June 25 (Bloomberg) -- Oracle Corp. posted a 27 percent increase in fourth-quarter profit and overtook International Business Machines Corp. as the second-largest software maker, buoyed by overseas orders and sales from acquisitions.

Net income climbed to $2.04 billion, or 39 cents a share, from $1.6 billion, or 31 cents, a year earlier, Redwood City, California-based Oracle said today in a statement. Still, Oracle's first-quarter forecast signaled that growth may ebb, sending the shares down 3.4 percent in extended trading.

International sales and rebounding U.S. orders helped the company withstand a slowing economy last quarter, which ended May 31. Chief Executive Officer Larry Ellison, 63, also has spent more than $33.5 billion on acquisitions, adding business applications to its database software.

``There was some residual euphoria from the fourth-quarter results, and investors always want to see more,'' Sarah Friar, a Goldman, Sachs & Co. analyst in San Francisco, said in an interview. ``The company is taking a more conservative stance, and I think it's the right thing to do right now.''

For the current period, Oracle forecasts profit, excluding some items, of 26 cents to 27 cents a share, President Safra Catz told analysts on a conference call. Revenue will advance between 18 percent and 20 percent, indicating first-quarter sales of $5.42 billion to $5.51 billion.

Analysts had estimated a 27-cent profit on $5.37 billion in sales for the period, which is typically Oracle's slowest quarter.

Shares Fall

Oracle dropped 76 cents to $21.79 in extended trading after closing at $22.55 on the Nasdaq Stock Market. The shares are little changed this year.

``We aren't seeing a marked slowdown, but it's extremely early in the quarter,'' Catz said on the conference call. ``We won't see significant issues until much, much later if they are there.''

Excluding acquisition costs and some other expenses, profit rose to 47 cents a share last quarter, topping the average analyst estimate of 44 cents.

Sales climbed 24 percent to $7.24 billion. Including acquired companies, sales advanced to $7.28 billion in the period. That compares with a $6.88 billion average estimate.

Oracle dominates the market for database programs. It also sells business-management applications for tracking sales, managing billing systems and handling accounting tasks, and provides so-called middleware, which helps different types of programs share information.

License Sales

Sales of new software licenses, an indicator of future growth, gained 27 percent in the quarter to $3.14 billion. Sales of new business applications rose 36 percent to $989 million, while revenue from new licenses of database and middleware software climbed 23 percent to $2.16 billion.

``These are strong results and evidence that Oracle's hard- charging sales culture and ever-more diversified product mix is paying off,'' Andy Miedler, an analyst with Edward Jones & Co., said in an interview from St. Louis.

The assortment gives Oracle's sales team an edge over competitors that don't offer such a range, said Tony Ursillo, an analyst with Loomis Sayles & Co., which bought 11.6 million Oracle shares in the first three months of 2008.

``Oracle is in a great place to cross-sell everything it produces,'' Ursillo said in an interview from Boston.

Oracle doesn't lead in all its markets. In business- management applications, the company trails Walldorf, Germany- based SAP AG. IBM leads in the middleware market.

Second Place

For fiscal 2008, Oracle reported $22.6 billion in revenue, passing IBM in overall software sales. Microsoft Corp. ranks first.

Oracle said in March that fourth-quarter profit would be 43 cents to 44 cents on $6.71 billion to $6.94 billion in sales.

Sales in the Americas region, dominated by the U.S., climbed 18 percent last quarter. While those sales grew more slowly than overall revenue, they bounced back from a decline in the earlier quarter.

``To see high-teens growth out of the U.S. is a nice rebound from the previous quarter,'' Miedler said. ``Longer term, we expect broad-based strength out of all geographies for Oracle.''

Oracle vaulted to the No. 2 spot through a buying spree that began in 2005, with the $10.3 billion purchase of PeopleSoft Inc. Since then, Oracle has picked up 39 software makers, adding programs geared to specific industries, such as utilities and retail, as well as products for securing data, analyzing sales opportunities and examining internal operations.

The acquisitions also supply Oracle with a guaranteed revenue stream. For every dollar Oracle gets from product sales, it reaps about $1.50 from maintenance contracts, which customers buy every year to receive updates and support.

To contact the reporter on this story: Rochelle Garner in San Francisco at rgarner4@bloomberg.net

Last Updated: June 25, 2008 17:58 EDT