June 23 (Bloomberg) -- Oracle Corp., the world’s second- largest software maker, reported fourth-quarter profit that topped analysts’ estimates after customers renewed contracts for product updates and support.

Excluding some costs, profit was 46 cents a share in the period ended May 31, the Redwood City, California-based company said today in a statement. Analysts in a Bloomberg survey had estimated 44 cents on average.

Chief Executive Officer Larry Ellison, 64, has announced more than $42 billion in acquisitions, swelling the ranks of customers that sign software maintenance contracts. That gives Oracle a steady stream of revenue, even when it’s not getting as many new orders. Operating margin, a measure of profit that excludes some costs, rose to a record 51 percent.

“It was a really nice, very solid quarter, and they followed through with their commitment for 50 percent operating margins,” said Peter Goldmacher, a San Francisco-based analyst with Cowen & Co. He has a neutral rating on the shares, which he doesn’t own.

Oracle climbed 63 cents, or 3.2 percent, to $20.50 in late trading. The stock, up 12 percent this year, closed at $19.87 today on the Nasdaq Stock Market.

Profit Forecast

The company predicted first-quarter profit of 29 cents to 31 cents a share, excluding some costs. Analysts had estimated 30 cents for the period, which ends in August.

First-quarter sales will be down as much as 5 percent from a year earlier, holding currency rates constant, Oracle said. That equates to at least $5.15 billion, in line with analysts’ projections.

The forecast doesn’t include sales from Sun Microsystems Inc. Oracle announced plans to buy that company in April.

Net income fell to $1.89 billion, or 38 cents a share, last quarter, from $2.04 billion, or 39 cents. Including revenue from acquired companies, sales dropped to $6.88 billion, compared with the $6.47 billion estimate of analysts.

Oracle has acquired more than 50 companies since 2005. The spree helped Oracle expand beyond its dominant database software, turning the company into a one-stop software market for business customers.

SAP, IBM

The acquisitions have stepped up competition with Walldorf, Germany-based SAP AG, the largest maker of business- management software, which handles tasks such as finance, human resources and inventory tracking. Last year’s purchase of BEA Systems Inc. is helping Oracle challenge International Business Machines Corp. for the lead in middleware, software that lets different kinds of programs share data.

Oracle’s new license sales, an indicator of future revenue from maintenance contracts, fell 13 percent last quarter. Revenue from software updates and product support, meanwhile, climbed 8 percent.

Only Microsoft Corp., the world’s largest software maker, offers as many kinds of programs as Oracle. That breadth gives Oracle’s sales people an opportunity to sell more products to existing customers, said Mark Murphy, an analyst at Piper Jaffray & Co. in San Francisco.

“Oracle has a vast army of feet on the street to promote their message -- and you don’t get fired for going with Oracle,” Murphy said. He advises investors to buy the stock and doesn’t own it. “They can sell snow to Eskimos and sand to Saudi Arabians.”

For every dollar Oracle got from business-application orders last year, it took in $2 in support fees. In databases and middleware, 60 percent of revenue came from maintenance contracts.

“No other company has that kind of maintenance base,” David Rudow, an analyst with Thrivent Asset Management, said in an interview from Minneapolis. He helps oversee about 3 million Oracle shares.

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

Last Updated: June 23, 2009 17:40 EDT