June 29 (Bloomberg) -- Oracle Corp., the world's No. 3 software maker, said fourth-quarter profit rose 3.2 percent, bolstered by Chief Executive Officer Larry Ellison's $11.2 billion acquisition spree.

Net income rose to $1.02 billion, or 20 cents a share, from $990 million, or 19 cents, a year earlier, Oracle said in a statement today. Sales rose 26 percent to $3.88 billion. Excluding one-time items, profit was 26 cents, beating the 23-cent average estimate of 34 analysts surveyed by Thomson Financial.

Oracle's four purchases this year, including the $10.6 billion acquisition of PeopleSoft in January, propelled sales of business software and database programs. The additions, while bolstering growth, are adding to costs. New software license sales, a measure of future earnings, rose to $1.61 billion, beating the $1.5 billion average estimate of five analysts surveyed by Bloomberg News.

``Oracle needs to keep bulking up the applications side to really get the footprint, to get the scale needed,'' and compete with market leader SAP AG, Robert Stimson, an analyst at WR Hambrecht + Co. in Boston, said before the report. He rates the shares ``hold.''

Redwood City, California-based Oracle in March forecast per- share profit of 22 cents to 24 cents for the quarter that ended May 31. Net income was forecast at 17 cents to 18 cents a share. Oracle also reported revenue that doesn't conform to generally accepted accounting principals of $4.06 billion, beating estimates of $3.89 billion.

Shares of Oracle, down 6.5 percent this year, rose 29 cents to $12.83 yesterday in Nasdaq Stock Market composite trading. Of 37 analysts tracked by Bloomberg, 28 recommend investors buy the stock, seven suggest holding it and two recommend selling.

Databases

Much of the gain came in databases, Oracle's biggest and most- profitable unit, where the company is closing the gap with market leader International Business Machines Corp. Oracle paid an undisclosed sum for closely held Oblix Inc. in March and TimesTen Inc. this month to add to its database technology.

Oracle, which lost the top spot in the $7.79 billion database market in 2002, last year cut IBM's lead to less than $30 million, according to Stamford, Connecticut-based Gartner Inc. Microsoft Corp., the No. 1 software maker, ranks third in database sales.

New database license sales rose more than 10 percent in four of the past five quarters, boosted by add-ons products, including a technology called RAC, or real application clusters, that lets more than one server tackle the intensive task of running a big database. The trend toward add-ons probably will continue, said Jason Maynard, a Credit Suisse First Boston analyst in San Francisco.

Applications

Ellison, 60, is cutting Oracle's reliance on database programs by buying companies that make software for business tasks such as payroll and human resources. The PeopleSoft deal vaulted Oracle to No. 2 in the $23.6 billion market behind SAP AG.

Both Oracle and PeopleSoft lost market share during the 18- month takeover fight and AMR Research Inc. said that trend may continue this year. The Boston-based researcher said Oracle and PeopleSoft held a combined 22 percent, down from 25 percent in 2003. SAP's share may rise to 43 percent this year from 40 percent. Oracle's share, with PeopleSoft, may drop to 19 percent.

Oracle last week began offering a rebate to customers who switch from SAP's business-management software, countering a similar incentive program SAP has been running since January.

`Project Fusion'

The PeopleSoft purchase and the March acquisition of Retek Inc. probably boosted sales of licenses for business applications by 30 percent to $300 million, Prudential Equity Group analyst Brent Thill in San Francisco estimated before the results.

Ellison started ``Project Fusion'' to show Oracle and former PeopleSoft customers how the company will weave together features from both sets of programs. Last week, he hired former Microsoft finance chief Greg Maffei, who led more than $9 billion in investments in cable, telephone and Internet companies.

``The real question is: Is their strategy going to continue going down the pipeline of doing acquisitions?'' Hambrecht's Stimson said.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net.

Last Updated: June 29, 2005 07:04 EDT