Adam Holt, an analyst at JP Morgan, said the company also gave Wall Street a "positive surprise" by effectively raising its outlook for license revenue for the third quarter and outlining a fourth-quarter range that exceeded analysts' expectations.

"The database and applications areas are doing better," he said.

Oracle Chief Executive Larry Ellison said a smooth integration of PeopleSoft and market acceptance of Oracle's Fusion package, which is aimed at tying together products acquired in recent takeovers, were helping to drive growth. Oracle plans to deliver Fusion in 2008.

"There were some uncertainties as to what we were going to do with our applications business after we bought PeopleSoft, and I think those questions have been answered," Ellison told investors on a conference call. "Both the applications business and the technology business look very strong for Q3," he added.

The financial forecast comes a little more than a week after Oracle closed its .85 billion acquisition of Siebel in a deal giving the business software maker a stronger foothold as it challenges industry leader SAP AG (SAPG.DE: Quote, Profile, Research) of Germany.

In the past two years, Oracle has spent some billion buying up rivals to grab a bigger share of the market for software aimed at big businesses that helps automate everything from human resources to accounting to inventory management.

Even with the buying spree, a recent .75 billion debt offering to help finance the Siebel deal and planned stock buybacks, Oracle executives said there was still room for more acquisitions.

"We'll take that into account as we make our plans going forward," said Chief Financial Officer Safra Catz. "But we have a commitment to be net cash positive, and I think we'll be able to do it all."

Redwood Shores, California-based Oracle also will cut about 2,000 jobs, leaving the software giant with about 55,000 employees worldwide following its Siebel acquisition.

Ellison said the company would keep most of the Siebel employees and that the cuts drew heavily from Oracle developers working on customer relationship management software. Oracle bought Siebel to boost its offerings for customer relationship software, which helps companies manage sales forces.

For its current fiscal third quarter, Oracle forecast a per-share profit before items of 18 cents to 19 cents, Catz said. She also pegged fiscal 2006 fourth-quarter profit before items at 26 cents to 28 cents.

On that basis, analysts on average expect a per-share profit of 19 cents for the third quarter and 27 cents for the fourth quarter, according to Reuters Estimates.

Oracle also forecast third-quarter total revenue ranging from .45 billion to .50 billion and fourth-quarter total revenue of between .39 billion and .55 billion.

The average Wall Street target was .45 billion for the third quarter and .37 billion for the fourth quarter, according to Reuters Estimates.

Shares of Oracle rose 12 cents, or 1 percent, to close at .69. In extended trade, the stock slipped 1.5 percent to .50.