updated 9/14/2004 5:32:25 PM ET 2004-09-14T21:32:25

Business software maker Oracle Corp.’s quarterly earnings exceeded analyst expectations, despite sluggish sales in a product line that the company hopes to bolster by completing a long-sought takeover of rival PeopleSoft Inc.

The Redwood Shores-based company said Tuesday it earned $509 million, or 10 cents per share, during the three months ended in August, a 16 percent improvement from $440 million, or 8 cents per share, at the same time last year.

Revenue for the period totaled $2.22 billion, a 7 percent increase from $2.07 billion last year.

Analysts surveyed by Thomson First Call had projected earnings of 9 cents per share.

Oracle’s shares fell 7 cents to close at $10.55 on the Nasdaq Stock Market before the high-tech bellwether released the results, then gained 42 cents in extended trading.

The results came out while Oracle is still celebrating a pivotal court victory in its $7.7 billion hostile takeover attempt for PeopleSoft, one of its toughest foes in business application software — the computer coding that automates a wide range of administrative tasks.

A federal judge removed one of PeopleSoft’s strongest takeover defenses late last week by ruling against a Justice Department’s antitrust challenge that sought to block the proposed combination.

Oracle believes a PeopleSoft takeover would improve its sales of its business applications software, a specialty that continued a recent slump during the latest quarter. The company’s business applications licenses totaled $69 million, down from $107 million last year.

The company historically has generated most of its sales from database software, a trend that continued in the latest quarter. Database sales totaled $494 million, an 18 percent increase from last year.

Oracle spent $29 million pursuing PeopleSoft during the latest quarter, bring its total bill for the bid so far to roughly $89 million.

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