SAN FRANCISCO (Reuters) — Business software maker Oracle Corp. posted quarterly profit and revenue yesterday that topped Wall Street forecasts on strong sales of new software applications, lifting its shares by three percent.The results helped ease investor concerns that big companies were tightening technology spending after German rival SAP AG missed a key 2006 sales target.

"Their share of the enterprise application market is growing faster than SAP's," said Pat Walravens, an analyst at JMP Securities. "That is all there is to it."

Oracle chief financial officer Safra Catz cited a strong global performance across all product lines and said the world's biggest database software maker turned in its fastest third-quarter growth in more than five years.

Sales of applications and database software beat Wall Street forecasts, and Catz said new software license revenue growth of 27 percent topped the company's own expectations of an increase ranging from 16 percent to 22 percent.

"I was impressed to see the revenue came in nicely higher than the Street had expected," said Kim Caughey, who helps manage some $1 billion of assets at Fort Pitt Capital Group. "These guys are on the first line of companies determining whether to spend more on infrastructure."

"It is good to see that they are, at least in this quarter."

Oracle has spent more than $20 billion buying rivals such as Siebel Systems and PeopleSoft over the past three years to challenge SAP, which leads the market in applications that help companies automate everything from accounting to human resources to inventory management. Oracle is pushing into that market as its core database business matures.

On top of taking market share from SAP, Walravens said Oracle also showed its consolidation strategy was the right one and that its core business was doing well.

Fiscal third-quarter net profit rose to $1.03 billion, or 20 cents per share, from $765 million, or 14 cents per share, a year ago. Excluding items, its per-share profit was 25 cents. Revenue rose to $4.4 billion from $3.47 billion.

Analysts, on average, were forecasting a per-share profit before items of 22 cents on revenue of $4.33 billion, according to Reuters Estimates.

The company said it sees fourth-quarter per-share profit at 34 cents, in line with Wall Street estimates, and forecast revenue growth of ten percent to 14 percent.

In December, Oracle had posted a healthy rise in profit but disappointed Wall Street with weaker-than-expected sales of new software application licenses. This led to some investor fears that its acquisition strategy may have hit a bump in the road.

Chief executive Larry Ellison chalked up that performance to an inability to close deals rather than a broad slowdown in technology spending and a stuttering economy, and he said he remained confident about the future.

He said yesterday the acquisition strategy was paying off.

"We think we have a good chance to catch and pass SAP in the overall applications business," Ellison told an investor conference call. "We closed the gap and gained applications market share again this quarter."

New license revenue rose to $1.39 billion in the quarter to Feb. 28, from $1.1 billion. Sales of new software applications rose 57 percent to $423 million, versus a Wall Street forecast of $368 million. New database and middleware software license sales grew 17 percent.

Oracle shares rose to $18.14 in extended trade from a Nasdaq close of $17.55. In the lead-up to its latest results, they rose nearly 5 percent over Monday and yesterday, marking the best two-day gain in six months.

Still, the stock was trading at a price-to-earnings ratio of about 17 times 2007 estimates, below 19 times for Microsoft Corp. and 21 times for SAP.