Updated from 5:42 p.m. ESTDatabase giant Oracle ( ORCL) surprised Wall Street on Wednesday with a stronger-than-expected performance in the second quarter. Net income was $535 million, or 10 cents per share. Revenue was $2.31 billion for the quarter that ended Nov. 30. Both earnings and revenue were higher than Wall Street estimates. According to Thomson Financial/First Call, Oracle was expected to earn 8 cents per share on $2.2 billion in revenue. In a generally upbeat conference call following the announcement, Oracle CFO Jeff Henley said he expects revenues in the current quarter to be up as much as 4%. "We are working on the assumption that we have hit bottom and we are moving up," he said. While second-quarter revenue was an upside surprise, it compared unfavorably to the year-ago quarter, when the company reported revenue of $2.38 billion and net income of $549 million and earnings of 10 cents per share. License revenues were $765 million, down 7% from last year, while license updates and product support revenues were up 8% at $954 million. Service revenues were down from last year, dropping 11% to $590 million while the second quarter's operating margin was 34%, equal to last year. Although the company's core database business grew by 6% year over year to $634 million, licensing revenues from applications, seen as a major opportunity by analysts, declined by 34% to $108.1 million, compared with last year. Henley blamed weakness in the application business on poor sales execution. He said Oracle has revamped its North American sales organization. "We're pleased that our database business started to grow again this quarter," said Oracle CEO Larry Ellison, fresh off a plane from New Zealand, where he is competing in the America's Cup race. "We have never been in a stronger position relative to our competitors." Perhaps. But analyst Mark Murphy of First Albany points out the message within the licensing numbers is not all positive. On the plus side, Oracle told analysts to expect licensing revenue to drop 10% to 15%. "So, a lot of people would say, 'well, it's getting better.' But in the year-ago quarter, license revenue declined 22%. Add them up, and it's a heck of a drop, at a time when Microsoft is growing like a weed," he said. First Albany does not have an investment banking relationship with Oracle.