Updated from 2:13 p.m. EDT

Highlighted by stronger-than-expected sales of its traditionally weak applications business, Oracle ( ORCL) delivered a 3-cent-a-share upside surprise for the fourth quarter and issued solid guidance for 2006.

Investors liked the news, as shares were recently up 78 cents, or 6.1%, to $13.61, although analysts noted that a low tax rate and currency benefits accounted for a substantial portion of the upside.

The database giant earned $1.02 billion, or 20 cents a share, in the May quarter, compared with $990 million, or 19 cents a share, a year ago. Sales rose 26% from a year ago to $3.88 billion. Backing out various items, Oracle posted pro forma earnings of 26 cents a share on a 32% jump in sales to $4.06 billion.

On the latter basis, analysts had been forecasting earnings of 23 cents a share on sales of $3.89 billion.

Oracle's flagship database and middleware business grew about as expected; new license revenue grew 16% to $1.26 billion; analysts had forecast a bit less -- $1.24 billion. Applications license revenue grew 52% to $350 million, well above Wall Street's expectation of $305 million.

However, Oracle did not differentiate application revenue generated by the sale of products developed by PeopleSoft, acquired last year for $10.6 billion. In the previous quarter, PeopleSoft contributed two months of revenue, or $31 million, which was 20% of the total license revenue of $152 million.

Co-president Safra Catz said during a conference call Wednesday that a breakout was "irrelevant. ... We really merged the sales organization entirely."

Speaking informally, one analyst, who asked to be unnamed, said, "The overall applications number was obviously good, and since it was better than expectations, it will help the stock." However, he noted that a year ago the two companies separately generated $361 million in application license revenue. "This raises some questions about loss of market share and the long-term ability to compete with SAP ( SAP)," he said.

Even so, there was evidence of the positive effect of the expensive takeover. Applications maintenance revenue jumped by 160% to $622 million. Since few, if any, customers are showing signs of backing away from maintenance agreements, the company said, Oracle will continue to reap substantial ongoing revenues in the future. And that, say analysts, was one of the key goals of the acquisition.

There were other concerns raised amidst the generally favorable reaction to the quarter. The tax rate in the quarter was "far-below normal," and accounted for two to three cents of the earnings upside," wrote Richard Williams of Garban Institutional Equities.

And Citigroup Smith Barney analyst Tom Berquist noted that, "roughly 75% of the upside to our estimates and Street estimates came from currency, which enhanced revenues by 3% and earnings by 4%. The company expects a similar effect during the rest of the year, an expectation that might be 'too aggressive.'"

Citigroup has an investment banking relationship with Oracle; Garban does not.

CEO Larry Ellison indicated that the company may well pursue further acquisitions, but gave no hint of where or when. "We have no plans to buy anything that doesn't contribute to our long-term strategy and profit margins of 20% per year over the next five years," he said during the call.

Last week, Oracle hired a new chief financial officer -- Greg Maffei, a former Microsoft ( MSFT) CFO, who is known as an aggressive deal maker. His appointment ignited speculation that Oracle is again on the acquisition trail. He replaces Harry You, who left after only eight months to head another company.

Maffei will also serve as an Oracle co-president, along with Charles Phillips and Catz.