Business Objects

(BOBJ)

topped analysts' revenue and profit estimates in the third quarter, boosted by strong sales of licences.

The company on Wednesday also raised full-year and fourth-quarter guidance.

Investors cheered the report and sent shares of up $2.87, or 8.4%, to $36.99 in after-hours trading.

For the period ended Sept. 30, the business software maker earned $19.6 million, or 21 cents a share, flat from the year-ago quarter.

Sales rose 19% year over year to $310 million from $261.4 million, thanks to rises in license and services sales.

Excluding amortization and stock options expenses, Business Objects earned $38.5 million, or 41 cents a share, up from $27.8 million, or 30 cents a share, a year ago.

The company's results were better than Street estimates. Analysts polled by Thomson First Call were expecting the company to earn 34 cents a share, excluding amortization and stock options costs, on sales of $295 million.

License revenue for the third quarter was $132 million, a rise of 9% year over year. Services revenue, including maintenance and global professional services, for the third quarter was $179 million, up 27% from last year.

The company said that revenue for the fourth quarter is expected to increase because of seasonal strength, as well as from sales from its ALG Software acquisition.

For the fourth quarter, Business Objects said that non-GAAP earnings would be 53 cents to 58 cents a share and estimated revenue ranging from $348 million to $356 million.

Consensus was for EPS of 53 cents on sales of $339 million.

Including items, the company forecast a GAAP profit of 29 cents to 34 cents.

For the full year 2006, Business Objects sees EPS of $1.57 to $1.62, higher than Street estimates of $1.50; sales are expected to range from $1.23 billion to$2.24 billion, again beating the consensus of $1.21 billion.

Early in October, the company said

that its U.K. subsidiary has bought privately held

Armstrong Laing

, a software maker that helps managers plan and evaluate the performance of business units.

Business Objects' all-cash transaction of roughly $56 million for all outstanding shares of Armstrong, which does business as ALG Software, will be accounted for under the purchase method of accounting, the company said.