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Update: Oracle Beats Forecast by 4 Cents, Announces 2-for-1 Stock Split

The software company said profits in the fiscal first quarter increased to $501 million, or 17 cents a share.

Wall Street had high hopes for


(ORCL) - Get Report

, and the software maker delivered, announcing Thursday that its earnings had more than doubled in the latest quarter, handily topping analysts' estimates.

Oracle, based in Redwood Shores, Calif., said profits in the fiscal first quarter increased to $501 million, or 17 cents a share, up from $237 million, or 8 cents a share, in the comparable period of last year.

Analysts surveyed by

First Call/Thomson Financial

had expected earnings of 13 cents a share in the latest quarter.

Revenue, meanwhile, climbed 15% to $2.3 billion, up from $2 billion in the comparable quarter of 1999, matching expectations. Sales of applications software, technology used to facilitate business on the Web, increased 42% to $156 million, while database software sales grew 32% to $585 million.

The company also announced a 2-for-1 stock split effective Oct. 13 for shareholders of record on Sept. 25. It's Oracle's 10th stock split since its

initial public offering in March 1986.

"We are off to our fastest start in six years," said Oracle Chief Executive Larry Ellison, in a statement. The growth in the database software business is evidence that the company is grabbing market share from


(IBM) - Get Report




(MSFT) - Get Report

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Ellison added.

Oracle's stock, which had dipped from a perch of $92.63 at the beginning of the month, rebounded Thursday ahead of the earnings announcement. Oracle shares closed Thursday regular trading at $84.94, up $3.13, or 4%, as investors awaited strong results. Anticipation of good numbers from Oracle, considered a bellwether in the industry, pulled other technology stocks

up Thursday. In after-hours trading, Oracle is trading down to $82.75, according to



Jim Mendelson, an analyst at

Wit SoundView

, predicted applications software sales of $190 million, more optimistic than most analysts' projections and a good deal higher than the $156 million the company posted. Still, Mendelson said it's difficult to find much fault with Oracle's financial performance, especially in a quarter generally regarded as a slower period.

With a high-flying stock, though, Oracle may have a

hard time dazzling investors, who have been spoiled by the company's market prosperity.

"There is substantial upside in earnings per share, but they have to put up big numbers when you consider the valuation of the stock," Mendelson said. "Two years ago, they were trading at a discount compared with other tech leaders."

Morgan Stanley Dean Witter

analyst Charles Phillips had fueled at least part of the optimism this morning after

elevating his rating on Oracle stock to strong buy from outperform.

The positive news may help some to forget about a couple of recent public-relations setbacks. In an abrupt move, Oracle President and Chief Operating Officer Ray Lane resigned in early July, saying he didn't see a place for himself in the organization after an eight-year stint. Lane later

joined the venture capital firm

Kleiner Perkins Caufield & Byers


And just days before Lane's announcement, Chief Executive Ellison acknowledged that the company had hired investigators to spy on allies of rival Microsoft that support the software giant in its antitrust battle against the U.S. government.