Business software analysts chimed-in Friday after Oracle's surprise disclosure the day before that it will report better than expected fiscal fourth-quarter results next week.

Preliminary results for the company's fourth quarter show a 32 percent increase in new license revenue to $2.1 billion, up from previous guidance, a rise of 8 percent to 18 percent. The Redwood Shores, Calif., company also expects to report per-share earnings of 24 cents, exceeding management's previous estimates of 21 cents to 23 cents per share

Oracle estimates license revenue from applications grew 83 percent during the quarter, pushed higher by its acquisitions of Siebel Systems and Retek. Susquehanna Financial Group LLP analysts describe the news as "coincidental," given Oracle's press release hit the wires as Microsoft Chairman Bill Gates began to detail his planned transition.

Oracle also disclosed that application license revenue grew 56 percent from the prior year. And while this number appears encouraging, Susquehanna Financial analysts find the 18-percent database license revenue growth more comforting. "The database business is more profitable, and we've always viewed that as Oracle's crown jewel," said Jason Kraft, research analyst at Susquehanna Financial. "Although it's great to see growth in the applications business, seeing the growth in the database business, though we don't have full details yet, makes us feel a little better."

Oracle's competitive position in the applications market may have improved. Kraft notes that while expectations for Oracle applications have been low, and SAP remains the "clear leader in the sector," the strength of Oracle's applications in the quarter could become an early indication that "SAP's low-hanging fruit, especially in the U.S. market, may have been picked."

Jim Shepherd, senior vice president at AMR Research Inc., attributes Oracle's projected revenue growth to an increase in IT spending and "settling in" after devouring more nearly two-dozen acquisitions in the past two years.

Companies can't make more than 20 acquisitions in two years without experiencing some disruption, Shepherd said. "Salespeople don't quite know their job because they may get new territories and have new quotas," he said. "Customers become nervous about product support. Many of these issues have settled down in the past three to six months, which has helped."

Oracle spent $11.1 billion buying PeopleSoft Inc. and $6.1 billion for Siebel Systems Inc. The company then poured another $2 billion into an array of smaller acquisitions. Now the bidding has turned toward Portal Software Inc. for a reported $220 million.

IT spending has picked up, too, after a slump between 2001 and 2004. As the economy recovers, companies need tools, business applications and storage equipment to keep pace.

"When you go through a big dip you create a bubble on the other end where there's a larger than normal demand to make up the lower than normal demand that went on for several years," Shepherd said. "The strong growth trend in IT spending, in part, is a reflection of companies not spending for several years."