NEW YORK (CNN/Money) - Oracle Corp. reported Thursday that earnings jumped 31 percent in the latest quarter, topping Wall Street analysts' forecasts. The company also maintained its earnings target for its first quarter and upped its sales guidance.

The earnings report came on the same day that rival PeopleSoft announced that it was rejecting Oracle's $5.1 billion hostile takeover bid. (For more, click here.)

The database software company said it earned net income of $858 million, or 16 cents a share, in its fiscal fourth quarter ended May 31, up from $656 million, or 12 cents a share, a year earlier. According to earnings tracking firm First Call, analysts were expecting earnings of 14 cents a share.

Oracle CEO Larry Ellison tells Jan Hopkins that he can turn PeopleSoft around. Play video (Real or Windows Media)

Oracle reported sales of $2.83 billion, an increase of 2 percent from $2.77 billion and ahead of Wall Street forecasts of $2.75 billion. For the full fiscal year, Oracle earned 43 cents a share, up from 39 cents a share last year, on sales of $9.5 billion, down from $9.7 billion a year ago.

Oracle did not raise earnings guidance for its fiscal first quarter of 2004, however. During a conference call on Thursday, the company estimated that earnings for the first quarter will come in at 7 to 8 cents a share. Analysts are expecting 8 cents.

But Oracle did boost its sales forecast slightly, saying that it expected total sales to increase 4 to 7 percent from a year ago. That implies a revenue target of about $2.1 billion to $2.2 billion. The consensus estimate is for $2.1 billion.

Oracle was originally scheduled to report results June 17 but bumped up the date after announcing its unsolicited offer for PeopleSoft last Friday. Oracle (ORCL: Research, Estimates) stock rose 1.5 percent, to $13.53, after-hours, according to Island ECN, after inching up in regular trading Thursday.

The fact that Oracle beat earnings estimates was not a huge shock since the company said last Friday that earnings would come in between 14 cents and 15 cents a share. More important was Oracle's sales surprise.

Bill Batcheller, portfolio manager for National City Investment Management, which subadvises the Armada family of funds, said there was a growing sense on Wall Street that Oracle would report a year-over-year increase in sales. So the fact that it delivered should be a big boost, he said. Armada owns shares of Oracle and PeopleSoft in its funds.

Looking more closely at sales, Oracle reported new license revenue of $1.2 billion, an increase of 3 percent from a year ago. Many analysts were expecting a slight decline from last year. New software licenses are viewed closely by Wall Street because it is a measure of whether or not Oracle is adding more customers.

However, Jason Brueschke, an analyst with Pacific Growth Equities, was quick to point out that currency played a role in the quarter, as it did in Oracle's fiscal third quarter. He doesn't own the stock and his firm has no banking relationship with the company.

Oracle, like other multinationals, has benefited from a weaker dollar because it makes sales from areas outside the U.S. worth more when translated back into dollars. To that end, nearly 57 percent of Oracle's new license sales came from outside the Americas and total license sales were actually down 4 percent, excluding the effects of currency conversion.

However, Oracle's results are being overshadowed by the PeopleSoft takeover situation.

In its earnings release, Oracle made reference to the fact that PeopleSoft's new license sales for application software, which is used by businesses to manage human resources, supply chain and customers, declined 39 percent in the first quarter.

"We believe that our growth and PeopleSoft's decline resulted in part from an increase in our competitive win rate over PeopleSoft, and the fact that we are beginning to replace PeopleSoft at a number of major accounts," said Oracle CEO Larry Ellison in the earnings release.

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Ellison continued his attack during the conference call, saying that PeopleSoft shareholders would be better off with $16 in cash than PeopleSoft stock. "Things are getting worse, not better, for PeopleSoft," he said. "I don't know how you can describe going down 39 percent as strong momentum."

Appearing on "Lou Dobbs Moneyline" Thursday evening, Ellison said this is a beginning of a consolidation phase in tech, with the strong companies getting stronger.

With that in mind, Kevin Landis, chief investment officer of Firsthand Funds, said that Oracle's bid for PeopleSoft is a stroke of "evil genius". He said that even if Oracle's bid for PeopleSoft fails, the uncertainty that may be created in the application software marketplace by Oracle's bid could make it tough for PeopleSoft to attract new customers, which could benefit Oracle. Firsthand owns Oracle in its Firsthand Technology Leaders fund.

But another fund manager said Oracle may find itself in a tough situation, regardless of what happens with PeopleSoft. Oracle trades at about 30 times earnings estimates for fiscal 2004, which ends in May, even though earnings are only expected to increase about 6 percent.

In fact, Wendell Perkins, manager of the JohnsonFamily Large Cap Value fund, said he sold his stake in Oracle recently in order to capitalize on the stock's big move. Shares of Oracle have gained 23 percent this year and are up more than 80 percent from their 52-week low of $7.30, set in October. "Oracle had a nice run and no longer fit our value parameters," said Perkins.