Oracle easily topped analysts' estimates in its third quarter and predicted strong growth in the future. After market close on Tuesday, the database and business applications software vendor reported a profit of $498m (£308m), or 17 cents (11p) a share, on sales of $2.4bn (£1.5bn). First Call consensus expected the database software developer to earn 13 cents (8p) a share in the quarter. Shares in Oracle fell 1 3/4 to 77 in Tuesday's regular trading ahead of the earnings report. The stock shot up to 84 in after-hours activity. The $2.4bn (£1.5bn) in sales marks an 18 percent improvement compared to the same quarter a year ago when it earned $277m (£171m), or 9 cents (6p) a share, on sales of $2.1bn (£1.3bn). "Oracle's database and e-Business applications have become the software standard for the Internet," said chief executive Larry Ellison in a prepared release. "All 10 of the world's biggest Web sites use Oracle -- 93 percent of the public dotcom companies use Oracle." Total net income, which includes $432m (£267m) from the sale of shares of Liberate Technologies (Nasdaq: LBRT), rose to $763m (£473m), or 25 cents (16p) a share. "We obviously had a spectacular quarter," chief financial officer, Jeff Henley, told analysts during a Tuesday afternoon conference call. In the quarter, database software sales jumped 32 percent to $778m (£482m). Oracle is taking market share on the low end from Microsoft; on the high end it is from IBM, Ellison told analysts. "Our database business has never been healthier," he said. Total applications software sales increased 35 percent, to $199m (£123m), with sales of customer relationship management applications growing at a 179 percent rate. The company's year-over-year comparison was easier this time compared to last year, when Oracle's applications growth slowed. But Oracle executives predicted continued strong increases in applications revenue, including a 100 percent sequential improvement in the fourth quarter for CRM software. Oracle hopes to pass Siebel Systems as the top CRM vendor sometime in the next fiscal year, Ellison said. The company expects to surpass Commerce One in installations Internet procurement software in the fiscal fourth quarter, he added. Consulting, education and support revenues grew 10 percent to $1.4bn (£87m). The consulting business slowed in previous quarters because of the company's focus on increasing margins and cutting costs, executives said. Oracle cut its overall workforce in each of the last three quarters, with much of that coming from consulting. The slowdown in consulting growth is "pretty much over", Henley said. Geographically, all regions except for Europe saw strong growth, executives said. European business grew just 12 percent. "Our European organisation has to be embarrassed by their performance," said Ray Lane, president and chief operating officer. "My expectation is for Europe to do a lot better. We've looked into their pipeline... we think they'll do a lot better in Q4." Ahead of the earnings report, most analysts said Oracle's cost-cutting moves as well as increased corporate software spending would likely mean an upside surprise. "There's a discernable pick up in corporate spending for database and application software right now," said Steve Palfrey, an analyst at Sanford C Bernstein & Company. "We're expecting Oracle to post strong results for the next two or three quarters." Henley said the company's plan to cut annual spending by $1bn (£62m) is well ahead of schedule, resulting in higher profit margins. Third-quarter operating margin rose to 31.4 percent from 19.6 percent in the same period a year ago. The cost-cutting plan is about half completed, Henley said. "We're very encouraged that we can continue to streamline the company, improve productivity," he said during the conference call. Now Oracle is targeting operating margins in the 40 percent range rather than 30 percent, Ellison said. Oracle easily topped analysts' estimates in its second quarter, pocketing $384m (£238m), or 26 cents (16p) a share, on sales of $2.3bn (£1.4bn). Out of 35 analysts tracking the stock, 33 maintain either a "buy" or "strong buy" recommendation. Oracle competes with a wide range of players. Competitors include Microsoft, IBM, Commerce One, i2 Technologies, Sybase, PeopleSoft, SAP, Seibel and Informix. Sergio G Non contributed to this report. What do you think? Tell the Mailroom and read what others have to say. See techTrader for more technology investment news, plus quotes and research. See Inter@ctive Investor for US tech investor news.