Is there any value left in the software sector? Sure, it's hard to find. But with estimate-beating fourth-quarter earnings now out, Oracle Corp. (NASDAQ:ORCL) might be a place to look.

At $12.00, Oracle trades at 20 times 2005 earnings and free cash flow. That's a 20% discount to big cap enterprise software peers Symantec (NASDAQ:SYMC), Siebel Systems (NASDAQ:SEBL), and Verisign (NASDAQ:VRSN). The market treats Oracle as though it has very little left to offer.

Perhaps that's not surprising. Legal wrangling with the Department of Justice over Oracle's proposed takeover of applications software specialist PeopleSoft (NASDAQ:PSFT) continues to hold down the share price. Whatever the outcome of the antitrust case, a resolution will give investors a better sense of Oracle's prospects going forward. Unfortunately, the show could go on and on.

Even so, there is the making of an upturn in the Q4 figures. Oracle said net income for the three months ended May 31 rose to $990 million, or $0.19 share, from $858 million, or $0.16 a share, in the same quarter of last year. Sales rose to $3.1 billion from $2.8 billion.

Following the tech bust, Oracle was the vendor hit hardest. But it now looks like big corporations are gradually shifting back to their old buying habits. Oracle's "bread-and-butter" database business is regaining some steam. The fourth quarter marks a third consecutive quarter of database growth. Importantly, Oracle's license revenues bounced back, growing by 16% in the fourth quarter.

At the same time, Oracle is also grabbing a sizable chunk of the red-hot market for Linux software. According to market research analysts at Gartner Group, Oracle now owns nearly 70% of the market for database software running on Linux.

But don't get too excited. With Microsoft (NASDAQ:MSFT) gunning for the low-end database market with its SQL database software, and IBM (NYSE:IBM) eager to capture the high end with bundled packages, the competitive environment will likely get fierce. Even MySQL, in the open-source world, is proving to be a strong force. Database price pressure is intense. Corporate IT departments are getting deep discounts, sometimes reaching 80% off list.

Oracle's outlook for 2004 is fairly positive. But a big, hard question remains for Oracle investors: Will the software spending up-tick gain momentum through 2005, or will it be remembered as just a temporary blip? Without more top-line expansion, the kind of profit margins required to meet investors' bottom-line growth demands will be awfully hard to find.

Want to read more about Oracle and PeopleSoft? Check out:

* Oracle, PeopleSoft Need Owners and The Case for OracleSoft, both by Tim Beyers

Fool contributor Ben McClure hails from the Great White North. He doesn't own shares of any companies mentioned here.