PeopleSoft has been in Oracle's sights for 15 months

The business software maker said sales were on track to reach $680m-$695m in the third quarter, outstripping the $663m expected on Wall Street.

Analysts said the forecast would boost Peoplesoft's defence against Oracle.

And as the Delaware court hearing began the firm dismissed speculation it might be coming round to a deal with Oracle.

Analysts 'misled'

Peoplesoft's decision on Friday to oust chief executive Craig Conway, a former Oracle executive who had led efforts to keep the firm independent, had fuelled reports that it may now be prepared to complete a sale.

But Peoplesoft board member Steven Goldby told the first day of the Delaware Chancery Court case the firm's five independent directors were still opposed to the Oracle takeover bid.

He also revealed Mr Conway was fired after he misled analysts by saying Oracle's hostile bid would not affect business.

Peoplesoft's board felt more confident about dismissing Mr Conway after the company delivered the strong third quarter results, Mr Goldby added.

Analysts have said Peoplesoft's improved sales performance would enable it to extract a higher price from Oracle if it did decide to negotiate.

The court case, which started on Monday, centres on a Peoplesoft scheme which could deter would-be buyers.

The measure would oblige any company that takes over Peoplesoft to continue offering full technical support to its customers, or face compensation claims worth up to five times the original price of the Peoplesoft products they bought.

Oracle is asking the to declare the scheme invalid, arguing that its proposed takeover poses no threat to Peoplesoft or its customers.

The scheme, which could add hundreds of millions of dollars to the cost of buying Peoplesoft, is seen as one of the company's most important lines of defence against Oracle.

Endgame?

On Friday, US regulators abandoned efforts to block the acquisition on competition grounds, scuppering Peoplesoft's best hope of halting Oracle's takeover attempt.

European Union competition watchdogs could yet veto the merger, although Brussels has yet to say when it will reach a final decision.

Competition officials are concerned that allowing Oracle and Peoplesoft to join forces would give the combined company too much influence over the multi-billion dollar market for business software.

The only other global player in the industry is Germany's SAP.

Oracle's pursuit of Peoplesoft, which began in June 2003, has turned into one of the most bitterly-contested takeover battles of recent years.

Oracle's most recent takeover offer was worth $7.7bn.

There has been talk also of a possible second bidder, although software giant Microsoft - which last year considered buying SAP - has ruled itself out.