UPDATE 2-Progress Software Q2 profit beats Street; Q3 view weak

(Adds details, analyst, company comments)

By Bijoy Anandoth Koyitty

BANGALORE, June 19 (Reuters) - Business software maker Progress Software Corp (PRGS.O) posted a quarterly profit that beat market estimates by a penny, but forecast weak third-quarter results as product deals take longer to close, sending shares down 8 percent to a new 52-week low.

The company's customers are more cautious about software purchases amid the U.S. economic downturn, said Brent Williams, an analyst with Benchmark Co.

The company, in a conference call, also blamed seasonal factors like the European holidays, when businesses would be closed, for the expected weakness in the third quarter.

About 46 percent of the company's revenue in the second quarter ended May 31 came from Europe, the Middle East and Africa.

For the third quarter ending August 31, Progress Software forecast earnings of 43 cents to 45 cents a share, excluding items, on revenue of $125 million to $127 million.

Analysts on average expect earnings of 50 cents a share on revenue of $130.9 million, according to Reuters Estimates.

For the 2008 financial year, the company expects earnings of $1.91 to $1.95 a share, excluding items, on revenue of $518 million to $526 million. Analysts were expecting earnings of $1.95 a share on revenue of $524.6 million.

Williams said the 2008 revenue outlook looks healthy, even though it is below market estimates, as the company expects a number of potential deals to come through in the longer-term.

The analyst has a "buy" rating on the stock.

Bedford, Massachusetts-based Progress reported earnings 47 cents a share, excluding items, on revenue of $127.9 million for the second quarter. Analysts expected earnings of 46 cents a share on revenue of $127.3 million.

The company's shares, which have lost 17 percent of their value this year, were trading down about 3 percent at $27.33 in afternoon trade. They had touched a low of $25.63 earlier in the day on Nasdaq. (Editing by Pratish Narayanan)