UPDATE 2-Zebra Technologies posts Q1 profit, gives weak Q2 view

* Q1 earnings of 18 cents beat estimates by 2 cents

* Q1 revenue down 22 pct

* Q2 sales forecast miss Street view

* Shares fall 7 percent (Adds conference call details, CEO commets)

By Shrutika Verma

BANGALORE, May 5 (Reuters) - Zebra Technologies Corp (ZBRA.O), which makes specialty business printers, posted better-than-expected quarterly earnings, but its revenue fell short of market expectations hurt by reduced capital spending, inventory reductions and project deferrals by its customers.

"We saw customers either delaying decisions or cutting down projects into smaller components," Chief Executive Anders Gustafsson said in an interview.

The company, which saw its biggest contraction in sales to customers in manufacturing, said some customers postponed projects to 2010.

For the second quarter, healthcare, government and mobile workforce applications are expected to do well, Gustafsson said.

The Vernon Hills, Illinois-based company also forecast second-quarter earnings of 12 cents to 20 cents a share, including exit and restructuring costs of 4 cents a share, on revenue of $186 million to $200 million.

Analysts were looking for earnings of 23 cents a share, excluding items, on revenue of $210.8 million. [ID:nWNAB3019]

Zebra, which has $189 million cash in hand, said it will be cautious on the acquisition front and will focus on buying back shares.

"We don't want to buy something and find that the business is much weaker than expected," CEO Gustafsson said.

The company, which competes with companies like Intermec Technologies Inc (IN.N) and Hewlett-Packard co (HPQ.N), posted first-quarter net income fell to $9.4 million, or 16 cents per share, from $27.6 million, or 42 cents per share, a year earlier.

Excluding restructuring and integration costs, the company earned 18 cents a share. Revenue fell 22 percent to $192.6 million.

Analysts expected earnings of 16 cents a share, excluding exceptional items, on revenue of $197.2 million, according to Reuters Estimates.

Shares of the company, which have lost 43 percent of their value in last one year, were trading down 4 percent at $20.50 Tuesday on Nasdaq. They went down as much as 7 percent at $19.78 earlier in the day. (Editing by Jarshad Kakkrakandy)