UPDATE 1-Plum Creek Q4 profit beats Street; revenue drops

* Q4 adj EPS 19 cts vs. Street 16 cts

* Revenue falls 44 pct

* Forecasts 2010 profit above Street

* Shares rise 1.5 pct after earnings report

NEW YORK, Feb 1 (Reuters) - Plum Creek Timber Co (PCL.N) posted a better-than-expected fourth-quarter profit on higher timber prices and improved land sales, though revenue plunged as demand for building products stayed tepid.

The company, one of the largest U.S. private landowners, timber processors and builders, said timber prices improved overall, although not in all regions, and land sales were better-than-expected for the season and better than a year earlier.

Plum Creek on Tuesday posted net income of $28 million, or 17 cents per share, compared with $95 million, or 57 cents per share, in the year-ago period.

Excluding one-time items, including debt extinguishment, the company posted profit of 19 cents per share. That beat analysts' average forecast of 16 cents per share, according to Thomson Reuters I/B/E/S.

Revenue fell 44 percent to $258 million -- below analysts' average forecast of $262.6 million.

For 2010, the company expects earnings of $1.25 to $1.45 per share -- above analysts' expectation of $1.21 per share.

The company expects to harvest about 15 million to 16 million tons of timber in 2010, about the same as 2009.

Sales from the real estate segment are expected to drop to a range of $350 million to $370 million in 2010, from a total of $486 million in 2009.

Seattle-based Plum Creek said its manufacturing segment should return to profitability in 2010.

"Business conditions stabilized in the second half of 2009, and we've seen some modest recovery from the extreme lows set earlier in 2009," Chief Executive Rick Holley said in a statement. "While we believe recovery in our core businesses will continue in 2010, we believe the recovery will be slow by historic standards.

Plum Creek shares rose 55 cents, or 1.5 percent, to $37.30 after the earnings report. The stock closed at $36.75, 1.6 percent higher in the regular session on the New York Stock Exchange, and has traded between $22.88 and $39.38 in the past 52 weeks. (Reporting by Ernest Scheyder; Editing by Gary Hill)