UPDATE 2-Lindsay Corp Q4 trails Wall Street on weak demand

* Q4 EPS $0.17 vs est $0.35

* Revenue $73.4 mln vs est $85.9 mln

* Says farmer sentiment improving

* Shares pare early loss, up 1 pct (Recasts, adds conference call details, analyst comments)

By Fareha Khan

BANGALORE, Oct 21 (Reuters) - Irrigation equipment maker Lindsay Corp (LNN.N) posted a lower-than-expected quarterly profit as revenue fell by half amid cautious spending by farmers, but its shares recovered from an early fall as the company said farmer sentiment was improving.

Lindsay shares, which fell as much as 5 percent in early trade, pared the losses and closed up 17 cents at $33.67 Wednesday on the New York Stock Exchange.

The economic slowdown and the tight credit conditions have caused farmers to initiate steep reductions on purchasing new equipment and fertilizer, as well as hold off trying out new technology.

"If you recall last year, we had a large backlog going into the first quarter of 2009; however, orders dropped off precipitously at one point because farmer sentiment turned very negative as the recession really started to have an impact," Chief Executive Rick Parod said on a conference call with analysts.

However, if commodity prices continue to rise and the credit environment improves, it is easier for farmers to borrow money for making investments, farmer sentiment should change pretty quickly, Rodman & Renshaw analyst Joe Giamichael said.

William Blair & Co analyst Brian Drab said Lindsay's earnings will improve in 2010, helped by infrastructure projects in the Mexico city.

Chief Executive Rick Parod said the company continues to have an ongoing structured acquisition process that will generate additional growth opportunities throughout the world in water and infrastructure.

"Lindsay is committed to achieving earnings growth through global market expansion, improvement in margins and strategic acquisition," Parod said.

Lindsay purchased railroad signalling structure from GE Transportation Systems and is transitioning to selling these products directly to railroads and system integrators, said Parod.

"We expect this to improve gross margins in diversified manufacturing as this change is fully implemented."

EARNINGS FALL

For the fourth quarter ended Aug. 31, the company reported a net income of $2.1 million, or 17 cents a share, compared with $11.3 million, or 90 cents a share, a year ago.

Revenue at the company, which competes with companies like Astec Industries Inc (ASTE.O), Cascade Corp (CAE.N) and Toro Co (TTC.N), slumped 50 percent to $73.4 million.

Analysts on average had expected the company to earn 35 cents a share, before special items, on revenue of $85.9 million, according to Thomson Reuters I/B/E/S.

Total irrigation equipment revenue decreased 53 percent to $54.8 million in the quarter. (Reporting by Fareha Khan; Editing by Anne Pallivathuckal and Gopakumar Warrier)