CORRECTED - Emerson sees negative underlying sales growth in 2010

(Delete bullet point on operating profit growth; corrects paragraph 5 to show that the operating profit and sales targets are long term, not in 2011; corrects paragraph 6 to clarify that CEO was referring to challenging economic conditions, not the company's long term targets; corrects paragraph 8 to show that Avocent deal was announced but not completed)

* Sees underlying sales growth negative in 2010

* Says recovery unlikely before late 2010

* Has identified 322 companies for possible acquisitions (Adds details, quotes)

By Sui-Lee Wee

HONG KONG, Oct 30 (Reuters) - Industrial conglomerate Emerson Electric Co (EMR.N) expects underlying sales growth to remain negative in 2010 as the global economic downturn batters demand, scuttling hopes for an earlier recovery, its chairman said on Friday.

Emerson, which makes everything from equipment used to run factories to shelving for consumers, had said in August that its order rates were stabilising, raising hopes that industrial demand was bottoming. [ID:nBNG422422].

But Emerson's Chairman David Farr, speaking at an American Chamber of Commerce event in Hong Kong, said no significant recovery was likely before late 2010, reiterating the company's earlier forecast.

"We'll be down for the next couple of years," Farr said, referring to the company's underlying sales growth.

Still, Emerson aims to boost its operating profit growth rate to 15-17 percent per year and underlying sales to 5-7 percent over the long term business cycle, Farr told Reuters on the sidelines of the event.

"I think it's going to be very challenging," he said about the economy. "The global recovery is going to be muted, especially in developed countries."

In August, Emerson reported a 37 percent drop in quarterly net profit as the strong U.S. dollar reduced sales in four of its five divisions. [ID:nN0466496].

ACQUISITION HUNT

The St. Louis-based company, which announced a deal to buy network equipment technology provider Avocent Corp (AVCT.O) for about $1.2 billion in October, was "actively courting companies," Farr said.

Emerson has identified 322 companies with $49 billion worth of sales for possible acquisitions, he added.

He declined to be specific on the type of acquisitions, but said deals could be worth $500 million to $1 billion.