UPDATE 4-Monsanto beats view, to restructure Roundup unit

* Profit falls to $1.25/share; Street expected $1.18/share

* Roundup outlook changes, new division created

* Reduction of 900 employees planned

* Sales tumble 11 percent

* Shares off 2 percent, reversing course (Recasts, updates share price, adds details)

By Carey Gillam

NEW YORK, June 24 (Reuters) - Monsanto Co (MON.N) posted a smaller-than-expected slide in quarterly profit on Wednesday and said it would cut jobs and and realign its Roundup herbicide business as surprisingly strong competition hammered sales.

The world's biggest seed company, a leader in development of genetically modified crops, said net income for the third quarter totaled $694 million, or $1.25 a share, falling from $811 million, or $1.45 a share, a year earlier.

Analysts on average were expecting $1.18 a share after the company warned last month that tougher competition in the herbicide business would pressure results.

Company officials said they were creating a separate division for the struggling herbicide business to help stabilize and "better align spending and working capital needs" around the unit.

They said they had no plans to try to grow the business, and would not rule out divestiture, preferring instead to focus on a more profitable seed sector.

"Over the last six years, Monsanto's business has undergone a dramatic transition from a company historically built on chemical innovations to one focused on delivering enhanced seed offerings," said Monsanto Chairman Hugh Grant in a statement accompanying the results.

Monsanto shares were down 2 percent at $77.73 in mid-morning trade on the New York Stock Exchange, after rising more than 3 percent as analysts initially cheered the better-than-expected results and the company's move to realign its herbicide-related resources.

"This has been a dark cloud looming over Monsanto's head," said Morningstar analyst Ben Johnson. "The Roundup numbers today were disastrous."

"The seed franchise continues to go very strong," but herbicides have been a "wet blanket on their shares," Johnson said.

Net sales of $3.2 billion for the quarter were down 11 percent due in part to declines in the company's Roundup and other glyphosate-based agricultural herbicides globally.