UPDATE 2-Borders' Q4 net income dives, expects weak 2009

* Q4 adjusted EPS $1.05 vs Street 95 cents

* Q4 revenue down 13 percent

* Sees negative sales trends throughout 2009

* Shares rise 3 percent (Adds executive quotes, estimates, sales details)

By Alexandria Sage

SAN FRANCISCO, March 31 (Reuters) - Bookstore chain Borders Group Inc (BGP.N) said on Tuesday quarterly earnings plunged 57 percent and predicted a weak 2009, but it still beat Wall Street earnings expectations with the help of deep cost cuts.

Borders's new chief executive, Ron Marshall, expects negative sales trends to persist throughout 2009 but said his company was cooperating with vendors "to get the company on more firm financial footing".

Borders, which in recent months has laid off workers and shelved costs aggressively, will "ultimately secure a viable future" by putting its financial house in order and reconnecting with consumers, many of whom have gravitated away from the chain to a host of rivals, Marshall said.

"For the shareholders of the company, it's been a very difficult ride," Marshall told Reuters. "We've taken ... the hard medicine to be successful in a difficult environment."

Net profit tumbled to $28.9 million, or 48 cents per share, in its fiscal fourth quarter ended Jan. 31, from $67.3 million, or $1.14 cents per share, a year ago. Revenue sagged 13 percent to $1.1 billion.

The latest results included charges of $34.9 million related to goodwill, store closures and severance costs, among other items.

But results from continuing operations were $1.05, above the 95 cents per share expected, on average, by analysts according to Reuters Estimates.

After struggling with liquidity issues last year, Borders shook up its management ranks in January, ousting its CEO and chief financial officer. It brought in former private equity executive Ron Marshall, who has experience in turning around ailing companies, as CEO.

On Monday, largest shareholder Pershing Square Capital Management, extended a deadline for Borders to repay a $42.5 million loan. That loan deadline had been extended twice previously.

Shares of Borders, which are down 89 percent since a year ago, rose 3 percent in extended trade, regaining losses during normal trade on the New York Stock Exchange.

"SELL MORE BOOKS"

The No. 2 brick-and-mortar bookseller behind Barnes & Noble Inc (BKS.N), which operates stores under the Borders and Waldenbooks names, is trying to aggressively cut costs and shore up its balance sheet while it tries to woo back readers.

This month, it said it had cut 742 positions at its stores. That followed the elimination of 136 corporate jobs.

Spending, general and administrative costs fell to 18.9 percent of total sales from 20.7 percent in the year-ago quarter, the company said.

For 2009, Marshall said the company planned only minimal capital expenditure.

Total sales at Borders superstores fell 15 percent in the quarter, falling 14 percent at the Waldenbooks chain. International sales, primarily the company's Paperchase business, fell 22 percent.

Borders was exploring a host of options in order to lure back serious readers to its stores, Marshall said, including looking at how books are displayed, how employees interact with customers, and the company's Website.

"Ultimately, we have to sell more books," he said.

The company has managed to reduce its book order cycle to 4 weeks from 12, allowing Borders to avoid excess inventory and costly charges to send books back to publishers, Chief Financial Officer Mark Bierley said.

Marshall also considered the company's Paperchase stationery unit a "core strategic asset." The division operates U.K. stores and is found within U.S. superstores. This week, Borders said it would allow its option to sell Paperchase to Pershing to expire.