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* Per-share profit of $1.20 vs estimate $1.15
* Sequestration impact seen less than original forecast
* Shares up 2.4 pct
July 19 (Reuters) - Rockwell Collins Inc reported higher-than-expected quarterly profit as it sold more parts to commercial jet makers and benefited from share buybacks and cost cuts, and its shares rose 2.4 percent, above their year high.
Rockwell Collins said on Friday the impact from automatic U.S. budget cuts known as sequestration would be less than it previously forecast, based on its assessment of orders against prior estimates.
The company said it now expects a $70 million impact from the cuts, compared with its original view of $120 million. It expects defense revenue to weaken 7 percent for the fiscal year that ends in September, compared with a prior outlook of a 10 percent fall.
The supplier of avionics and other electronic systems for commercial and military aircraft is counting on commercial demand to drive growth as the United States curbs defense spending. The company's sales are roughly split 51 percent-49 percent between government sales and commercial sales.
Rockwell Collins has reduced its business in some defense segments, curbed unnecessary research and development expenses and cut jobs as U.S. military spending came under pressure.
"We're taking costs out where we need to," Chief Executive Clay Jones said in an interview on Friday. "What we're doing is basically trying to anticipate and match the market, so that our spending is consistent where it should be" based on business conditions.
Jones will be retiring at the end of July, and President Kelly Ortberg will take over as CEO.
In the fiscal third quarter ended June 30, cost cuts helped to partly offset a 3 percent decline in overall sales. Government-related sales fell 11 percent while commercial sales rose 7 percent. Segment operating profit before effects of interest expense and stock-based pay was up 3 percent, and commercial margins expanded.
Jones said airlines looking to improve operations were retiring more planes, slowing the rate of growth for some service and support sales. But he said other commercial service segments were "still very strong."
Net income was $164 million, or $1.20 a share, for the fiscal third quarter, compared with $166 million, or $1.14 a share, a year earlier.
Analysts had expected a profit of $1.15 a share, according to Thomson Reuters I/B/E/S.
Robert Stallard, an RBC Capital Markets analyst, said in a note to clients that Rockwell had "a good operating quarter" with healthy margins in the commercial business.
There were fewer shares outstanding in the latest period as Rockwell Collins bought back 1.4 million shares for $90 million. The company said it had $473 million left on its share repurchase program that will fund buybacks for the rest of 2013 and into 2014.
The company said it expects a full fiscal-year profit of $4.55 a share to $4.60 a share, compared with a prior range of $4.45 to $4.65 a share. Analysts currently expect $4.58 a share.