By Brad Dorfman

The parent of Marlboro cigarette maker Philip Morris USA also forecast earnings at or slightly below analysts' estimates in 2009.

The U.S. government is expected to raise cigarette taxes sharply this year. Combined with the recession, the higher taxes may put more pressure on consumers to choose lower-priced brands.

Goldman Sachs analyst Judy Hong said there were still risks to Altria's forecast, citing "flattish" U.S. market share for Marlboro and uncertainty around how much volume and market share will suffer from a higher cigarette tax.

But Citigroup analyst Adam Spielman said the earnings forecast indicated that Altria plans to increase cigarette prices enough to offset lower volume.

"In the medium term, we believe the company can deliver (earnings-per-share growth) within its guided range, of 8-10 percent," Spielman said in a research note.

Altria shares rose 1.1 percent in morning trading.

In the fourth quarter, profit fell to $679 million, or 33 cents a share, from year-earlier earnings of $2.19 billion, or $1.03 cents a share, that included the Philip Morris International business that was spun off in 2008.

Excluding one-time items, earnings were 37 cents a share, matching the average forecast compiled by Reuters Estimates.

Revenue rose 2.8 percent to $4.65 billion.

REVISITING BUYBACKS

Earlier this month, Altria completed the acquisition of smokeless tobacco maker UST Inc for $10.4 billion to expand in a market that is growing even while demand for cigarettes shrinks.

The merger will add to earnings in 2010 and possibly in 2009, depending on the timing of cost savings, the consumer response to increased marketing spending on UST brands and the interest rate for refinancing the bridge loan Altria took to complete the deal, the company said.

Altria had $2.8 billion left on its $4 billion share repurchase program before suspending it. The company said it was trying to maintain flexibility while completing financing for the UST deal and will reconsider stock buybacks in the first quarter of 2010.

The company's Philip Morris USA unit shipped 40.8 billion cigarettes in the fourth quarter, down 2.1 percent from a year earlier.

The unit's market share slipped to 50.4 percent from 50.7 percent. Marlboro's U.S. market share rose to 41.6 percent from 41.2 percent a year ago, but was flat compared with the third quarter.

For 2009, Altria forecast earnings of $1.70 to $1.75, excluding one-time items, up 3 percent to 6 percent from 2008. Analysts on average forecast $1.75 a share.

Altria shares rose 19 cents to $16.99 on the New York Stock Exchange.

(Reporting by Brad Dorfman; Editing by Derek Caney and Lisa Von Ahn)