By Euan Rocha

But the largest U.S. paper and packaging maker also cautioned that demand in its paper and packaging businesses has been hurt by the global economic slowdown.

Excluding one-time items, the Memphis, Tennessee-based company posted earnings from continuing operations of 84 cents a share, up from 57 cents a year earlier and above the average Wall Street forecast of 78 cents a share.

"It's heartening to see somebody beat (estimates) in this environment. However, having said that, the focus is not going to be on this quarter. It's going to be on the fourth quarter and 2009," said Longbow Research analyst Joshua Zaret.

Net income was $149 million, or 35 cents a share, compared with a year-ago profit of $217 million, or 51 cents a share.

Net income was hurt by a series of write-downs and restructuring charges, which reduced earnings by $207 million, or 49 cents a share.

Quarterly revenue rose 22.9 percent to $6.81 billion, largely due to gains from the recent acquisition. Analysts on average had forecast revenues of $6.89 billion, according to Reuters Estimates.

International Paper closed its $6 billion acquisition of Weyerhaeuser Co's packaging business on August 4. The deal made International Paper the largest North American producer of corrugated packaging products.

"Since mid-September, demand in our core businesses has weakened, and as a result we will continue to manage our capacity to meet our customers' needs, and continue our cost-reduction initiatives," Chief Executive John Faraci said in a statement.

In a regulatory filing, the company indicated that it expects fourth-quarter paper and packaging shipment volumes in North America to decline from the third quarter.

International Paper's shares rose 2.2 percent to $18.25 in trading before the morning bell.

(Reporting by Euan Rocha; editing by John Wallace)