Excluding items, the company posted earnings from continuing operations of 21 cents a share, down from 69 cents a share, a year earlier.

Analysts, on average, had forecast earnings of 20 cents a share, according to Reuters Estimates.

On a net basis the company posted a loss, as results were hurt by a range of restructuring, severance and goodwill impairment charges.

Memphis, Tennessee-based International Paper reported a net loss of $452 million, or $1.07 a share, compared with a year-ago profit of $327 million, or 78 cents a share.

Quarterly sales rose 12.1 percent to $6.55 billion, driven primarily by gains from last year's acquisition of Weyerhaeuser Co's packaging business.

International Paper said its final goodwill impairment will be completed in the first quarter of 2009 and could result in an additional impairment charge of up to $1.3 billion.

In a filing with U.S. regulators, International Paper indicated that it expects selling prices in the first quarter to be 'under pressure' and volume shipments are likely to see continued weakness.

The company expects 2009 capital expenditures of about $700 million, down from $1 billion in 2008.

On a sequential basis, the company expects first-quarter raw material and freight costs to fall and maintenance outages to increase.

The company has about $1.2 billion of debt maturities in 2009, with cash and committed facilities of $3.6 billion.

Shares of International Paper fell 47 cents to $11.15 in early trade on the New York Stock Exchange.

(Reporting by Euan Rocha, editing by Maureen Bavdek)