* Q3 EPS $0.08 vs $0.09 year earlier
* Analysts expected EPS $0.09
* Revenue $4 billion vs est $4.53 billion
* Shares end down 1.5 percent on the TSX (Updates share price to close. In U.S. dollars unless noted)
By John McCrank and Bhaswati Mukhopadhyay
TORONTO/BANGALORE, Dec 2 (Reuters) - Bombardier Inc
The world's No. 3 civil aircraft maker after Airbus
Bombardier shares ended down 1.5 percent at C$4.70 on the Toronto Stock Exchange, recovering from a 4.5 percent slide. At least two analysts recommended buying the stock on the dip.
Bombardier is also the world's top train maker, and while the revenue in its transportation segment sagged on a lull between some major projects, new orders were solid.
Net income at the Montreal-based company was $143 million, or 8 cents a share, in the third quarter, ended Oct. 31. A year ago it reported a profit of $168 million, or 9 cents a share.
Revenue was down 13 percent at $4 billion.
Analysts had expected earnings of 9 cents a share on revenue of $4.53 billion, according to Thomson Reuters I/B/E/S.
"It's a tale of two cities," said Walter Spracklin, an analyst at RBC Capital Markets. "Aerospace is doing poorly and transportation is doing very, very well."
Sales in the aerospace division were down around 14 percent at $1.8 billion and the order backlog fell around 3 percent since the end of January to $16.2 billion. Deliveries of commercial aircraft were down, while business jets were flat.
BRUSHES OFF AIRBUS THREAT
Airbus ramped up the pressure in the commercial aircraft market space on Wednesday when it said it would upgrade its popular A320 family of narrowbody airplanes with new engines to cut down on fuel costs. [ID:nLDE6B008X]
Bombardier, which is set to enter the narrowbody jetliner market in 2013 with its all-new 110- to 145-seat C-Series, brushed off the Airbus announcement.
"This doesn't affect anything," Ben Boehm, vice-president of commercial aircraft programs at Bombardier, told Reuters.
He said the C-Series would offer more savings related to fuel economy and operating costs than Airbus's re-engined A319s, due to hit the market in 2016.
Both companies will use a new, more fuel efficient Pratt
and Whitney
Boehm said that the C-Series CS300, which features a newly constructed fuselage and composite wings, would be 13,000 pounds lighter than a re-engined A319.
"We ... have been designing the C-Series airframe in conjunction with a brand new engine to optimize both and, as a result you get a 20 percent airplane fuel burn reduction," he said. "That's a big difference from saying an engine is 15 percent more fuel efficient."
Bombardier has 90 firm orders for C-Series planes and options for 90 more. The company said on Thursday that it is still in advanced talks with around five potential C-Series customers, and lower-level discussions with about 60 more.
TRAIN DIVISION CHUGGING ALONG
In the company's transportation segment, sales fell about 12 percent to $2.2 billion, while the backlog rose around 12 percent to a record $32.7 billion.
RBC's Spracklin said Bombardier's share price fails to reflect strength in its transportation segment, as free cash flow generated there is seen being funneled to aerospace.
"If aerospace does turn around, it'll be a double benefit," he said, because both segments will be fully valued. He has an "outperform" rating on the stock.
David Tyerman, an analyst at Canaccord Genuity said that, overall, the quarter was a disappointing one for the company.
"The net/net is negative to me," he said.
"Weak orders and weak margins on aerospace say the next while's going to be pretty poor for aerospace."
Looking longer-term, however, he said the company has the potential to double its earnings in the next three years and he recommends buying the stock on dips.
"Over the two or three year time-frame, it should do really well as the aerospace cycle comes back."
Bombardier's overall backlog was $48.9 billion on Oct. 31, compared with $43.8 billion on Jan. 31.
($1=$1.00 Canadian) (Editing by Rob Wilson)