UPDATE 3-Rockwell Auto results fall short of forecasts

(Adds CEO interview, analysis, takeover speculation, byline; updates share price)

By Helen Chernikoff

NEW YORK, April 23 (Reuters) - Diversified manufacturer Rockwell Automation Inc (ROK.N: Quote, Profile, Research) posted lower-than-expected quarterly earnings on Wednesday on disappointing operating margins, sending its shares down as much as 11 percent and touching off takeover speculation.

The company, whose engineering services and computer systems are designed to make manufacturing cheaper and faster, estimated 2008 operating margins falling about a point from 19.7 percent in 2007.

But Rockwell Chairman and Chief Executive Keith Nosbusch painted a rosier picture for the second half of the year, and the company affirmed its full-year profit forecast of $4.25 to $4.45 per share. Analysts, on average, expect $4.34 per share.

However, investors aren't convinced, said analyst Nick Heymann of Sterne Agee.

"These guys are flying magic carpets," he said, noting that Rockwell's outlook assumes economic acceleration in Europe and stability in North America despite evidence both economies will continue to slow.

Heymann said Rockwell gave an optimistic outlook to prop up its share price in an attempt to stave off takeover talk, citing Tokyo-based Yokogawa Electric (6841.T: Quote, Profile, Research) and rival Siemens AG (SIEGn.DE: Quote, Profile, Research), based in Munich, as possible buyers.

However, Nosbusch, in an interview with Reuters, brushed off speculation that the company is for sale,