(Corrects name in paragraph 5 to Hassan Ahmed from Charles
Neivert and closing share price)

By Ernest Scheyder

NEW YORK (Reuters) - Dow Chemical Co, the
biggest U.S. chemical maker, posted a lower-than-expected
quarterly profit Tuesday as it idled several plants to
retool for higher production rates, sending shares down 10
percent.

The temporary closing of three plants overshadowed higher
sales across all businesses and regions, cutting profit by 7
cents per share and revenue by $300 million.

The plants, one in Argentina and two in Texas, had been
operating at low levels during the recession and Dow needed
extra time to ramp up production, it said.

The Argentina factory, Dow's largest polyethylene plant in
Latin America, was closed for 30 days, roughly a third of the
quarter. It also had a water supply problem, Chief Executive
Andrew Liveris said on a call with investors.

"These outages were primarily in higher-margin
geographies," Alembic Global Advisors analyst Hassan Ahmed
said. "I don't think consensus was full factoring them in."

Liveris told investors the plant outages did not bleed into
the third quarter and that there will be no major outages the
rest of the year.

He also said that his view of the U.S. economy "remains
guardedly optimistic."

In a positive sign, Dow said its advanced materials
business, which holds assets from the legacy Rohm & Haas and
has two financial reporting units, reported a 13.6 percent
increase in sales to $2.73 billion.

Dow hopes to boost annual sales at the unit, which makes
parts for solar panels, televisions and Apple Inc's
iPhone, to $16 billion by 2015.

The units' performance needs to be better, Dahlman Rose &
Co analyst Charles Neivert said, since higher costs, lower
margins and increased competition continue to squeeze Dow's
traditional cash cow, its basic chemicals and plastics
businesses.

"They need to continue to improve their performance
businesses at a faster rate, because we know the basic plastics
business is coming under pressure going into the second half of
the year," Neivert said.

Elsewhere on Tuesday, Dow rival Westlake Chemical Corp's
quarterly results widely beat expectations due to
significantly higher pricing for some of its products.

BY THE NUMBERS

Dow reported net income of $566 million, or 50 cents per
share, compared with a year-earlier loss of $486 million, or 47
cents per share.

Excluding one-time items, Dow earned 54 cents per share. By
that measure, analysts expected 56 cents, according to Thomson
Reuters I/B/E/S.

Revenue rose 20.3 percent to $13.62 billion. Analysts
expected $13.69 billion.

Dow cited bad weather in North America and Europe for
lower-than-expected results in its agricultural business, where
operating income rose 40 percent.

"The last month of the quarter was much worse than normal
because the season ended so fast," Dahlman Rose's Neivert said.
"The earnings are a bit of a disappointment."

On the conference call, executives said demand for
agricultural chemicals remains strong.

As in the first quarter, Dow's basic plastics unit posted
strong results, with sales up 26.2 percent. The unit's products
go into a wide range of consumer goods, including diapers.

Dow has been trying to spin off the unit into a joint
venture as part of its "asset-light" strategy to focus more on
high-margin specialty chemicals.

The basic chemicals unit, which makes chlorine, one of the
most mass-produced chemicals in the world, posted a 25 percent
increase in sales.

Dow cut its long-term debt, much of which came from the
Rohm & Haas acquisition, by 5.5 percent to $18.11 billion.

Earnings from joint ventures, including the Dow Corning
business with Corning Inc, doubled to $244 million,
though down from $304 million in the first quarter.

During the period Dow sold its Styron basic plastics unit
to a private equity firm.

Last month the Midland, Michigan-based company said it
would become a global sponsor of the Olympics, a move it hopes
will boost its standing with the public and net more than a $1
billion in revenue over the next 10 years.

Also on Tuesday, Dow and Saudi Aramco said they would
locate a long-planned joint venture project in Jubail, on the
Persian Gulf coast. The move was widely expected.

Shares of the company fell $2.83, or 10 percent, to $25.50.
The stock has traded between $19.75 and $32.05 in the past 52
weeks.

(Reporting by Ernest Scheyder; Editing by Lisa Von Ahn,
Dave Zimmerman, Robert MacMillan, Steve Orlofsky and Bernard
Orr)