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Cuts fail to keep pace with revenue fall

VERIZON Communications Inc, United States largest wireless carrier, said yesterday its second-quarter profit fell 21 percent as cost-cutting in its wireline business failed to keep pace with falling revenues.

The earnings narrowly beat Wall Street expectations, and Verizon said demand for cell phones and its new home TV service was holding up well in the recession.

Verizon earned US$1.48 billion, or 52 cents per share, in the three months to June 30. That's down from US$1.88 billion, or 66 cents per share, a year ago.

Excluding special items, mainly for job cuts, New York-based Verizon says it earned 63 cents per share.

Revenue rose 11 percent to US$26.86 billion from US$24.1 billion a year ago, matching expectations. The purchase of wireless carrier Alltel Corp in January was the major reason for the increase - without it, revenue would have risen 1.9 percent.

In pre-market trading, Verizon shares fell 25 cents to US$31.25.

Verizon Wireless had already revealed how many subscribers it added in the quarter, saying net additions were 1.1 million. It ended the quarter with 87.7 million customers, ahead of AT&T's 79.6 million.

AT&T added more subscribers in the quarter: a net of 1.37 million. The iPhone continued to make AT&T a first choice for those willing to spend a premium on wireless service.

Wireless is the main growth driver at Verizon Communications, but it doesn't fully own Verizon Wireless. Britain's Vodafone Group Plc owns 45 percent of it, and gets a corresponding share of its profits, though all of Verizon Wireless' revenue is counted in Verizon Communications' results.

Local consumer services are actually rising at Verizon despite massive losses of landlines as households opt for cable phone services or going wireless.


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