* Q2 adjusted shr $0.58 vs estimate $0.56
* Q2 rev $26.77 bln vs year ago $26.86 bln
* Q2 postpaid subs 665,000 vs analyst view 570,000
* Verizon shares rise 3 pct
(Adds executive comment, FiOS details, share price update)
by Sinead Carew
NEW YORK, July 23 Verizon Communications (VZ.N)
posted a quarterly loss due to a $2.3 billion charge for job
cuts but wireless customer growth and landline profit margins
impressed investors, sending its shares up 3 percent.
While cost cuts helped profits in the declining landline
business, the popularity of phones based on Google Inc's
(GOOG.O) Android software helped Verizon add more valuable
monthly bill-paying wireless customers than expected.
Verizon Wireless, a venture between Verizon and Vodafone
Group Plc (VOD.L), added 665,000 postpaid subscribers compared
with the average expectation for 570,000 from eight analysts
contacted by Reuters.
Stifel Nicolaus analyst Christopher King was impressed
Verizon was able to add more postpaid customers in the quarter
than the 496,000 additions at rival AT&T Inc (T.N), the
exclusive U.S. operator for Apple Inc's (AAPL.O) iPhone 4.
Both Verizon and AT&T have focused on cost cutting to
improve landline results as they have seen traditional home
phones decline steadily in the face of competition from cable
and Internet rivals and cellphones.
Verizon's landline profit margins of 22.7 percent compared
to King's expectation for 21.7 percent and an estimate for 22
percent from Piper Jaffray analyst Chris Larsen.
Verizon's Chief Financial Officer John Killian forecast
earnings-per-share growth in a range of 5 percent to 10 percent
for the second half of 2010 compared with the first half of the
He said on a conference call that cost controls will keep
bolstering margins for the rest of 2010 and beyond. He also
announced plans to cut more jobs in Verizon's traditional phone
business on top of the 11,000 employee buyouts already planned
for this year.
"In the wireline business, the biggest contributor was
definitely the cost controls we put in," Killian said. "There's
plenty of opportunities to take (more) cost out."
Killian said Verizon is seeing stabilization in business
trends among big corporate customers but is cautiously
optimistic regarding a "more meaningful economic recovery."
Verizon posted a second-quarter loss of $198 million, or 7
cents per share, from a profit of $1.48 billion, or 52 cents
per share, in the same quarter the year before.
But excluding items such as the charge, its earnings per
share would have been 58 cents, ahead of analyst expectations
for 56 cents, according to Thomson Reuters I/B/E/S.
Verizon's revenue fell 0.3 percent to $26.77 billion from
$26.86 billion a year earlier, driven by a $268 million
reduction made by Verizon for accounting purposes to properly
defer previously recognized wireless data revenue that would be
earned and recognized in future periods.
In wireless Verizon has been heavily promoting Droid
branded phones from Motorola Inc MOT.N and HTC Corp (2498.TW)
to help it compete with AT&T and iPhone.
Killian said the company was having trouble keeping Droid
phones in stock but that it was not having a "big supply
Including prepaid customers who pay for calls in advance
but do not commit to a contract, Verizon Wireless had 1.4
million net wireless customer additions.
On top of this the company said it connected 264,000
devices such as e-readers to its network, bringing the total
number of new connections to 1.64 million. Including these
devices Verizon said it had 99.7 million wireless connections
at the end of the quarter.
In comparison its biggest rival AT&T reported 1.6 million
net customer additions for the quarter including devices such
as e-book readers, giving it 90.1 million connections at the
Verizon said it added 196,000 net customers to its FiOS
Broadband service and 174,000 to its FiOS TV service to end the
quarter with 3.8 million FiOS Internet customers and 3.2
million TV customers.
Verizon's shares were up 85 cents to $27.85 in afternoon
trade on New York Stock Exchange after the news.
(Reporting by Sinead Carew; editing by Derek Caney, Phil