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Wireless, DSL Drive Verizon Profit

Verizon Communications posted strong second-quarter financial results, as surging wireless and broadband demand more than offset traditional phone service losses.

The carrier earned $1.8 billion, or 64 cents per share, up from $338 million for the same period last year (figures for the 2003 quarter were affected by a $1.6 billion charge). The 64 cent profit was 4 cents more than analysts had forecasted.

Revenue was $17.8 billion, jumping 6 percent over $16.8 billion last year. Like BellSouth , another Baby Bell that reported strong second-quarter numbers, Verizon owed much of its success to two key areas.

Verizon added 280,000 DSL customers during the three months, giving it a total of 2.9 million lines. In the last year, it has notched more than 1 million new customers for broadband, as customers embrace high-speed applications or buy the service as part of a bundle.

Wireless was the other star. Verizon Wireless (a joint venture between Verizon and Vodafone ) netted 1.5 million new customers, the largest quarterly customer increase in the company's four-year history. Total customers grew 16.8 percent year-over-year to 40.4 million.

Domestic telecom revenues were $9.6 billion, about a 3 percent slide from last year. However, long-distance revenues jumped about 14.7 percent. The company said it's too early to say if it will pick up customers from AT&T, which recently announced it would stop pursuing new long-distance customers because of a change in regulatory policy.

While broadband and wireless were today's drivers, the company is also looking to the future. It's earmarking more than half of its annual $5.5 billion capital expense project for new technology initiatives.

Just last week, the company introduced VoiceWing, its large-scale, consumer Voice over IP offering. A business version is in the works for next year.

In addition, the company is on track to make fiber-to-the-premises available to 1 million homes and businesses in nine states by year's end.

Verizon Chairman and CEO Ivan Seidenberg was in Texas today to meet with analysts and check the progress on the FTTP community in Keller, a Dallas suburb.

"We look at this as a three- to four- to five-year project where we focus on between 50 [percent] to 70 percent of lines we have in service," Seidenberg said during a call with financial analysts.

The company plans to begin offering an alternative to cable TV over FTTP-connected homes next year to better compete with Comcast and others.