Verizon Meets Street, Will Get Palm Pre

Verizon Communications (NYSE: VZ) narrowly beat Wall Street expectations as second-quarter earnings fell 21 percent, though the company posted increases in subscribers and revenue and the wireless division continues to perform well.

Verizon realized income of $3.16 billion, or $0.52 a share, down from $3.4 billion, or $0.66 a share, a year earlier.

Excluding merger and labor costs, per-share earnings fell to $0.63 from $0.67 cents, while revenue increased 11 percent to $26.86 billion. Analysts polled by Thomson Reuters expected earnings of $0.62 cents a share on revenue of $26.85 billion.

At the same time, Verizon’s wireless business shows no sign of slowing down in the near term. Wireless revenues totaled $15.5 billion, up 27.7 percent year over year.

A key factor in that growth comes from wireless data, which continues on a tear despite the economic downturn as users seek more advanced smartphones

“Data services continue to be a dominant driver of growth, and is increasingly becoming a bigger part of the revenue pie,” Verizon CFO John Killian said. Verizon Wireless service revenues were $13.3 billion, up 27.2 percent year over year and up 9 percent on a pro forma basis. Data revenue grew to $3.9 billion, up 52.6 percent and up 33.2 percent on a pro forma basis.

Palm Pre coming to Verizon

Executives said Verizon will continue to capitalize on the trend with a slew of hot new advanced devices poised for launch in coming months.

“You can expect to see a steady stream of attractive devices — we launched the Blackberry Tour, we plan to refresh the Storm later this year, Android is on our roadmap with Motorola, and you can expect the Palm Pre early next year,” Chief Operating Officer Denny Strigl said during the earnings conference call.

The effort aims to keep Verizon competitive even as rivals like AT&T continue to reap the profits from its exclusive deal with Apple for the iPhone. Sprint, meanwhile, has the well-regarded Palm Pre, while T-Mobile has been pushing hard with Android, the Google-backed mobile software that powers current and upcoming releases.

At the same time that Verizon is seeing promise in its mobile data offerings, the company demonstrated staying power in other core wireless metrics, in spite of the harsh economy.

The average Verizon mobile subscriber spent $51.10 a month, down 0.8 percent from a year earlier, which the company said is due to its recent acquisition of Alltel and those customers generally spending less.

The percentage of customers who cancel service, an industry metric known as “churn,” fell to 1.37 percent overall and to 1.01 percent for postpaid customers — both considered solid numbers in the category.