Oct. 27 (Bloomberg) -- Royal KPN NV, the largest Dutch phone company, said third-quarter profit rose 14 percent after cutting jobs as sales slid.

Net income rose to 398 million euros ($594 million), or 24 cents a share, from 349 million euros, or 20 cents, a year earlier, The Hague-based company said in a statement today. Analysts had predicted a 393.6 million-euro profit, the average of nine estimates compiled by Bloomberg.

Chief Executive Officer Ad Scheepbouwer has eliminated about 6 percent of the workforce since January to protect profitability while customers reduce spending. The company today reiterated that revenue will drop this year and be stagnant in 2010 as it passes up less profitable new corporate business.

“The numbers show again that KPN has quite some potential for efficiency improvements,” said Victor Bareno, an analyst at SNS Securities in Amsterdam who recommends buying the stock.

The phone company repeated a forecast for 2009 sales of between 13.6 billion euros and 13.8 billion euros, down from 14 billion euros last year. Revenue next year will be “in line” with 2009. Third-quarter sales declined 8.8 percent to 3.33 billion euros, missing the 3.43 billion-euro average estimate of 15 analysts.

KPN shares rose 32 cents, or 2.6 percent, to 12.37 euros in Amsterdam. The shares gained 19 percent this year, trailing the 27 percent increase for the benchmark Amsterdam Exchanges Index.

Top-Line

“The company needs to revive top-line growth in the medium term or at least offset the revenue decline,” said Stephan Haber, an analyst at UniCredit SpA.

Revenue fell 4.9 percent at the Dutch telecommunications business as consumers and corporate clients reduced spending. Sales at iBasis Inc., a wholesaler of international calling minutes in which KPN owns a 56 percent stake, fell to 180 million euros from 227 million euros a year earlier, as it focused on profitable contracts. KPN has offered to buy the rest of iBasis.

“There’s some pressure from the economic headwind especially in the business segment, but KPN deals with this well through cost savings,” SNS’s Bareno said.

KPN on Oct. 5 raised its offer for iBasis’s remaining shares by 45 percent to $2.25 a share in cash. IBasis has said that KPN’s offer is “grossly inadequate, opportunistic and not in the best interests of” its minority shareholders.

Third-quarter earnings before interest, tax, depreciation and amortization rose to 1.33 billion euros from 1.28 billion euros. KPN expects Ebitda of between 5.15 billion euros and 5.25 billion euros this year and more than 5.5 billion euros in 2010, Scheepbouwer said on a conference call with reporters today.

Getronics

KPN eliminated 1,400 jobs at its computer-services unit Getronics. Third-quarter sales at Getronics fell 9.2 percent to 485 million euros as its customers postponed investment decisions. In the first nine months of the year, the company’s headcount fell by 2,152 to 34,550.

The company, which is also the third-largest wireless operator in Germany, cut its capital expenditure forecast for this year to between 1.8 billion euros and 1.9 billion euros, down from a previous guidance of about 2 billion euros.

In the Netherlands, KPN expects to offer fiber-optic links in regions where there’s “a lot of demand” rather than building a nationwide network, Scheepbouwer said on the call.

To contact the reporter on this story: Marcel van de Hoef in Amsterdam at mvandehoef@bloomberg.net

Last Updated: October 27, 2009 13:02 EDT