Oct. 26 (Bloomberg) -- Verizon Communications Inc., the second-largest U.S. phone company, reported third-quarter profit that topped analysts’ estimates after cutting workers and adding mobile-phone customers.

Profit, excluding severance and other costs, amounted to 60 cents a share, New York-based Verizon said today in a statement. That compared with the 59-cent average of estimates compiled by Bloomberg. Sales rose 10 percent to $27.3 billion, compared with the average $27.2 billion projection.

Verizon cut 4,000 jobs in the declining land-line business last quarter, and expects to shed the same amount in this one, Chief Financial Officer John Killian said on a conference call. The carrier pared costs while expanding coverage for high- definition TV and Internet with fiber-optic FiOS service. Verizon also is relying on its mobile-phone service, which became the largest in the U.S. this year, to fuel growth.

“They’re well positioned, but they definitely are facing more competition,” said Jennifer Fritzsche, a Chicago-based analyst at Wells Fargo & Co., who rates the shares “market perform” and doesn’t own any.

Verizon declined 21 cents to $28.64 in New York Stock Exchange composite trading at 4 p.m. It has fallen 16 percent this year.

Introducing Storm2

Rival AT&T Inc. added 2 million wireless customers last quarter, helped by its exclusive contract to provide service for the iPhone. That compared with 1.3 million new subscribers at Verizon.

While Verizon is interested in offering Apple Inc.’s iPhone, the decision to make it available to subscribers will be Apple’s, Chief Executive Officer Ivan Seidenberg said on a conference call today.

“Our view is to broaden the base of choice for customers,” Seidenberg, 62, said. “Hopefully, along the way, Apple as well as others will decide to jump on the bandwagon.”

Verizon today said it would begin selling Research In Motion Ltd.’s BlackBerry Storm2 this week. The touch-screen smart phone will go for $179.99 with a two-year service contract and a mail-in rebate.

Verizon is teaming up with Google Inc. to develop more devices using Google’s Android operating system. The company is readying the Android-based Droid phone as a competitor to the iPhone.

Sales of data services rose 48 percent and accounted for about one-third of customers’ bills. Customer turnover rose to 1.49 percent from 1.33 percent a year earlier.

Net income attributable to Verizon fell 30 percent to $1.18 billion, or 41 cents a share, from $1.67 billion, or 59 cents, a year earlier.

Lowering Expenses

Verizon said in July it planned to cut 8,000 employees and contractors in the second half, with additional firings to come in the next few years. AT&T reported last week it had almost 19,000 fewer employees as of Sept. 30 than a year earlier.

Carriers are cutting costs and looking for new revenue streams as home-phone customers cut lines and growth in mobile subscribers slows. There are enough wireless devices for nine out of 10 people in the U.S., according to the CTIA wireless industry association.

Verizon added fewer new customers for FiOS TV and high- speed Internet access than last quarter. Cable companies succeeded in winning more customers, and Verizon may have to lower prices to gain market share, Piper Jaffray Cos. analyst Chris Larsen said.

New FiOS Customers

“Just when you thought things were getting better for their competitive position relative to cable, it seems that cable is right back in the driver’s seat,” said New York-based Larsen, who doesn’t own the shares and rates them neutral. “Are they going to cede the share, or get more competitive in the way that they go about capturing new customers? That could be on price, that could be on customer acquisition costs.”

Verizon added 198,000 net new customers for FiOS Internet and 191,000 for FiOS TV service. That’s lower than the 300,000 TV additions a quarter earlier and Larsen’s forecast of 228,000 new subscribers. Verizon has committed to spending $23 billion through next year on the high-definition TV and high-speed Web service, which is helping maintain wireline revenue.

To contact the reporter on this story: Amy Thomson in New York at athomson6@bloomberg.net

Last Updated: October 26, 2009 16:20 EDT