Updated from 10:25 a.m. EDT

Telecommunications giant

Sprint

(FON)

reported better-than-expected quarterly earnings Thursday, as its phone business posted strong growth alongside a surge in subscribers in its wireless division.

Sprint's operating income from core operations rose 13% to $926 million in the second quarter from $821 million during the same period last year. Excluding a one-time 3-cent gain from the sale of a directory publishing operation, diluted earnings per share from core operations increased 20% to 67 cents per share, compared to 56 cents per share a year ago.

The company's

FON Group

, which comprises Sprint's long-distance and local telephone operations as well as its data business, reported normalized earnings per share of 50 cents.

The Wall Street consensus, according to

First Call/Thomson Financial

, was for Sprint to report 49 cents a share.

Sprint's consolidated net operating revenue -- which include the Fon Group and its wireless division -- was $5.79 billion, a 19% increase from $4.89 billion in the second quarter of 1999.

However, Kansas City, Mo.-based Sprint said net income applicable to common shareholders fell to $365 million, or 42 cents a share. In the same period last year, the company reported $387 million, or 45 cents a share.

The company took a hit of $161 million, or 12 cents a share, from costs related to its

failed merger with

WorldCom

(WCOM)

. The deal fell apart after regulators in the U.S. and Europe voiced their opposition.

Sprint PCS

(PCS)

, the firm's wireless division, reported 833,000 new customers, a 43% increase over the second quarter of 1999, making it the fourth-largest wireless carrier in terms of customers with over 7.4 million.

Sprint PCS' revenue doubled, reaching $1.46 billion, compared to $736 million in the same period last year. Its operating loss was cut to $469 million, or 46 cents per share, from $708 million, or 61 cents per share, a year ago.

Wall Street analysts had expected a loss of 49 cents, according to

First Call/Thomson Financial

.

Meanwhile, fellow telecom

SBC Communications

(SBC)

bested Wall Street by a penny when it reported second-quarter earnings per share of 56 cents, compared with 55 cents a share during the second quarter last year.

The consensus among Wall Street analysts was for SBC to come in at 55 cents a share, according to

First Call/Thomson Financial

.

SBC, which is based in San Antonio, Texas, said revenue grew 9.8%, to $13.2 billion from $12 billion, while net income, excluding one-time items, rose 0.7%, to $1.924 billion from $1.91 billion.

Much of the revenue growth was driven by data communications and wireless operations, the company said. Its data revenue grow 38.2% from a year ago to $1.8 billion. SBC's wireless unit saw a net gain of 537,000 wireless customers and its revenue increase 30.6% to $1.6 billion.

Sprint closed regular trading down 2 7/16, or 5.4%, at 42 9/16. Sprint PCS closed up 33/64, or 0.8%, at 64 3/8. SBC Communications finished down 5/8, or 1%, at 43.