Nextel Communications Inc. (NXTL) said on Thursday its quarterly profit and revenue rose as it added 546,000 subscribers to its mobile phone service.

Reston, Va.-based Nextel met analyst estimates for the period but investors pushed the stock down more than 4 percent after Nextel told investors in a conference call it began recording full statutory tax rates in the second quarter.

Nextel said it would record tax rates of about 39 percent from now on, since it had reported two years of profits, changing its tax status. It said the taxes would not involve cash payments until the second half of 2006.

"Basically their reported earnings per share will probably come down," said Loop Capital Markets analyst Bill Cram, who said he was encouraged that the company said it would be able to put off cash tax charges until 2006.

Nextel has long been a Wall Street favorite in the highly competitive U.S. mobile sector as it has gathered a loyal customer base among business clients. But its shares have been volatile recently pending a regulatory ruling on its airwaves.

Its shares were down $1.19 at $24.80 in early afternoon trade on Nasdaq where it hit a year-high of $29.37 earlier this year before dropping again to around $22 in May.

While the Federal Communications Commission (search) recently approved Nextel's proposal to swap some airwaves to reduce interference with public safety mobile systems, Nextel has said it is still unsure of the financial impact of the plan.

Chief Financial Officer Paul Saleh told Reuters the company still expects to earn more than $2 per share this year but would update its targets again when the FCC provides a written order including its financial details on the swap.

"We'll be able to tell the timing of some of these expenditures and if there is an impact to this year's numbers from a cash flow perspective," said Saleh, who said he hopes the FCC will reveal more details in the next few weeks.

Nextel posted a second-quarter net profit of $1.3 billion, or $1.17 a share, from $281 million or 27 cents a share a year ago.

Quarterly profit included a net tax benefit of $726 million, or 65 cents a share. Profit also included an expense of $34 million, or 3 cents a share, from debt retirement.

Excluding items, the company posted a profit of $608 million, or 55 cents a share, compared with an adjusted profit of $288 million, or 28 cents, a year ago.

While the company met analyst estimates for the quarter, excluding the tax gain investors pushed its

Analysts expected the company to post a profit of 50 cents a share, according to Reuters Estimates.

Its revenue rose 29 percent to $3.3 billion from $2.6 billion a year ago.

The company said its 13.9 million customers spent about a $1 more on average, compared with the first quarter. Average revenue per user was $70 in the quarter, and customer turnover improved a tenth of a percent from the first quarter to 1.6 percent.