Dish Network Corp said it lost satellite television customers in the second quarter due to intense competition and consumers struggling with the economic downturn.

Shares fell 10 percent to $18.75 in morning trade on Nasdaq, overshadowing the company's better-than-expected quarterly earnings.

Dish, the No. 2 U.S. satellite operator, said it lost a net 19,000 subscribers in the quarter, ending the period with about 14.3 million subscribers. A year earlier it had a net gain of 26,000 subscribers.

The Englewood, Colorado-based company said competitive pressures hurt gross activations and increased customer cancellations, known as churn.

The consumers are strained, said Christopher Marangi, an analyst with Gabelli & Co who said that Dish attracts price-conscious customers.

Dish was also coming off tough year-ago comparisons as the company aggressively promoted its services, said Kaufman Bros analyst Todd Mitchell. They looked at their and said 'fish or cut bait,' Mitchell said, adding that Dish made an effort to upgrade customers. I think they let a lot of low-end subs go.

Collins Stewart analyst Thomas Eagan said Dish had not reported subscriber losses since the first quarter of 2009 as it had been turning around the business after a tough 2008.

In the big picture, they were mixed. On a financial basis, they beat most of the estimates but they lost subscribers, said the analyst, who had expected Dish to add 150,000 customers in the second quarter.

It calls into question how long-term the turnaround will be, whether this subscriber loss is a single blip or whether there's something with their market proposition people didn't take to, he said.

Eagan noted that cable rivals, which include Comcast and Time Warner Cable , also had a tough quarter, while Dish's satellite rival, DirecTV , grew.

DirecTV said last week that Latin America subscriber additions tripled in the second quarter as World Cup fans kicked in for satellite TV service.

Dish said that second-quarter net income attributable to common shareholders jumped fourfold to $257 million, or 57 cents a share.

Analysts were expecting 53 cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 9 percent to $3.17 billion, compared with analyst expectations of $3.13 billion.

(Reporting by Sayantani Ghosh in Bangalore and Jennifer Saba and Sinead Carew in New York; Editing by Maju Samuel, John Wallace, Dave Zimmerman)

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