Gannett Co Inc , the largest U.S. newspaper publisher, reported stronger-than-expected quarterly results after slashing jobs to cut costs, sending its shares up 20 percent.

Even though revenue fell 18 percent as advertising sales slumped, Gannett posted a second-quarter profit of 46 cents a share excluding writedowns and layoff charges. That beat the average analyst forecast of 37 cents, according to Reuters Estimates.

Gannett, owner of USA Today, the largest U.S. newspaper by circulation, is navigating through an unprecedented economic storm, Chief Financial Officer Gracia Martore said in a statement.

The McLean, Virginia-based company is the first U.S. newspaper publisher to report its results this quarter. Next week New York Times Co , Media General Inc and McClatchy Co will provide their quarterly reports.

Gannett's second-quarter revenue fell to $1.4 billion on a 32 percent drop in publishing ad revenue.

Net income was $70.5 million, or 30 cents a share, compared with a loss of $2.29 billion, or $10.03 a share, a year earlier. Last year's loss included a writedown and other charges. Operating profit per share a year ago was $1.04.

Since last year, several publishers have filed for bankruptcy and more are engaging in feverish negotiations with their lenders to avoid defaulting on their debts.

Many media experts think Gannett will survive the twin threat of permanent advertising declines and the ill effects of the recession.

The company's debt position improved after exchanging some of its debt with its bondholders. Its debt was $3.5 billion as of the end of the second quarter, and it has extended the due dates for some of the debt to 2015 and 2016.

Still, the company is cutting expenses. It is laying off about 1,400 workers this summer, following several thousand layoffs last year.

Its chief executive, Craig Dubow, is out on medical leave with back troubles, and it is uncertain when he will return.

Classified ad revenue, traditionally the lifeblood of newspapers, fell nearly 45 percent in the second quarter, with job classifieds falling 62 percent.

Gannett shares rose 70 cents to $4.19 in early trade on the New York Stock Exchange.

(Reporting by Robert MacMillan; Editing by Derek Caney and John Wallace)