It's fascinating to watch a company that once ruled a mountain fight to hold its perch on a rapidly eroding molehill. Last week, USA Mobility (NASDAQ:USMO) reported $111.5 million in first-quarter revenue, mostly from a dwindling pool of 3.9 million pager customers. Thanks to strict cost control, however, the company still reported operating income of $21.8 million for the quarter.

It's easy to see what happened to the paging business. With cheap cellular phones and service from providers like Verizon (NYSE:VZ), Alltel (NYSE:AT), and AT&T (NYSE:T), it makes little sense for most consumers to pay for a pager that only sends numbers or text. However, several sectors of business still depend on paging for its reliability. USA Mobility is pursuing industry verticals, particularly health care, that require quick, reliable communications.

The company is also expanding its service offerings, including its reselling agreement with Sprint Nextel (NYSE:S), to provide a total solution to customers beyond various pagers and plans. These solutions are focused on niche applications where paging still may be an important component, but other services are also needed.

While this transformation happens, the company has busily been returning capital to shareholders in terms of a recently announced quarterly dividend and special $1 per-share distribution. Together, the distributions will take $45.1 million off USA Mobility's balance sheet. At this rate, the company will quickly burn through the $80.3 million in cash it had on hand at the end of the quarter.

It remains to be seen whether the company can successfully shift from a horizontal business to a vertically focused one -- and whether this new vertical focus will produce enough new growth to return the company to its glory days atop the mountain.

Paging further Foolishness:

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Fool contributor Dave Mock only goes vertical when forced -- it's much harder to take a nap that way. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. The Fool has a disclosure policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.