Lehman Brothers

( LEH) posted first-quarter results Wednesday that slightly exceeded Wall Street estimates, even as profits dropped nearly 28% from the year-ago period.

Lehman reported earnings per share of $1.39, 2 cents ahead of the

First Call/Thomson Financial

consensus estimate, but down noticeably from the $1.84 in the year-ago period. Net income totaled $387 million, compared with $551 million in the first quarter a year ago.

The market has been bracing for weaker earnings from brokers as the slowing economy has impacted trading activity and underwriting business. At Lehman, for instance, investment banking revenues fell to $483 million from $602 million last year. Meanwhile principal transactions, or revenue from trade executions, dropped to $998 million in the latest quarter from $1.1 billion a year ago.

In a written statement Lehman said it had "strong performance in a challenging market environment" and pointed to its diverse business mix. Underscoring the record levels of last year's results, Lehman noted that the quarterly revenues were the third-best the firm has ever recorded.

Shares of Lehman closed Tuesday at $65.90, and have a 52-week range of $34.81 to $86.20.