Updated from 10:07 a.m. EDT

Verizon ( VZ) stood strong against cable competitors and a slumping economy in the first quarter, soundly beating Wall Street estimates.

The New York phone shop posted an adjusted profit of 63 cents a share, which is up from the 61 cents in the prior quarter and 61 cents in the year-ago period. Analysts were expecting pro forma profit of 59 cents a share, according to Yahoo! Finance.

Sales for the quarter ended last month were $26.6 billion, up 11% from $23.8 billion one year ago. Analysts were looking for $26.3 billion in sales.

"The consumer market is holding up very well," said CFO John Killian on a conference call with analysts. "We are off to a great start," he said.

Asked for an assessment on the economy and the level of demand, COO Dennis Strigl offered a somewhat comforting outlook.

"We are not seeing things getting worse," Strigl said. "I would qualify it as consistent," he added.

As some analysts predicted, Verizon's solid wireless and FiOS TV and Internet sales helped keep the top line strong, while steep cuts in capital expenditures preserved the company's margin and bottom line. The $3.7 billion spent in the first quarter represents a 10% cut from the 2008 spending plan.

Verizon generated $2.7 billion in free cash flow in the first quarter, up $1.5 billion from year-ago levels.

The wireless unit added 1.3 million net new subscribers in the quarter, and saw customers cancel service at a monthly rate of 1.45%, up from the 1.35% churn in the prior quarter.

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