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.

On the so-called wireline side, Verizon lost another 10% of its phone lines falling to 35.2 million from $39 million a year ago. The FiOS triple play of TV, phone and Internet services proved to be a strong offering in the first quarter. Verizon added 299,000 net new FiOS TV customers and 298,000 Internet customers in the quarter. Those numbers compare with 303,000 net new FiOS TV customers and 282,000 Internet subscriber gains in the prior quarter.

Apple ( AAPL) was reported by USA Today to be in talks with Verizon on future sales of the iPhone. Asked about the Apple talks on the conference call with analysts, Verizon said it is "always open to discussions," but added that it has "nothing to say about Apple today."

Apple has an exclusive iPhone agreement with AT&T ( T) that expires next year. Verizon has plans to start construction and operation of a fast data, 4G, long-term evolution (LTE) wireless network upgrade. Verizon has been exploring 4G device plans with phone makers including Nokia ( NOK), as TheStreet reported , and it is likely to have some form of discussions with Apple.

Verizon shares were falling 0.8% to $30.77 in recent trading.

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