AT&T chief spooks Wall Street
AT&T's stock took a hit Tuesday after the company's CEO told investors that a weak economy is hurting the company's landline and broadband business.
Randall Stephenson, AT&T's CEO, said Tuesday during a Citigroup investor conference that the company was forced to cut off some of its broadband and landline customers in the consumer segment in the fourth quarter because they were not able to pay their bills. The news shook investors, and the stock dipped $1.87, or 4.5 percent, to $39.16 per share at the closing bell.
Stephenson was responding to a question posed by an analyst who asked whether the weak economy had affected AT&T's business. And essentially Stephenson, said yes it had.
"We're really experiencing some softness on the consumer side of the house from the economy," Stephenson said, according to a transcript of the event.
While he acknowledged that all consumer services are being affected, Stephenson said that wireless hasn't been affected as much.
"As the economy gets soft, wireless starts to become the last thing" that consumers let go off, he said. "And traditional access lines become one of the first...."
This trend suggests a shift in how people view their cell phones. In the past during financial hard times, people would do all they could to keep their landline phone. But now it appears that people are more dependent on their wireless phones. As a result, they may cut their landline phone at home to save money.
Stephenson's news, which some fear is another sign that the U.S. economy is heading toward a recession, was enough to also hurt some of the other major phone companies too.
Verizon Communications, the second largest phone company after AT&T, fell 2.73 percent to close at $41.75. Qwest Communications International saw its shares dip 5.82 percent to $6.15. And shares in wireless operator Sprint Nextel fell 3.24 percent to $12.53.
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
OR, if someone's house is foreclosed, they stop paying their landline and broadband, but not their cell phone.
clear patent decision and the leader in the market but for some
reason Wall Street treats it like the ugly-step-child. One step
forward, three steps back!
deposits may have something to do with lack of new customers.
My son has no credit, and was told it would be $500 deposit. Went
to another carrier and got no deposit. They should rethink the
process of gaining new customers rather than blaming the
economy.
- Why? Their Privacy Agreements...
- by fred dunn January 9, 2008 3:18 PM PST
- After they got caught giving unlimited access to the US Government to their customer usage records they announced a change in their privacy agreement.
- Like this Reply to this comment
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(7 Comments)ALL Customer usage data belongs solely to AT&T and can be used in any way they see fit.
This applies across the board. A new privacy notice was sent out and all you had to do was call them and not accept it and any and all contracts with them would be null & void.
I don't do anything that I am not ashamed of anybody seeing but at the same time the wording lead me to believe that they could and may sell Internet and UVerse (TV) viewing habits to market companies who will then start sending you everything in the book as well as have that data in another maybe less secure database.
AT&T blows.