Shares of AT&T Inc dropped to their lowest in nearly five years in New York trading after chief executive officer Randall Stephenson said slowing economic growth led to "softness" in the home-phone and Internet businesses.
The share price fell 4.6 percent, helping to spark a broader decline in US stocks after Stephenson said San Antonio-based AT&T would disconnect more phone and high-speed Internet customers who failed to pay their bills.
"We're really experiencing softness on the consumer side of the house from the economy," Stephenson said at an investor conference in Phoenix yesterday.
The disconnections in the residential-phone business, which accounts for about a fifth of sales, have put more pressure on Stephenson, who became CEO in June. Last year, he relied on the popularity of wireless handsets such as Apple Inc's iPhone to fuel growth, helping to make up for losses of home-phone customers.
AT&T fell US$1.87 to US$39.16 at 4pm in in New York Stock Exchange composite trading. The drop was the largest since March 2003. The shares have declined 5.8 percent year to date after climbing 70 percent in the previous two years as the firm reaped savings from US$100 billion in mergers.
Stephenson's comments underscore investors' growing concern that the US economy is sinking into recession. US President George W. Bush said on Tuesday that economic indicators were sending "mixed" signals and that Congress should keep taxes low to avoid aggravating the situation.
AT&T was the second-biggest decliner on the Dow Jones Industrial Average yesterday, helping to pull the index down 1.9 percent.
"As people foreclose on houses, you're obviously going to have access-line disconnects," Robert W Baird & Co analyst William Power said in an interview from Dallas. "If the economy continues to weaken, that's going to continue to weigh on access lines."
Investors are concerned the slowdown may spread to business customers, said Power, who advises buying the shares.
"It's the big unknown on the enterprise side. On the consumer side, we're seeing it," Stephenson said. "On the enterprise side, not yet."
The economy had not affected the mobile-phone unit, Stephenson said. The wireless division grew 14 percent in the third quarter and represents more than one-third of AT&T's overall revenue.
AT&T isn't changing its financial forecasts for this year, company spokesman Michael Coe said.
"He was mainly talking about what we were seeing in December," Coe said, referring to Stephenson's comments.
FALSE DOCUMENTS? Actor William Liao said he was ‘voluntarily cooperating’ with police after a suspect was accused of helping to produce false medical certificates Police yesterday questioned at least six entertainers amid allegations of evasion of compulsory military service, with Lee Chuan (李銓), a member of boy band Choc7 (超克7), and actor Daniel Chen (陳大天) among those summoned. The New Taipei City District Prosecutors’ Office in January launched an investigation into a group that was allegedly helping men dodge compulsory military service using falsified medical documents. Actor Darren Wang (王大陸) has been accused of being one of the group’s clients. As the investigation expanded, investigators at New Taipei City’s Yonghe Precinct said that other entertainers commissioned the group to obtain false documents. The main suspect, a man surnamed
DEMOGRAPHICS: Robotics is the most promising answer to looming labor woes, the long-term care system and national contingency response, an official said Taiwan is to launch a five-year plan to boost the robotics industry in a bid to address labor shortages stemming from a declining and aging population, the Executive Yuan said yesterday. The government approved the initiative, dubbed the Smart Robotics Industry Promotion Plan, via executive order, senior officials told a post-Cabinet meeting news conference in Taipei. Taiwan’s population decline would strain the economy and the nation’s ability to care for vulnerable and elderly people, said Peter Hong (洪樂文), who heads the National Science and Technology Council’s (NSTC) Department of Engineering and Technologies. Projections show that the proportion of Taiwanese 65 or older would
The government is considering polices to increase rental subsidies for people living in social housing who get married and have children, Premier Cho Jung-tai (卓榮泰) said yesterday. During an interview with the Plain Law Movement (法律白話文) podcast, Cho said that housing prices cannot be brought down overnight without affecting banks and mortgages. Therefore, the government is focusing on providing more aid for young people by taking 3 to 5 percent of urban renewal projects and zone expropriations and using that land for social housing, he said. Single people living in social housing who get married and become parents could obtain 50 percent more
Democracies must remain united in the face of a shifting geopolitical landscape, former president Tsai Ing-wen (蔡英文) told the Copenhagen Democracy Summit on Tuesday, while emphasizing the importance of Taiwan’s security to the world. “Taiwan’s security is essential to regional stability and to defending democratic values amid mounting authoritarianism,” Tsai said at the annual forum in the Danish capital. Noting a “new geopolitical landscape” in which global trade and security face “uncertainty and unpredictability,” Tsai said that democracies must remain united and be more committed to building up resilience together in the face of challenges. Resilience “allows us to absorb shocks, adapt under
RSS