The tightening of the global credit markets is crimping the world’s largest telecommunications company.
AT&T Inc chairman and CEO Randall Stephenson said on Tuesday that his company was unable to sell any commercial paper last week for terms longer than overnight.
Commercial paper, which helps lubricate the flow of business operations, is a short-term IOU available to corporations that banks usually know are good for the money.
PHOTO: BLOOMBERG
It’s not that short-term borrowing is unreasonably expensive, Stephenson said.
A shortage of buyers for the debt means such borrowing is not as readily available as it had been even three weeks ago, he said.
“It’s loosened up a bit, but it’s day-to-day right now. I mean literally it’s day-to-day in terms of what our access to the capital markets looks like,” Stephenson said.
AT&T spokesman Larry Solomon said later that as of Tuesday, the company had ready access to the commercial paper market at reasonable rates and various terms.
But as a result of the recent volatility, managers at the Dallas-based phone company are more cautious.
“Your ability to plan for investment is obviously affected. You kind of don’t know what your cost of capital six months from now is going to be,” he said. “We’ll just be very guarded, cautious in terms of where we invest, very guarded and cautious in terms of hiring and capital spending. We’ll see where this situation goes.”
Separately, Microsoft chief executive Steve Ballmer said on Tuesday the global financial crisis would sap consumer and business spending, affecting all companies, including his own.
“Financial issues are going to affect both business spending and consumer spending, and particularly ... spending by the financial services industry,” Ballmer told reporters on the sidelines of a news conference in Oslo.
“We have a lot of business with the corporate sector as well as with the consumer sector and whatever happens economically will certainly effect itself on Microsoft,” he said.
“I think one has to anticipate that no company is immune to these issues,” he said, but declined to be more specific.
Wall Street analysts, on average, expect the Redmond, Washington-based company to generate an 8 percent rise in revenue to just under US$15 billion in its first-quarter ending last month.
“There are parts of our every business which are probably ‘safe’ in the sense that it’s not like our business would go to zero,” he said in an interview.
“On the other hand, when businesses have less money — they can borrow less money, they can spend less money — that can’t be good. When consumers feel the economic pinch, house prices come down. That can’t be good,” Ballmer said.
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