Tuesday, January 08, 2008
AT&T Inc., the biggest U.S. phone company, faces ``softness'' in its consumer business because of slowing economic growth, Chief Executive Officer Randall Stephenson said.This caused the shareholders great suffering; the stock has dropped over 4% today. Perhaps it was the comment that management hoped for increased sales to small businesses that did it.
The shares dropped the most in more than five years after Stephenson said AT&T is disconnecting more home-phone and high- speed Internet customers for failing to pay their bills.
Consumer credit G.19 for November was released today. As of November, revolving credit had already increased more than 41 billion from the ending point of 2006. Revolving credit is one area in which you can really see the effect of the housing bust. During the boom revolving credit didn't grow much because everyone was cashing out. Here's how it looks so far (I am using NSA numbers):
2002-2003 +22.7For several years the Nov/Dec increase has always been an NSA 20 billion plus, so I am expecting the 2006-2007 total change to reach at least 58 billion. In 2004, the Nov/Dec increase in revolving credit was more than 30 billion. It is not that consumers are charging more on credit cards that is making the revolving credit total increase faster; it is that they are less able to pay the balance off through refis.
2005-2006 +52.3 (note that 2006 started the initial problems with subprime)
2006-2007 (Nov) +40.7
When consumers get the Christmas CC bills I don't think AT&T's payments are going to start coming in any faster!
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