AT&T Inc’s warning that its consumer business was starting to suffer some “softness” suggests that Americans are having more trouble paying their bills for landline and online services. The disclosure spooked inventors, sending AT&T’s stock down 4.5 percent and weighing on the broader market.
That AT&T’s troubles would worry investors comes as no surprise, particularly when those troubles are related to consumers. It’s the consumer, after all, who has propped up the economy, and many believed that telecoms would be sheltered from a U.S. economic slowdown.
If Americans aren’t paying there phone bills, they aren’t likely to be forking over as much for the great gadgets being rolled out this week at the Consumer Electronics Show in Las Vegas. Evidence isn’t hard to find: Just two days ago Circuit City Stores said its December same store sales fell 11.4 percent, pointing to declining sales of both projection and tube TVs and desk top computers.
Steve Eastman, vice president of consumer electronics at Target Corp, put it this way at CES. “The big items, the items that people want, they’re still buying in droves,” he said. But consumers are “going to be more selective.”
The Consumer Electronics Association isn’t ready to throw in the towel yet. It’s forecasting U.S. consumer electronics sales this year will rise to $171 billion, up from an estimated $161 billion in 2007, which was an 8.2 percent rise from 2006.
And retailers at the show said consumers are still hot to buy flat panel televisions, video games, digital picture frames and global positioning systems.
Heck, who needs telephone service when they’ve got the Wii?
Keep an eye on:
- McGraw-Hill, the publisher of educational books and magazines and owner of Standard & Poor’s, is eliminating 611 jobs, impacting every unit of the company. More cuts may be ahead, it said. (Reuters)
- British music fans will be getting a better deal on songs from iTunes. Within six month, they will pay 10 percent less to download songs from the Apple online service. (Reuters)
- NBC is offering money back to some Golden Globe advertisers after the awards show was scrapped due to the Hollywood writers strike, but ABC says it’s confident that its Academy Awards telecast on February 24 will go ahead as planned (Reuters)
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This problem of consumers not being able to pay their bills extends most notably to the mortgage market, where Countrywide is reporting a record number of foreclosures. The only good news seems to be coming from companies that are heavily invested in emerging markets, like DuPont, which revised its earnings projections upward.
- Posted by NewsVisual