AT&T (T): The Phone Company Was Supposed To Be Recession-Proof

Telecom & Wireless

Published: January 9, 2008 5:49 am

Wall St. was taken by surprise when AT&T’s (T) chief said that the company was seeing soft home phone and internet business. So far, wireless spending seems OK. Since big company CEOs are trained from birth to be careful what they say in public, it is likely that the big phone operator is sending a message about its earnings.CEO Randall Stephenson told reporters “We’re really experiencing softness on the consumer side of the house from the economy."

The conventional wisdom is that phone companies are close to recession-proof like tobacco companies and consumer goods firms. People will cut back on travel, cars, most shopping, and discretionary items like PCs and household goods. But, who lowers their use of the phone? And, a DSL connection comes with a price tag of under $20 a month.

It looks like the economic slowdown is moving to spending for goods and services below $50 a month. At least the AT&T news would indicate that. If so, it brings a bunch of industries into play that have been left out of the game.

The next level of things that consumers could cut back on would be fast food, inexpensive consumer goods, gas, and food items. That potentially puts pressure on firms like Kraft (KFT), Procter & Gamble (PG), Sara Lee (SLE), Exxon (XOM), and McDonald’s (MCD). It puts another 5% or 10% of the companies in the S&P 100 at some risk for having earnings hurt in a downturn.

The phone companies was supposed to be recession-proof. That is until it wasn’t.

Douglas A. McIntyre

Are You Still Paying With a Debit Card?

The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.

Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!

Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!

Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.