NEW YORK (AP) -- SBC Communications had its Aa3 senior unsecured
long-term credit rating placed on review for possible downgrade
Tuesday by Moody's Investors Service.
The announcement was not unexpected after Moody's last week said
it was re-examining the San Antonio-based Regional Bell Operating
Cos., or RBOCs, on a number of industrywide pressures. Concerns
include growth of wireless communications, unfavorable regulatory
pricing policies and cable providers' broadband success.
SBC responded to Moody's assessment of the industry last week by
placing much of the blame for the pressures it faces on regulators.
"It is important to note that two of the three revenue pressure
points Moody's identified are either the result of -- or affected by
-- regulatory decisions," SBC Chief Financial Officer Randall
Stephensen said. "Mandatory, below-cost wholesale prices are
encouraging economically irrational behavior in the marketplace. We
are losing customers to companies that are simply repackaging our
service, without reinvesting in the nation's telecom
Stephensen also said cable companies dominate the broadband
market because of an "unlevel playing field" and that these
companies are "unfettered by rules that affect competitor services."
Moody's mentioned BellSouth and Verizon Communications in its
report last week. Moody's rates BellSouth as an Aa3 with a negative
outlook. It rates Verizon Communications A1, and has it under review
for a possible downgrade.
Moody's assessment of the RBOCs is more negative than that of
rival rating agency Standard & Poor's, however.
Last week, S&P issued a report saying that while the U.S.
telecommunications industry has seen a rapid deterioration in credit
quality over the past six months, "downside risk to the ratings on
the three investment-grade RBOCs is very limited for the foreseeable
S&P rates SBC Communications double-A-minus with a stable
outlook, BellSouth single-A-plus with a stable outlook and Verizon
Communications single-A-plus with a negative outlook.
SBC Communications units provide local and long-distance phone
service, wireless and data communications, paging, high-speed
Internet access and messaging, cable and satellite television,
security services and telecom equipment.
New York Stock Exchange-listed SBC Communications shares closed
Tuesday at $26.63, down 23 cents, or 0.8 percent.
Retail sales rise 1.2%
WASHINGTON (AP) -- Consumers, taking advantage of free-financing
offers, snapped up cars and trucks, helping to boost retail sales by
a brisk 1.2 percent in July.
But the Commerce Department's report Tuesday also showed that
shoppers trimmed spending on other goods, including furniture,
electronics, building supplies and clothes, a sign that consumers
have grown more cautious amid stock market turmoil and economic
uncertainties. Excluding sales of automobiles, retail sales rose
just 0.2 percent in July.
Still, the fact that consumers were still buying offered a dose
of good news for the struggling economic recovery. Consumer spending
accounts for two-thirds of all economic activity in the United
`'In the midst of all the problems in the markets, people are
still willing to part with their hard-earned cash," said economist
Joel Naroff of Naroff Economic Advisors.
The 1.2 percent increase in retail sales in July followed a
revised 1.4 percent advance in June, stronger than the government
Worried about sales, some big auto makers recently brought back
generous incentives, including free-financing deals, to lure buyers.
Sales at automobile dealers rose by 4. …