Old technology doesn't cut it.

ATT & EK were top rated companies, they owned their industries, their brands were recognized around the world, they were paragons of good management.

What happened?

The Digital Revolution happened and time and again management failed to properly asses what that meant for their customers, their employees or for their stock holders.

It isn't easy changing a company culture. Few have successfully morphed from the old manufacturing models to the new Internet sales model and most companies are half way across the fence.

Neither ATT or Kodak management can say they weren't hit over the head by repeated advancements that obviously and radically swung customers away from their traditional value propositions.

Instead both managements "rearranged chairs on the deck of the Titanic" with the full knowledge that the ship is going down.

What does this "slow motion car wreck" show us about our own companies?

It clearly demonstrates that we live in the Networked Society where digital information is the token of exchange and where information is the most important component of products and services. It shows us what can happen if we choose to cling to the past, to traditional methods and sales channels.

Many of us never thought we'd see the day when the following headline would appear.
It is a powerful metaphor. A powerful lesson.

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Reuters
S&P Cuts AT&T's Debt Ratings to Junk

1 hour, 2 minutes ago

NEW YORK (Reuters) - Standard & Poor's on Tuesday cut AT&T Corp.'s (NYSE:T - news) debt ratings to junk, citing the company's declining revenues and profitability.

AT&T reported an 80 percent decline in second quarter profits last month and a 13 percent decline in revenues, thanks to brutal competition from cellular and local phone companies.

The downgrade will automatically boost AT&T's annual interest expense by $32.5 million, because about $6.5 billion of AT&T's $11.2 billion of outstanding bonds have coupons that automatically rise as the company is downgraded.

The downgrade could also boost the company's costs on new borrowing. AT&T has reduced debt by 80 percent over the last three years, but has a $2 billion bank facility maturing in October.

S&P was the last major ratings agency to give AT&T investment-grade status. Rival agencies Moody's Investors Service and Fitch Ratings late last month cut the company's ratings to junk.

Standard & Poor's Ratings Services cut AT&T's senior unsecured debt rating to "BB-plus," the highest junk rating, from "BBB," the second lowest investment-grade rating.

The ratings agency cut AT&T's short-term ratings to "B," the highest junk short-term rating, from "A-3." The outlook for the ratings is negative, signaling there is some chance of another downgrade.

Views from Lisa Wellman & Terry Wellman

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