AT&T put a stop on telemarketing calls for at least 24 hours. Lockheed Martin planned to unveil a print ad campaign showing support for the troops. General Motors has banned travel, except with special permission, to about 80 countries, mostly in the Middle East and Asia.
Just one day into a war with Iraq, businesses big and small were maneuvering to implement new procedures to protect their employees, reassess their investment and expansion plans, and reformulate marketing plans for proper tone.
Investors, meanwhile, reacted positively to the war news. The Dow Jones industrial average and the Standard & Poor's 500-stock index rose for the seventh consecutive day, and the Nasdaq composite index rose for the third day in the past four.
For financial industry companies dependent on investors, the start of the war -- and the possibility the invasion of Iraq will succeed quickly -- brings with it the hope that the stock market will cease its downward slide. But traders and hedge-fund managers are staying cautious until they can get a better sense of how the hostilities will play out.
At T. Rowe Price in Baltimore, Andrew Brooks, who heads equity trading, was warning his staff to be careful and not take big risks on scant information. "Look for confirmation. Don't get hoodwinked into doing something based on a one-line [news item] coming out," he said. "It's a treacherous time to trade. If you are particularly bold, you could be particularly stupid."
Perhaps the most visible impact of the war on businesses so far has been that a broad array of companies temporarily halted their mass-marketing campaigns yesterday, pulling ads off of network television, newspaper pages, magazines and even e-mail as the Iraq war commenced. Corporate officials say they wanted to show respect for the troops.
Home Depot Inc., Procter & Gamble Co., EarthLink Inc., American Express Co. and AT&T Corp. are among those that said their lighthearted advertisements may be inappropriate amid the nation's somber mood.
"This is an incredibly pensive and delicate time," said Karen Gough, executive vice president for marketing for Atlanta-based EarthLink. She said the company has pulled its advertising for at least a week and possibly longer and had already reviewed its campaigns to err on the side of sensitivity, taking special care to avoid language such as providing Internet connections at "rocket speeds," or offering services that will "bomb" spam.
Telecommunications giant AT&T halted its advertising and marketing Wednesday night "out of respect for the military activities," said spokesman Gary Morgenstern. The company also said that it would pause all of its marketing, including telemarketing, for at least 24 hours.
Bethesda-based Lockheed Martin Corp. will be one step ahead of most companies today when it unveils a print advertising campaign showing support for the troops. It had been prepared specifically in case of war.
"We said that if conflict breaks out, if war starts, we are going to certainly want to pay tribute to our armed forces. If diplomacy had worked or whatever, we wouldn't have put them in," said spokesman Thomas Jurkowsky.
True to form, many businesspeople focused on the numbers and attempted what some believe is impossible: to quantify in dollars before the fact the impact of something so unpredictable as war.
One study offers this scenario: If it ends quickly, in a few weeks or so, growth in sales will be 8 percent over the next 12 months. If it drags out for longer than six months, sales will be flat. If a nuclear, biological or chemical weapon is used during the war or if there's another large-scale act of domestic terrorism? Negative -- minus 8 percent -- sales.
"The longer it takes the more is lost economically," said Campbell Harvey, a Duke University finance professor who conducted the study in conjunction with Financial Executives International.
Others took a more fluid view. "I don't think anybody has a clue," said Craig J. Barrett, chief executive of Intel Corp., a Silicon Valley company that is the world's largest chipmaker.
Concerns about domestic terrorism and the dangers of travel are also driving changes at American businesses.
Sensing workers would be anxious, Dulles-based America Online Inc. addressed various measures it was taking to protect them in an e-mail Tuesday to its 18,000 employees worldwide. It also has created an online area to update staff and has set up a telephone hotline for employees to report suspicious activity or seek help.
In a survey of 1,200 corporations by the Business Travel Coalition, 21 percent of companies said they had banned international travel until further notice and 48 percent of the companies have adjusted their domestic travel policies. American Express, for instance, suspended all business travel within the Middle East immediately after the military action commenced for at least 72 hours, and oil company BP PLC suspended travel worldwide.
Retailers, meanwhile, also say sales already reflect the nation's uncertainty -- and on a much more exaggerated scale than before.
During the Gulf War, Hecht Co. experienced about a 5 percent loss in business. "Today, business already seems a lot worse than that," President Frank J. Guzzetta said. Robert Wildrick, chief executive of Jos. A. Bank Clothiers Inc., said business slowed down at his men's clothing chain in the past two days.
A survey earlier this month found that 26 percent of Americans said they would stop shopping if war broke out, said C. Britt Beemer, chairman of America's Research Group, which polled 1,000 consumers by phone. That's a huge spike compared with a similar survey conducted before the Gulf War, when 12 percent of shoppers said they would stay away from malls.
"Their biggest concern is they are not sure what's going to happen in terms of the economy or terrorist attacks at home," Beemer said.
Other industries dependent on consumers are also vulnerable. Even before the war, Ford announced it would cut back production 17 percent during the second quarter, and GM said it would produce 10 percent fewer vehicles in the quarter.
Incentives such as interest-free financing also appear unchanged -- for the time being.
Many hedge fund managers, usually the gunslingers of the financial world, have officially adopted a wait-and-see attitude: Fully 27 percent of funds surveyed by the Van Global Hedge Fund Index last week said they had adopted a "market neutral" strategy, up sharply from the 21 percent in that posture when the bear market started in 2000. At the same time, more funds are also adopting an "aggressive growth" strategy -- 11.6 percent, compared with 7.2 percent in early 2000.
The companies' frantic activities over the past day mask the reality of their situation: They are in limbo. With the uncertainty of how long the war will last and how much damage it will do, many corporations' plans have been put on hold. The Duke study, for instance, showed that 67 percent of the chief financial officers surveyed said they were "spending cautiously" or holding off on capital investments.
That, concluded professor Harvey, shows "there is a huge jump in terms of the degree of pessimism."
But Barbara Marcin, who manages the Gabelli Blue Chip Value Fund, was trying to take the long view. "War fear is keeping everyone's hand in their pockets," she said. "But we think it's hard not to be optimistic here. Where you are looking for a recovery, you just need a little pent-up demand."
Staff writers Keith Alexander, Peter Behr, Kenneth Bredemeier, Warren Brown, Bill Brubaker, Dina ElBoghdady, Sandra Fleishman, Carrie Johnson, Amy Joyce, Neil Irwin, Sabrina Jones, Jonathan Krim, Brooke A. Masters, Caroline E. Mayer, Mike Musgrove, Yuki Noguchi, Don Phillips, Greg Schneider, Christopher Stern, David A. Vise and Krissah Williams contributed to this report.