Dozens dying, businesses Crushed. In this column we will outline a few businesses being hit, including one that has just seen its worst day of trading in 5 years. It is only getting worse. Firefighters face another round of dry, windy conditions on Friday as they battle the wildfires
The fires have killed at least 31 people in Northern California and left hundreds missing in the heart of wine country. The most lethal wildfire event in California’s history has killed people while they sleep in their beds and prompted authorities to evacuate thousands of residents, warning anyone deciding to wait it out: “You are on your own.”
The toll from the more than 20 fires raging across eight counties could climb, with more than 400 people in Sonoma County alone still listed as missing. Winds of up to 60 mph (100 kph) and humidity of just 10 percent will create “critical fire weather conditions” and “contribute to extreme fire behavior” on Friday afternoon and into Saturday, the National Weather Service said.
A force of 8,000 firefighters is working to reinforce and extend buffer lines across the region where the flames have scorched more than 190,000 acres (77,000 hectares), an area nearly the size of New York City. With 3,500 homes and businesses incinerated, the so-called North Bay fires have reduced whole neighborhoods in the city of Santa Rosa to smoldering ruins dotted with charred trees and burned-out cars.
The cause of the disaster is under investigation, but officials said power lines toppled by gale-force winds on Sunday night may have sparked it.
The Napa Valley town of Calistoga faces one of the biggest threats and its 5,000-plus residents were ordered from their homes as winds picked up and fire crept closer. Calistoga Mayor Chris Canning said anyone refusing to heed the mandatory evacuation would be left to fend for themselves if fire approached, warning on Thursday: “You are on your own.”
Mark Ghilarducci, state director of emergency services, said the loss of cell towers likely contributed to difficulties in warning residents. This means one company could see even larger losses. That company is AT&T (T).
In short, AT&T, being the global company that it is, came right out and said the hurricanes over the past two months are really going to have a financial impact on the company. This report is what is causing investors to press that sell button, and the fires could lead to more pressure.
The bad news here is that the destructive hurricanes that we saw pound the United States and its territories, as well as the strong earthquake in Mexico, not only have severe costs to the governments of these respective nations and territories, but undoubtedly have cost businesses billions in damage when totaled. Specific costs to AT&T stem from infrastructure damage.
The costly damage brought down towers and lines that support the network, as well as damage to physical property. The company will absorb costs related to clean up, restoration of services, and infrastructure repair. More importantly, the company will also be waiving a number of charges and fees associated with down service time. What kind of costs are we talking?
AT&T is estimating that the impact to revenues from the waived charges will be about $90 million to the consolidated Q3 revenues. What is more, when we factor in the related cost of repairs which appear to be around $100 million or more, the potential pretax impact to earnings will be about $0.02 per share, or around $200 million. But it does not end there. This is because the company foresees additional costs being incurred in Q4.
Those costs are only from the hurricanes and the earthquake. Now the company will have to deal with the costs in California which could have billions in economic impact.
As many as 900 missing-person reports have been filed in Sonoma County and 437 have since turned up safe. It remains unclear how many of the 463 still unaccounted for are fire victims rather than evacuees who failed to alert authorities, Ghilarducci said. While communications are down, other companies and industries suffer.
The fires struck the heart of the world-renowned wine-producing region, wreaking havoc on its tourist industry and damaging or destroying at least 13 Napa Valley wineries. California’s newly legalized marijuana industry also was hit hard, with at least 20 pot farms in Sonoma, Mendocino and Napa counties ravaged, said Hezekiah Allen, executive director of the California Growers Association.
The total costs will not be known for months, but for now we must hope to get a lot of natural rain to assist with the fires. The economically good news is that clean up and restoration creates jobs, but lives can never be replaced.