Amazon.com (NASDAQ: AMZN) says costs may drive it to a loss this quarter. (Reuters)

Sony (NASDAQ: SNE) appoints Kazuo Hirai as CEO. (Reuters)

China’s PMI is better than expected. (Reuters)

Patent plaintiffs file actions against Facebook ahead of its IPO. (Reuters)

Panasonic and Samsung will try to set financial ties to troubled Olympus. (Reuters)

Blackstone (NYSE: BX), Morgan Stanley (NYSE: MS) and DE Shaw are among Kodak’s largest creditors. (Reuters)

The U.S. to charge some Credit Suisse employees with mortgage bond fraud. (WSJ)

President Obama will try to set plans for millions to refinance mortgages. (WSJ)

Walt Disney (NYSE: DIS) to buy India entertainment company UTV Software Communications. (WSJ)

Hulu will press its entry into original programs. (WSJ)

Barnes & Noble (NYSE: BKS) says it will not offer certain Amazon.com books. (WSJ)

U.S. refiners and the United Steelworkers come to an agreement just ahead of a strike. (WSJ)

The U.S. deficit will be above $1 trillion again in the next year. (WSJ)

As Greece moves closer to default, Germany presses its case for more control over the small nation’s budget. (WSJ)

The European Central Bank faces huge losses from a Greek default. (WSJ)

Corn and tin prices rise rapidly. (WSJ)

Chrysler may do more to save Fiat than Fiat did for Chrysler. (WSJ)

The stock market has its best January gains in 15 years. (WSJ)

Natural gas futures fall 7.7%, nearly a one-day record. (WSJ)

Officials track more than 90% of the money lost from MF Global customer accounts. (NYT)

A new rare earth plant will open in Malaysia. (NYT)

The Pension Benefit Guaranty Corporation has attached some AMR assets to help employees to get benefits. (NYT)

New jobs data show the great differences among EU economies. (FT)

Greek bondholders may set a deal to get a better return if its economy recovers. (Bloomberg)

China’s home prices fall for the fifth month in January. (Bloomberg)

Douglas A. McIntyre

Neil Ashe was the president of CBS (NYSE: CBS) Interactive before he moved to the job as president and CEO of Walmart’s Global eCommerce business. Walmart obviously has web operations outside America, but without a strong performance of the e-commerce business in its home country, its web division cannot succeed.

The choice of Ashe is a bit odd. He oversaw CBS Sports and News online, along with the tech site company CNET. He also ran the media firm’s overseas sites. The belief that stepping from content to e-commerce is likely to work is hard to explain.

The problem that Walmart has online is not directly related to who runs the e-commerce operations. Walmart’s U.S. store sales have not grown in the past year, and its U.S. revenue has barely increased. This is despite the fact that, after Amazon.com, Walmart’s sites are the second most visited e-commerce sites in America.

Walmart’s U.S. problems have been described as troubled in two ways. The first is that top merchandising executives at the company have done a poor job as they decide what inventory to put into their stores. The other is that Walmart’s price advantages are no longer substantial enough to keep customers from the decision to go to other retailers, like Target (NYSE: TGT). What Walmart cannot do with its bricks-and-mortar stores, it cannot accomplish online. An overall lack of demand cannot be made up by websites. Retailers like Best Buy (NYSE: BBY) and Barnes & Noble (NYSE: BKS) have already proven this.

Walmart’s new online CEO will have his hands tied no matter how skillful and experienced he is. Well over 95% of Walmart’s sales are made in its stores, and in the U.S., the traffic to those stores has slowed. An adroit e-commerce operation, hampered by the same prices and inventories, will not do better than Walmart’s primary business.

Douglas A. McIntyre

The unofficial closing bells put the DJIA down nearly 3 points to 12,415.70 (-0.02%), the NASDAQ rose more than 21 points (0.81%) to 2,669.86, and the S&P 500 rose 0.29% or nearly 4 points to 1,281.05.

There were several analyst upgrades and downgrades today, including Broadcom Corp. (NASDAQ: BRCM) maintained ‘buy’ with a $46 target price at Argus; Netflix Inc. (NASDAQ: NFLX) maintained ‘underperform’ and estimates cut at Needham; Nokia Corp. (NYSE: NOK) raised to ‘outperform’ at Credit Suisse; Google Inc. (NASDAQ: GOOG) cut to ‘hold’ at Benchmark; and VMWare Inc. (NYSE: VMW) started as ‘buy’ at Sterne Agee.

Earnings reports of note since markets closed yesterday include: Constellation Brands Inc. (NYSE: STZ) is down about -3.5% at $19.72; Monsanto Co. (NYSE: MON) is up more than 5.5% at $76.70; Worthington Industries Inc. (NYSE: WOR) is down -0.6% at $17.55; and Helen of Troy Ltd. (NASDAQ: HELE) is up more than 4% at $32.73.

Other standouts from today include the following stocks:

Dendreon Corp. (NASDAQ: DNDN) is up nearly 40% at $10.61. The biotech company reported a sales jump of 25% for its prostate cancer drug. The company is one of our top biotech picks for 2012.

Ancestry.com, Inc. (NASDAQ: ACOM) is up more than 21% at $27.69. The internet genealogy provider reported a 22% rise in subscribers and forecast sales growth for 2012 of more than 14%.

Zumiez Inc. (NASDAQ: ZUMZ) is up nearly 17% at $30.74 after posting a new 52-week high earlier of $30.94. The sports apparel company reported a 10% same-store sales gain and raised guidance this morning. See our coverage here.

Orchard Supply Hardware Stores (NYSE: OSH) is down nearly -25% at $16.70. The home improvement store held its IPO on Monday and today provided a weak outlook for 2012.

Barnes & Noble Inc. (NYSE: BKS) is down more than -17% at $11.25. The bookstore chain said today that it is considering spinning off its Nook e-reader unit as a strategic option. Our coverage is available here.

American Eagle Outfitters Inc. (NYSE: AEO) is down more than -10% at $13.61. The clothing retailer slashed its fourth-quarter profit guidance by nearly a quarter.

Stay tuned for Friday. Federal Reserve Governors Elizabeth Duke and Sarah Bloom Raskin are speaking, as are Boston Fed President Eric Rosengren and New York Fed President William Dudley. Here are the noteworthy events on the schedule (all times Eastern):

• 8:30 a.m. – Employment reports, including non-farm payrolls
• 3:00 p.m. – US Treasury STRIPS

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Paul Ausick

Barnes & Noble tried to “sell” the decision about the NOOK to Wall St. with the following comments

The Company expects fiscal 2012 digital content sales to be approximately $450 million. By fiscal 2012 year-end, based upon forecasted device sales, the Company expects annualized U.S. digital content sales will achieve a run-rate of approximately $700-$750 million.

Barnes & N0ble may have a NOOK partner in one of the largest consumer electronics companies in the world–Sony (NYSE: SNE). Sony’s “Reader” has been a failure, along with many of its other recent product launches. It has no product to challenge the Amazon.com (NASDAQ: AMZN) Kindle reader and tablets, or Apple’s iPad.  The NOOK, by several measures, has about a quarter of the e-reader market, and Barnes & Noble has a huge library of e-books.

Sony could do worse than to take a large equity position in a NOOK spin off. If the $750 million digital content sales forecast for Barnes & Noble digital sales in 2012 is right, a NOOK company could be worth $3 billion or $4 billion. A Sony investment of several hundred million would help assure that. Barnes & Noble shareholders could retain a majority interest in NOOK, and that may be more worth more than Barnes & Noble is in it entirety today.

Douglas A. McIntyre

The EU agrees to an embargo on Iranian oil. (Reuters)

Citing defense cuts, Boeing (NYSE: BA) closes it plant in Wichita. (Reuters)

Japan Air plans to list its shares in a $13 billion IPO. (Reuters)

Apple (NASDAQ: AAPL) hires an Adobe (NASDAQ: ADBE) executive to run its iAd business. (Reuters)

Fiat raises its ownership in Chrysler to 58.5%. (Reuters)

Eastman Kodak (NYSE: EK) to declare bankruptcy later this month. (WSJ)

Congress will examine which ratings firms failed to do more to warn on MF Global’s European investments. (WSJ)

Apartment vacancy rates fall as people prefer renting over buying. (WSJ)

Comcast (NASDAQ: CMCSA) and Walt Disney (NYSE: DIS) will put more video from TV behind pay walls on the web. (WSJ)

Farmers face a shortage of corn. (WSJ)

BMW sales top Mercedes in the U.S. for 2011. (WSJ)

The Federal Reserve calls on Congress to do more about the battered housing market. (WSJ)

Prime Minister Lucas Papademos says Greece faces default if it does not receive a second bailout. (WSJ)

Verizon Wireless sells 4.2 million iPhones in the fourth quarter, which will damage its margins. (WSJ)

U.S. auto sales rise strongly in December. (WSJ)

Chevron (NYSE: CVX) faces a decision from an Ecuador court on environmental issues that may dog the U.S. company for years. (WSJ)

Barnes & Noble (NYSE: BKS) puts its Sterling Publishing unit up for sale. (WSJ)

Auto lenders target people who fall behind on home mortgages. (WSJ)

China will create new measures to make it easier for banks to clear yuan across borders. (WSJ)

Nielsen SoundScan says sales of full albums rose 1.3% last year to 330.6 million. (NYT)

If the Strait of Hormuz is closed, oil prices could quickly rise 50% and gas to $4. (NYT)

Americans have less economic mobility than people in many other nations. (NYT)

Spain says that its banks would need 50 billion euro to clean up their balance sheets. (FT)

France will try to raise $10.4 billion at low rates to demonstrate confidence in its economy. (Bloomberg)

Toyota’s (NYSE: TM) sales in China rose only 4% last year, underperforming the market. (Bloomberg)

Apple’s profit margins probably rose because of pressure it put on supplier Foxconn. (Bloomberg)

Douglas A. McIntyre

Read the ten best online stores this holiday
Read the ten worst online stores this holiday 

To put those customer service rankings in context, we looked at how the parent companies that own the websites have performed recently.  We found that a strong customer service rating often coincides with a company that has widely regarded brands.

It begs the question: Does Apple (NASDAQ: AAPL) have such a high customer service ranking because so many consumers love the Apple brands? Or, is Apple’s customer service for online shoppers really superior to that of other e-commerce businesses? Apple is tied for second place in the index. Amazon.com is in first place. It also has a sterling reputation with consumers, as do some of its major products like the Kindle.

At the bottom of the ForeSee index are Gap (NYSE: GPS), Sony (NYSE: SNE) and Overstock (NASDAQ: OSTK). Gap recently said it would close 21% of its U.S. flagship stores. Sony has had trouble gaining sales for its PCs, games, smartphone and TV products. Overstock, an also-ran online department store, was founded in the days of the dial-up internet. It is hard to see how any of these could be at the top of the list. Or, perhaps if they were at the top of the list, they would not be in such deep trouble now.

ForeSee’s E-retail Satisfaction Index included the top 40 retailers by sales. The company surveyed 8,500 customers between Thanksgiving and Christmas. Despite its shortcomings, 24/7 Wall St. used the data from ForeSee as a foundation, because it is a reasonable measurement of the experience that consumers have with specific e-commerce sites, whether those sites are part of highly successful companies or ones on the verge of failure.

There is also some evidence that a few troubled retailers have actually performed well online. Whether that success is enough to save the companies themselves is impossible to tell. One such example is Avon (NYSE: AVP), with online service that is tied for second among all e-commerce sites in the ForeSee index. But Avon recently posted a disastrous quarter, and its CEO of 12 years was dismissed. Similarly, JCPenney’s (NYSE: JCP) online operations’ customer satisfaction is equal to Apple’s, which is also tied for second place in the ForeSee rankings. However, JCPenney has lost sales to big-box retailers such as Walmart (NYSE: WMT) for years. It is worth noting that JCPenney just hired the head of retail stores at Apple to turn the bricks-and-mortar retailer around. Apple is one of the few companies that was successful online long before it began to build physical stores.

These are the the companies with the best and worst online customer satisfaction. To draw our conclusions about why they are on the list and what the relationship is between the companies and their e-commerce operations, we examined three factors: the ForeSee satisfaction data, the annual sales of each of the companies, and the amount of traffic each site had in November — the most recent month measured by audience research firm Compete.com. Foresee describes its rating as “Average customer satisfaction with the top 40 U.S. e-retail websites increased by one point this year to tie 2009’s all time high score of 79 on the study’s 100-point scale. Satisfaction scores for individual e retailers span a 16-point  range, from a high of 88 (Amazon) to a low of 72 (Overstock).”

Best Buy (NYSE: BBY), Gap (NYSE: GPS) and Sears Holdings (NASDAQ: SHLD) shares sold down sharply in the fourth quarter. Shares of Walmart (NYSE: WMT), JCPenney (NYSE: JCP) and Macy’s (NYSE: M), though, remained steady or gained. This despite the fact that these three are threaten nearly as much as other bricks-and-mortar retailers are as e-commerce becomes a larger part of the retail market.

Concerns about the three weak retailer stocks are very specific.

Best Buy has been unable to thwart Amazon.com’s (NASDAQ: AMZN) rapid expansion into consumer electronics and digital content. These businesses are now nearly as strong as the e-book and print book businesses are for the largest e-commerce company in the world. Like Barnes & Noble (NYSE: BKS), Best Buy failed to create a web presence or online price model that would allow it to defend itself against Amazon.

Sears Holding’s problems are largely different from those of Best Buy. Kmart and Sears stores have not changed much in the past five years. The parent has elected not to commit the capital to upgrade its locations. Sears might have done better if its stores were freshened like those owned by Walmart, Macy’s and Target (NYSE: TGT). Sears management has witnessed how being cheap can get expensive when customer retention is at stake.

The reasons for the failure at Gap fall into another category. The retailer had the instinct to remain on the leading edge of mid-priced fashion. It lost that edge two or three years ago for reasons that are unclear. Gap has been overwhelmed since then by the success of smaller retailers like Abercrombie & Fitch (NYSE: ANF).

The retail industry, like most others, will lose some of its largest companies over the next few years. Best Buy, Sears and Gap are likely to be among them.

Douglas A. McIntyre

Over the past four weeks, both Staples and Office Max have seen their target prices drop. At Staples, the median target price fell from $19.00 to $18.00. The share price today is $14.40, indicating a potential upside of 25%. At Office Max, the median price target fell from $7.50 to $6.75, indicating a potential upside of 42.1%. At its current earnings multiple of about 8, Office Max could be a contender, but the company is closing stores and only expects revenue to be flat with last fiscal year. The company’s price/book ratio is also a very low 0.62, but again, that could be deceptive.

Staples’ median target price has fallen further below its 52-week high in the past month and its price/book ratio is pretty high at 1.40. The company reported weak sales and earnings, and like all the office supply stores, traffic is down. The trend is particularly bad in Europe. Staples may hit its revenue and profit targets for the quarter and the year, but that’s only because the estimates have come down.

Barnes & Noble missed revenue and profit estimates yesterday, but the stock continues to rise because sales of the company’s Nook e-readers and tablets have risen sharply (85%, to $200 million) and investors believe the trade-off for book sales is a positive sign. B&N’s median target price rose from $15.50 to $20.00 over the past four weeks, and at today’s price of $16.15, the potential upside is 23.8%. Nook sales account for just over 10% of the company’s total revenue, so unless sales continue to climb at last quarter’s rate, B&N’s chances of fulfilling its promise are pretty slim. The company’s forward P/E is 37.42 and the price/book ratio is 1.09, which could lead one to believe that the stock may be approaching an overbought status. The company’s share price has risen by about 25% in the past 12 months.

Sotheby’s median price target fell from $51.00 to $45.00, and at a current price of $32.14, the stock’s potential upside is 40%. That figure would be cause for more joy if Sotheby’s share price hadn’t fallen by -7% in the past month and if the target price were still about the 52-week high. Sotheby’s forward P/E is 10.79, but its price/book ratio is 2.47. For the fiscal year ending this month, Sotheby’s EPS estimate has fallen by -$0.23 in the past 90 days. This does not look like a company about to bust its target price.

PetsMart has a median target price of $53.50, a rise of $3.50 over the past four weeks. At today’s share price of $48.95, the potential upside for the stock is 9.3%. The company beat third-quarter earnings and revenue expectations and boosted its fourth-quarter EPS estimate to $0.85-$0.89. Shares put up a new 52-week high of $49.03 today. The company’s forward P/E is 16.36, and its price/book ratio is a fairly high 4.66. But sales and profits have been growing, and the stock price is up about 25% this year.

Share price gains have fallen about equally on B&N and PetsMart in the past year. The other stocks we’ve looked at have lost between -25% and -75%, with Office Max the biggest loser. B&N also boasts a 5.7% dividend yield, compared with just 1.2% for PetsMart.

PetsMart’s 9.3% potential upside is within reach as long as the store sticks to its business, while B&N’s potential gain of nearly 24% depends on selling boatloads of its Nook devices, which is possible and  perhaps even likely. But as that happens B&N cannibalizes its old business and that may be hard to make up quickly.

Paul Ausick

November car sales numbers were telling in several ways. SUV sales picked up. Perhaps American believe the drop in gas prices will be long-lived. If not, drivers with the large trucks face several years of expensive motoring. Japanese car companies continued to lose ground, with the exception of Nissan. Toyota (NYSE: TM) and Honda (NYSE: HMC) still have production disruption problems due to the March earthquake. November U.S. sales also showed the continued rising success of American car companies. All three posted substantial gains. The most impressive of them was Chrysler, which said units sold increased 45% over November of last year. The company sold more than 100,000 cars and light trucks last month. It is a compelling victory for a company that went through Chapter 11 just three years ago. It is also a victory for Fiat, which now owns Chrysler.

Retail results for November and third-quarter earnings from some store chains were another indication that several companies are now permanently out of the race for profits and better revenue. Barnes & Noble (NYSE: BKS) posted poor quarterly results. Its store sales were weak and its investment in e-commerce expensive. The book company has battled Amazon.com (NASDAQ: AMZN) for years, and it is more clear with each quarter that the fight is one it cannot win. Weak retailers like Talbots (NYSE: TLB), Gap (NYSE: GPS) and Kohl’s (NYSE: KSS) continued to get weaker. Their competitions have overwhelmed them in price, store configuration and location, and e-commerce efforts. Those are not advantages that can be overcome.

Google’s (NASDAQ: GOOG) Chrome browser passed Firefox as the second most used product in the business. It sits behind only Microsoft’s (NASDAQ: MSFT) Internet Explorer. The gains could be critical to Google’s advances into businesses like social networking. The Google browser bar offers rapid access to its products, such as social network launch Google+. Microsoft loses chances to promote its products in the browser space as its share shrinks. The Chrome advance is another example of how Google has pushed into businesses beyond search. The most prominent of these is the Android mobile OS. But Chrome, Google Maps, YouTube and Google’s image search product are parts of the largest search company’s success in diversification.

Douglas A. McIntyre

Google in in talks with traditional retailers like Gap (NYSE: GPS). The strength of the new service Google would offer is that one-day free shipping would be part of the product the search company brings to bricks-and-mortar outfits. This would compete with the Amazon Prime service that offers frequent shoppers at its site free two-day shipping.

Traditional retailers may find that Google poses dangers to them as a partner. Google earns much of its revenue on retail ads. The new free shipping service will tether these retailers and Google closer together. Most of the same retailers have their own e-commerce sites. They need to be concerned about the extent to which Google’s service may pull away traffic to their own sites. It is not unlike the probably that many airlines have with online travel sites like Expedia (NASDAQ: EXPE). Expedia brings them business but takes a piece of the revenue. At the same time, it cuts visits directly to airline sites where comparison shopping for tickets is not available. Music publishers have had a related problem with Apple’s (NASDAQ: AAPL) iTunes. It enhances song sales, but at a cost to profit margins as Apple takes part of the money from each sale.

Traditional retailers have become desperate. Yesterday, Barnes & Noble (NYSE: BKS) posted worse-than-expected earnings. Traditional sales were off. Its investment in e-commerce systems rose. Barnes & Noble is in a race it probably cannot win. Amazon.com has too much of the online book and e-reader business. Now, Barnes & Noble must ask itself whether an alliance with Google will help sales — and at what cost.

The move to e-commerce has been only a modest success for companies like Barnes & Noble and Gap. They may find that a partnership with Google improves their prospects but takes away their independence.

Douglas A. McIntyre