A Reuters poll shows Japanese manufacturers have prepared for a eurozone break up. (Reuters)

Apache (NYSE: APA) to buy Cordillera Energy. (Reuters)

A National Association for Business Economics industry poll shows few companies plan to add jobs. (Reuters)

Nokia Siemens gets a 1.2 billion euro loan to support its business. (Reuters)

E-book publishers experiment with $0.99 books to draw new customers. (WSJ)

Volkswagen may speed its takeover of Porsche to increase the integration of the two companies. (WSJ)

Oil production in the U.S. rises sharply in the past year. (WSJ)

A sharp increase in car production causes a competition for jobs in the Midwest states. (WSJ)

Talks between bondholders and Greece are still unsettled. (WSJ)

UK wage increases stall. (WSJ)

Target (NYSE: TGT) will fight one of the retail industry’s largest problems: people come to it stores and then buy online from competitors. (WSJ)

Refinery prices and low natural gas will hurt oil company returns. (WSJ)

Moody’s downgrades Sony (NYSE: SNE) and Panasonic (NYSE: PC). (WSJ)

Hyundai expects growth in the troubled EU region. (WSJ)

European Central Bank three-year loans help drop yields on the region’s sovereign paper. (WSJ)

China increases its oil purchases from Iran. (WSJ)

France and Germany would like to relax some bank rules to help the region’s financial troubles. (FT)

Sales of the Nokia (NYSE: NOK) Lumia probably pass one million units. (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

President Obama to ask for a $1.2 trillion increase in the national debt ceiling. (Reuters)

China’s foreign currency reserves drop to $3.18 trillion, a sign that exports have slowed enough to change monetary policy. (Reuters)

Novartis (NYSE: NVS) will cut 2,000 jobs in the U.S. (Reuters)

Apple (NASDAQ: AAPL) stops iPhone sales in China when crowds become unruly. (Reuters)

Several buyers, including Delta (NYSE: DAL) and US Air (NYSE: LCC), may approach American Airlines parent AMR about a buyout. (Reuters)

Yields fall at Italy and Spain debt sales. (Reuters)

Research In Motion (NASDAQ: RIMM) may have retained Goldman Sachs (NYSE: GS) to look at strategic alternatives. (Reuters)

The Fed may force Bank of America (NYSE: BAC) to leave a number of businesses and some areas of the country. (WSJ)

Goldman Sachs approaches federal officials about buying the troubled bond portfolio of AIG (NYSE: AIG). (WSJ)

A strategic review of PepsiCo (NYSE: PEP) by its board likely will not prompt the firing of its CEO, Indra Nooyi. (WSJ)

China sets new rules to make it easier for foreign investors to put capital into the country. (WSJ)

A Wynn Resorts (NASDAQ: WYNN) shareholder files suit about a possible donation the company made to a university in Macau. (WSJ)

Low retail sales raise concerns about the pace of the recovery. (WSJ)

An agency of the U.S. government pressures AMR to keep its pension plans intact. (WSJ)

Eurozone factory output drops in November, based on year-over-year numbers. (WSJ)

The government probes potentially illegal financial activities at Diamond Foods (NASDAQ: DMND). (WSJ)

Several lenders to Sears Holdings’ (NASDAQ: SHLD) suppliers want faster payments to those suppliers. (WSJ)

BMW and Mercedes increase production in the U.S. (WSJ)

Peugeot would like to form a broad alliance with another car company. (WSJ)

International bond investors largely believe a deal on Greek debt will be done, but not on the terms Greece expects. (WSJ)

China may invest some of its foreign reserves in stocks to get better returns. (WSJ)

Corn prices fall on new, higher estimates of U.S. production. (WSJ)

Members of the 2006 Fed did not anticipate the housing collapse. (NYT)

CVS Caremark (NYSE: CVS) pays $5 million for charging too much for some drugs. (NYT)

Target (NYSE: TGT) will set up small Apple stores inside its retail locations. (NYT)

The creditworthiness of U.S. companies fell over the past 30 years, according to S&P. (FT)

Google (NASDAQ: GOOG) and LG discuss a new TV project. (Bloomberg)

Eastman Kodak (NYSE: EK) approaches Citigroup (NYSE: C) for capital it might use as part of a bankruptcy. (Bloomberg)

Douglas A. McIntyre

Chevron Corporation (NYSE: CVX) was the surprise warnings in the oil and gas sector, sending shares down 2.6% at $104.91.

Eastman Kodak Company (NYSE: EK) was down after a highlighted Moody’s note signals that even with a patent deal the company could run out of cash in the middle of 2012. Shares were down 18% at $0.66 late in the day.

J.P. Morgan Chase & Co. (NYSE: JPM) fluctuated all day ahead of Friday’s earnings report, where we believe many will try to look at book value and other metrics to try to justify the massive gains in the banking sector since the end of 2011. Shares were up $0.03 at $36.69 a few minutes before the closing bell.

Earnings warnings took a bite, as much as double-digit percentage bites, ou of the following stocks: Williams-Sonoma, Inc. (NYSE: WSM), Infosys Ltd. (NASDAQ: INFY), Big 5 Sporting Goods Corporation (NASDAQ: BGFV).

Microsoft Corporation (NASDAQ: MSFT) managed to hold up a day after management gave a cautious PC market outlook.  In analyst calls, it was maintained Outperform but cut target to $34 from $35 at Credit Suisse and it was maintained Hold and lowered estimates at Argus.

Target Corporation (NYSE: TGT) was up 1.4% at $49.73 right before the close on news of a news and expanded $5 billion share buyback plan.

Stay tuned for Friday, particularly since this will be Friday the 13th!  Here are Friday’s economic reports to watch:

• 8:30 AM NOV Trade Balance
• 8:30 AM DEC Import & Export Prices
• 9:50 AM JAN Univ. Michigan Sentiment (preliminary)

JON C. OGG

Teen stores Buckle and Zumiez battered expectations, while Gap and Wet Seal both missed expectations badly.

Data from CNBC.

Fortunately for investors in retail stocks, Target and Wal-Mart are not Sears. We just featured this one as one of the worst big stock stories of 2011, but we did not call for a bankruptcy nor did we include it on our list of stocks unlikely to survive 2012.  The most recent effort to spin off Orchard Supply Hardware Stores (NASDAQ: OSH) is interesting on the surface but it is just too small to make a difference at this point.

Unfortunately, a report on the CNN Money site did note that there are rumors of a Sears bankruptcy.  That is their story rather than ours.  Still, analysts have pounded upon Sears and some see much more downside on top of the pain and suffering we have seen in recent weeks (and years).

• In early December came word that Imperial Capital issued a “underperform (SELL) rating and said that it could go down to $6.00 in the new two to three years.
• Barclays recently cited that Sears appliance market share could fall to 31% from 39% and offer a large reward for other appliance sellers.
• On December 30, Zacks put Sears on its #5 list, a list of stocks with a “Strong Sell” rating.
• On December 28 came word that Credit Suisse was maintaining and Underperform rating… with a $20 price target objective.
• Fitch also lowered its corporate credit rating in the last week of December.
• Barron’s called for the start of 2012 that Sears could lose another 80% of its value.

Sears is up 0.1% on Tuesday at $31.46 verus a new 52-week range of $31.17 to $94.97 and its market cap is now down to about $3.35 billion.  The most recent short interest was listed as 10.88 million shares as of mid-December before the latest warning.

The saga continues. The question is whether or not this turnaround can ever come to fruition. Please feel free to take the absolute yes/no anonymous poll below.

JON C. OGG

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).”

The question for Sears Holdings is how the breakup might be engineered and what the fate of the pieces would be.

S&P put Sears Holdings on Credit Watch with “negative implications.” Its opinion on the retailer is a low B long-term corporate credit rating. Sears cost of capital is bound to rise, which makes the retail conglomerate’s future even less tenable.

Sears exists in several pieces. The largest two are Kmart and Sears. Each has its own problems. Sales at Sears’ domestic business are falling rapidly — down 6% in the past eight weeks. Kmart’s sales are off 4.4% over the same period.

Kmart’s inventory is weighted toward apparel. Sears’ sales rely more on appliances. Each has to deal with different sets of marketing problems because of its different focus. Sears also has more specialty stores and fewer full-line stores than Kmart. This is in part to accommodate its automotive and appliance businesses. Kmart stores compete more with Walmart (NYSE: WMT) and Target (NYSE: TGT).

In addition to the two major store chains, Sears Holdings owns or has rights to a number of brands. These include Jaclyn Smith, Joe Boxer, County Living, Route 66, Smart Sense, Kenmore, Craftsman, DieHard and Lands’ End. There is no reason that these brands could not be licensed or sold to other retail companies.

Many American companies have had success managing multiple brands. Ford (NYSE: F) and General Motors (NYSE: GM) are examples. But these firms have pruned their brands and killed some, even though they are decades old. There is precedent among large American companies recently to discard or sell brands that cannot make money.

What company might buy either Sears or Kmart? Target, for one, would have to consider a bid. It is far enough behind Walmart that it might use the sales and store base of a Sears Holdings unit to close that gap. Costco (NASDAQ: COST) would have to look at some Kmart and Sears locations, although the big-box retailer tends to have more up-market customers. JCPenney (NYSE: JCP), which is struggling to keep pace with Macy’s (NYSE: M), could be a buyer of a brand or some portion of Sears or Kmart to regain lost ground.

Sears Holdings has not retained an investment bank or a major consulting firm, or at least it has not disclosed such an action. Now is the time to do so. The slide of the Sears Holdings properties has become inexorable.

Douglas A. McIntyre

Sears is in such great enough trouble that shuttering 3% of locations barely dents the problem. The Kmart and Sears store networks must have a larger portion of their outlets that underperform enough not to be profitable, or are only marginally so.

Sears also must deal with the fact that its online business is not strong enough to allow it to compete with e-commerce sites that draw much more traffic, particularly Target (NYSE: TGT), Walmart (NYSE: WMT) and, of course, Amazon.com (NASDAQ: AMZN).

Sears needs to show Wall St. that it takes its severe trouble more seriously. Its stock is down 20% on the poor sales news to a 52-week low of $36.31. The best recent example of a larger retailers that dealt with same-store sales problems was the Gap (NYSE: GPS), which said it will close 21% of its U.S. Gap flagship outlets. Sears would have to cut 800 locations to make a comparable downsizing. Sears and Gap do not have identical problems. Sears is a broad-product-line store chain. Gap is a specialty retail one. But extremely poor same-store sales are a mark of a retailer that has maintained a financially unsustainable network.

Sears’ problems are not new. If they were, management could make the argument that it might turn the retailer around with only modest store cuts. But Sears is now struggling to stay a viable company. A 3% cut in locations is not nearly enough.

Douglas A. McIntyre

Sears reported an overall sales decline of -5.2% in its K-mart and domestic Sears stores for the current quarter, and a -2.6% full-year drop in sales. Consumer electronics sales at both K-mart and Sears stores has dropped, while apparel sales at K-mart continued to decline and appliance sales at Sears fell.

Sears, especially, has had a tough holiday season and a tough year. This morning the store announced that its adjusted EBITDA for the fourth quarter will be less than half last year’s total of $933 million. The company will take non-cash charges of $1.6-$2.4 billion for the year on the valuation of some deferred tax assets and an impairment of goodwill.

The company will also close 100-120 Sears and K-mart stores. And that may not be all, as Sears says it is changing its policy on underperforming stores:

[W]e will carefully evaluate store performance going forward and act opportunistically to recognize value from poor performing stores as circumstances allow.  While our past practice has been to keep marginally performing stores open while we worked to improve their performance, we no longer believe that to be the appropriate action in this environment.  We intend to accentuate our focus and resources to our better performing stores with the goal of converting their customer experience into a world-class integrated retail experience.

But this really isn’t such a big change, as the company has been closing stores right along rather than remodeling them. What the company hasn’t been doing is focusing on improving the stores that are doing well. Maybe the change will help, but it could be coming too late to make a significant difference.

Paul Ausick