Season's Greetings From Wal-MartT'was the day after Christmas and Wal-Mart ( WMT) was adding one more group to the burgeoning ranks of Americans who despise it: the large number of shoppers that tried to redeem gift cards in its stores on Dec. 26, only to be turned away due to a computer glitch. The world's largest retailer acknowledged the problem during the post-Christmas shopping rush, when hordes of shoppers head back out to stores to redeem gift cards, exchange gifts and spend more money. The company pinned the blame on a third-party systems provider called ValueLink, whose parent company is First Data, but this, ahem, "issue" made an already challenging retail season even harder for Wal-Mart, leaving frustrated investors to wonder, like Jack Nicholson, if this is as good as it gets. Astonishingly, Wal-Mart, which has yet to see its shares get anywhere near the highs they set eight years ago, was only getting started. On Monday, the retail giant announced that it closed an online movie-download service it launched less than a year ago to compete with Amazon ( AMZN) and Apple ( AAPL). Apparently, the company -- known more for cheap prices and stingy employment practices than its online video expertise -- could not compete. But this holiday season isn't about winners or losers for Wal-Mart, and it's not about what it gets. It's about what it gives. How much of its shareholders' cash did the world's largest retailer bury with its failed movie downloads effort anyway? Dumb-o-meter score: 95. Unlike most things on its shelves, at least Wal-Mart's gift-card problem wasn't manufactured in China.
Off Tar-zhayTarget ( TGT) never wants to be outdone by Wal-Mart, and the No. 2 U.S. retailer had investors scratching their heads on Christmas Eve when it delivered an early stock stuffer. Late in the afternoon after a shortened holiday trading session when most of Wall Street's bridge-and-tunnel crowd was already slurping eggnog on the bar car, Target admitted quietly that its December same-store sales may decline. The Minneapolis-based retail chain said it now expects its December sales at stores open at least a year in the range of down 1% to up 1%. That's a far cry from its previous forecast calling for an increase of 3% to 5%. Earlier in the month, Target had reported disappointing November results and warned that if weak sales trends continued, its December same-store sales would fall short of its forecast. The trends appear to have continued and then some, since the company said December results fell "well short of the meaningful improvement" it had earlier said was needed to achieve fourth-quarter earnings growth. Target's weakness comes as the retail sector suffers across the board amid what may be the worst holiday shopping season since 2002 -- Wall Street's last recession year. Since the beginning of December, the S&P Retail Index has shed 7.5%. Meanwhile, shares of Target have lost 17% in that span, including a 5.6% slide since its Christmas Eve announcement. Dumb-o-meter score: 88. Should we give Target credit that it was standing underneath the mistletoe when it gave investors this little kiss?
The Sell-Side New YearThe bursting of the U.S. credit bubble has Wall Street's credit analysts facing severe scrutiny at the moment. Their predicament is similar to that faced by Wall Street's equity analysts after the dot-com meltdown. Luckily for stock investors, regulators prescribed toothy reforms to guard against the conflicts of interest at broker-dealer firms that both underwrite and analyze stocks ... right? Well, in 2008, sell-side equity analysts are busy upgrading their record from an "abysmal" rating to a strong "way behind the curve." Let's survey some of the sell side's collective wisdom from the first week of the year. On Wednesday -- the first day of trading in 2008 -- Banc of America Securities downgraded chipmaker Advanced Micro Devices ( AMD) to "sell." In 2007, shares of Advanced Micro Devices dropped 63%. Thanks for the update BofA. Bear Stearns, fresh off its recent glory in the subprime mortgage market, kicked off the new year by downgrading Starbucks ( SBUX) to peer perform from outperform. In 2007, shares of Starbucks dropped 42%. JPMorgan Chase ( JPM) was next out on a limb when it downgraded FedEx ( FDX) to neutral from overweight. In 2007, FedEx shares tumbled 19%. For its part, UBS blew the market's mind when it downgraded oil outfit Hess ( HES) to neutral from buy, while simultaneously raising its price target on the stock to $110 from $87. No doubt, with Hess trading recently at $99.40, that 11% premium in the analyst's new price target makes it a screaming neutral. Dumb-o-meter score: 72. Perhaps these firms were following The Wall Street Journal's lead, inspired by the paper's 2007 upgrade of Bear Stearns CEO Jimmy Cayne to "high" from "incommunicado."
Who Needs Writers?Jay Leno, host of NBC's "The Tonight Show," is known less for his natural abilities than for his hardworking zeal -- a quality that everyone is looking for in a comedian. Leno's work ethic, symbolized in his Wednesday night return to late night by his cleanshaven face, is probably what gives him his strong sense of solidarity with his writing staff. Like the vast majority of TV and film scribes in Hollywood and Manhattan, Leno's writing staff remains entrenched in a labor strike that has crippled the entertainment industry and