Sears Holdings will not survive

Just goes to prove that if you merge two weak companies, you get an even weaker larger company.

* At a time when holiday season sales overall have turned out better than expected, Sears Holdings was an exception. It will close 100 to 120 Sears and Kmart stores after disappointing holiday sales.

* Its stock, having already lost 37% of its value this year, tumbled 20% to $36.61 in early trading.

* Sears plans to take as much as $2.4 billion of charges in the fourth quarter on asset write downs and other items.

* Comparable sales in the eight weeks through December 25 fell 4.4% drop at Kmart and 6% at Sears. In contrast, the National Retail Federation holiday forecast was a 3.8% increase.

* Fourth-quarter EBITDA is now expected to be less than half the year-earlier fourth quarter's.

* Adjusted pre-tax profit is down to about 10% of its five-year peak.

http://www.marketwatch.com/story/sears-holdings-to-shut-up-to-120-stores-2011-12-27

I was at a Sears on December 24 (through no fault of my own). Sears stores suck. No big surprise in any of these numbers.

AMR Bankrupt

American Airlines parent AMR, the only major US airline operator to not file for bankruptcy during the last decade, surrendered to the stark realities of a souring global economy on Tuesday and sought Chapter 11 protection from creditors today.  The filing came as AMR gave in to the burden of the industry's highest labor and operating costs. The company’s shares plunged to 26 cents, down 84%. (MW)

AAPL to plummet tomorrow

Steve Jobs resigns

HP

Hewlett Packard may follow IBM and dump its PC division.  It's also discontinuing its WebOS operation (even though I saw an ad about how awesome WebOS is just earlier this week).  Translation: the $1.2 billion Palm purchase just vanished like a fart in the wind.

Follow-up 8/19:  As of noon today, HP is down 20% today on a generally flat day, as the market absorbs how bad this news really was.

Market News

Borders inches closer to liquidation

Yesterday's bidding deadline passed without offers to keep the second largest US bookstore operator in business.

Netflix, LinkedIn highlight tech losses

Netflix fell 3.74% after Pacific Crest Securities analyst Andy Hargreaves cut his rating to sector perform from outperform. [...] LinkedIn gave up $4.73 a share, or 4.3%, to fall to $105.23 after J.P. Morgan analyst Doug Anmuth cut his rating to neutral from overweight.  I think both of these are still way overpriced and have a long way farther to fall.

29 of 30 DJIA components down

Decline lead by Bank of America which fell  3.6% to $9.64.

Citigroup gives up on its stock price

Citigroup (currently trading at $4.41) on Monday announced a 1-for-10 reverse stock split of its common shares effective after markets close on May 6.  Separately, the banking giant said it plans to reinstate a quarterly dividend of a penny a share in the second quarter.

AT&T to acquire T-Mobile for $39B

AT&T, the #2 US wireless carrier is purchasing T-Mobile USA from Deutsche Telekom for $39B, with $25B in cash and the remainder in AT&T common stock, which will give Deutsche Telekom a roughly 8% stake in AT&T. Regulatory approval is expected to take at least a year due to concerns about market share and price-competition for consumers. If the acquisition is approved, AT&T would have about 130 million wireless subscribers, vaulting it above Verizon Wireless, currently the #1 wireless carrier with a little more than 100 million subscribers. Sprint Nextel Corp., the #3 wireless carrier, was immediately seen as a big loser. The company was said to have been in talks of its own to acquire T-Mobile, and now there are concerns about the company’s status as a weakened player among the carriers with nationwide footprints.

Verizon stock was essentially unaffected by the news.  Sprint Nextel on the other hand is down over 15%.

Borders files for bankruptcy

Borders, the 40-year-old retail chain that helped define the age of the book superstore, filed for bankruptcy today. The company will close some 200 of its 650 stores.

The troubles of Borders are rooted in a series of strategic missteps, executive turnover and a failure to understand the digital revolution — problems in many ways of Borders’ own making. But as those in the volatile industry digested the news that most saw coming, they were acutely aware of the bigger picture: that in a fast-evolving bookselling environment there is slim margin for error.