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11 Companies on the Edge in 2012

It was four years ago that a punishing recession officially began. The financial pressure drove many companies out of business, while the survivors generally adapted and got stronger.

But some firms are still struggling, whether from delayed effects of the recession, relentless competition, fresh strategic blunders or a turnaround plan that hasn’t panned out. While a double-dip recession seems unlikely in 2012, CEOs are intently watching for a financial crisis in Europe or policy mistakes in the United States that could weaken the economy. And consumer spending, surprisingly strong in 2011, could decline once again, as overspent consumers get nervous. There’s plenty that could go wrong, in other words, even though the economy is supposedly recovering.

To identify companies with the thinnest margin for error, I analyzed data on stock prices, expected 2012 earnings and other financial measures provided by S&P Capital IQ, a financial-information firm. The companies I’ve highlighted had a weak year-to-date stock performance through mid-December 2011, indicating deep investor worry. These are also firms likely to have weak earnings in the future, according to Capital IQ’s summary of analyst forecasts for 2012 and beyond.

There probably will not be a fresh surge of bankruptcies in 2012, but in some industries there’s likely to be consolidation as weak firms succumb to stronger ones. Plus, the usual forces of competition always produce winners and losers. Here are 11 prominent firms likely to struggle in 2012:

Eastman Kodak. Stock decline in 2011: 85 percent. It’s never a good sign when a firm denies that it’s heading for bankruptcy, as Kodak has been doing. Kodak was slow to join the revolution in digital photography, while taking several wrong turns into fields such as pharmaceuticals and document management. The firm is now seeking to sell assets and find other ways to raise cash so it can return to profitability after five consecutive money-losing years. Investors are clearly worried: Kodak stock has recently traded below $1 per share, a threshold at which companies are sometimes delisted from major exchanges.

Research in Motion. Stock decline: 76 percent. The once-ubiquitous Blackberry commanded 55 percent of the U.S. smartphone market in 2009, according to research firm Canalys. Today, its market share is less than 10 percent. Blackberry-maker RIM has failed to counter ruthless competition from Apple’s iPhone and the many Android phones now available, with total Blackberry shipments falling recently even though the overall smartphone market is still exploding. Plus RIM’s PlayBook tablet device–meant to take on Apple’s iPad–has been a flop. A key Blackberry upgrade has been pushed back until late 2012. By then, RIM might be gobbled up by a goliath such as Microsoft or Samsung.

OfficeMax. Stock decline: 75 percent. If the economy were booming, maybe three office-supply chains–OfficeMax, Office Depot and Staples–would all be able to thrive. But the tough economy, plus competition from discounters like Walmart and Costco, has put pressure on the whole group. Investors seem to have the strongest doubts about OfficeMax, whose stock has fallen significantly more than its two competitors over the last 12 months.

Monster Worldwide. Stock decline: 67 percent. If the economy springs back and hiring picks up, this job-placement firm could thrive. But the economic rebound, of course, is painfully slow, with CEOs basically waiting to see whether another crisis is coming. It could be 2013 or later before they’re convinced the clouds have passed. Meanwhile, new competitors are going online, hoping to cash in on the same hiring boom Monster is waiting for.

Bank of America. Stock decline: 61 percent The whole banking sector is beaten down due to fears of a European crisis. Bank of America is under special scrutiny because of its disastrous 2008 purchase of Countrywide Financial, which has saddled the bank with billions in losses on bad mortgages, many of which may to sour. Investors worry that B of A hasn’t fully revealed its full exposure to troubled counterparties in Europe or stressed mortgage holders. But if B of A skirts disaster, it may recover sooner than expected.

To see the final 6 companies, go here.

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Santa Circle Jerks Western Markets

All attempts for a Santa rally were dragged down in Europe and the U.S. banking sectors.  Declines further accelerated on the proposed adoption of the Basel Treaty rules and the  ECB failing to negotiate a loan program via the IMF.

Mario Draghi had some low note commentary  and then BAC broke $5  helping traders to fade equities.

DOW down 99

NASDAQ down 32

S&P down 14

[youtube://http://www.youtube.com/watch?v=YPOTg-7pV64 450 300]

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ECB Fails to Get a Loan Agreement Going With the IMF

The ECB failed  to negotiate a loan through the IMF to increase their firewall capacity for the sovereign debt crisis.

Of course more caviar and champagne dinners will likely come to hash out this deal. For now though they have met an impasse.

Full article

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The BRIC Mania is DEAD

Brazil, Russia, India and China (BRIC), represented by BKF, has grossly underperformed the US for years. Despite all of the underperformance, fuck faces still tout “emerging markets” as something worthwhile. I beg to differ.

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