Perhaps it is the cynic in me, but I was not surprised to read this story about Wal-Mart Stores Inc. (WMT) from Bloomberg. The news outlet obtained an e-mail that was sent to Walmart managers instructing them to raise prices on an average of 1,800 types of toys per store. The managers were instructed to perform the price markups "as soon as possible" and were told that the price changes were "to better enable your store and the company to have a successful financial month."

Walmart stated that these price increases went into effect because temporary discounts on products (including toys) ended on November 30. Spokesman Ravi Jariwala, spokesman for Walmart, said in an e-mail, "Once a rollback ends, the item returns to its original everyday low price." That said, Eric Johnson director of the Center for Digital Strategies at the Tuck School of Business at Dartmouth noted that "In previous years Wal-Mart has come out and hammered everyone with unbelievably low toy prices ... They stepped away from that this year and after Thanksgiving their prices have crept back up."

Now here's shocker. Wal-Mart Stores Inc. (WMT ), the world's largest retailer, reported that sales fell 2% in the fourth quarter compared to the same period last year. More bad news is on the way. Walmart also forecast a "challenging" first quarter.

All of the big guns at Walmart offered their reasons for the decline. Deflation in the price of groceries, which account for 40% of sales, was one factor. Price discounts in electronics and flat screen TVs were also cited.

The international division of Wal-Mart Stores (NYSE: WMT) would rank as the fifth-largest global retailer if it were a standalone company. With sales of $100 billion, it certainly looks impressive from a sales perspective. But, Wal-Mart international has failed in quite a few markets in recent years under the then-leadership of current company CEO Mike Duke.

Recent partnerships in India and China have repaired Wal-Mart's somewhat disjointed international picture, and international operations are now given autonomy and freedom to operate as needed inside the culture of each region and country where they are located. Long gone are the days of the "big box" retailing format being simply exported to other countries. That strategy obviously does not work.

Wal-Mart Stores Inc. (NYSE: WMT) has fared better than just about anyone in the recession, but its stock is down 9% so far for 2009. Why? Wal-Mart shares outperformed the market by a wide margin in 2008, but now that many investors are looking to prepare their portfolios to profit from a turnaround, there is concern that Wal-Mart will be unable to sustain its momentum once people spend more money.

To capitalize on the stock price pullback, Wal-Mart announced that it would spend as much as $15 billion to buy back its own stock. And at the company's annual meeting on Friday, recently-installed CEO Mike Duke said that "Our customers will stay with us when this economy turns around and they have more discretionary spending, I promise."

On Sunday, Wal-Mart Stores Inc. (NYSE: WMT) got a new CEO in Mike Duke, and with him comes a stronger focus on overseas opportunities.

As the former vice chairman of Wal-Mart International, Duke has been a key player in the company's efforts at international expansion. That the board of directors selected him as the new CEO indicates that they believe that the company will need to focus overseas to continue growing.

The Wall Street Journal reports (subscription required) that "He is expected to continue expanding Wal-Mart into new foreign markets, especially in developing nations, while remodeling domestic stores to better position the company against rivals such as Target Corp."

Wal-Mart is run on a model of ruthless efficiency and cost-oriented innovation, and Mr. Duke's job will consist primarily or continuing to steer the company along on that path. He will not have the opportunity to do too much damage with the grandiose acquisitions and empire building that have destroyed so many other companies.

Wal-Mart Stores Inc.'s (NYSE: WMT) new Chief Executive Mike Duke will have his hands full once he takes control of the world's largest retailer on Sunday.

For one thing, the economy continues to struggle. Gross Domestic Product fell 3.8% in the fourth quarter, the most since 1982. Consumer spending fell 3.5% in the quarter as unsold goods continued to pile up. Though consumer confidence rose to a four-month high, it was still weaker than expected.

Today's late rally tied to breaking news of President-elect Obama's naming Timothy Geithner as Treasury Secretary for the next administration, but there was also an end of week bargain-buying hunt. Today was also options expiration. Whatever the real determination was, at least it was not yet another miserable day of relentless selling.

Here were today's unofficial closing bell levels:

DJIA: 8,046 (+6.5%)
Nasdaq: 1,384 (+5.2%)
S&P 500: 800 (+6.3%)

Top Analyst Upgrades
Top Analyst Downgrades

Gap Inc. (NYSE: GPS) posted earnings at $0.35 EPS on revenue of $246 million. While other retailers are stinking up a storm, this compares to earnings of $0.30 EPS and revenue of $238 million last year. While sales did drop over 7% to $3.56 billion, analysts' estimates from Thomson Reuters (First Call) were only $0.34 EPS and $3.57 billion. Shares were up 21% at $11.62 right before the close.

Microsoft Corp. (NASDAQ: MSFT) hired Sean Suchter, the former head of search operations at Yahoo! This could give them the brains and engine behind the search business without ever having to pay Yahoo! a dime. Shares were up 8% at $19.01 shortly before the close.

Nike Inc. (NYSE: NKE) managed a show of force when times are tough. The sporting apparel giant raised its quarterly dividend payout by 9% to $0.25. Shares were up over 6% at $46.41 right before the close.

USG Corp. (NYSE: USG) shares surged after disclosing that Warren Buffett and Faifax invested a combined $400 million into the home building products maker. This was on top of their investments in the company in the past. Shares were up 24% at $7.04 shortly before the close.

Wal-Mart Stores Inc. (NYSE: WMT) rallied after the board of directors elected Mike Duke to replace Lee Scott as President and CEO of Wal-Mart, effective February 1, 2008. Shares were up almost 2% at $51.55 right before the close.

In a surprise move, Wal-Mart Stores Inc. (NYSE: WMT) replaced H. Lee Scott as chief executive with Mike Duke, the president of Wal-Mart International.

The timing of the move is curious. Wal-Mart seems to be the only retailer showing signs of strength during the economic downturn as cash-strapped middle-class shoppers flock to the chain, lured by its low prices. I count myself among this group. Moreover, shares of the world's largest retailer are up 6.6% this year, making them the only component in the Dow Jones Industrial Average to post a gain.

Of course, Wal-Mart is spinning this like a dreidel at Hanukkah. Rob Walton, the chairman of the board of directors, said in a press release that "Lee Scott has made an extraordinary contribution to Wal-Mart during his almost thirty years of service as an associate, and as our president and CEO for the last nine year [...] Lee has earned the respect and affection of our associates around the world, and of the Walton family."

Alright Mr. Walton, if this is true, why would you want to replace him? Perhaps Scott and the Waltons had some sort of dispute. Maybe it was over strategy. Maybe it was over something else. I found it odd that the announcement had no verbiage about Scott wanting "to spend more time with his family" or wishing him luck to "pursue other interests." Scott, though, maybe has decided it was time to call it a career.

Wal-Mart deserves credit for not rushing Scott, 59, out the door. Effective February 1, he will become chairman of the executive committee. The 58-year-old Duke won kudos from investors for guiding Wal-Mart's international business. Eduardo Castro-Wright, the head of Wal-Mart's U.S. operations, becomes vice chairman.

The new Wal-Mart will continue to be as big of a juggernaut as it has been in the past.