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Venezuela will devalue its currency for the second time since January in a bid to pull South America’s third-biggest economy out of recession.

Venezuela will unify its two fixed foreign exchange rates at 4.3 bolivars per dollar, Finance Minister Jorge Giordani said in comments carried by state television. Imports of so-called essential goods, such as food and medicine, were previously bought at a rate of 2.6 bolivar per dollar.

“We think that by unifying the exchange rate, we’ll have economic growth in 2011,” Giordani said today.

Chavez devalued the bolivar for the first time since 2005 in January and created a multitiered exchange system in an attempt to spur non-oil exports and curb the consumption of luxury imports at subsidized exchange rates payday loan. A devaluation may accelerate inflation, which at 27 percent, is the highest of 78 economies tracked by Bloomberg.

Venezuela’s economy contracted for a second consecutive year on an electricity crisis, foreign currency shortages and a drop in oil production, the central bank said in a report published on its website.

Gross domestic product fell 1.9 percent this year, with the oil sector shrinking 2.2 percent and the non-oil sector contracting 1.8 percent, according to today’s report, which cited preliminary figures. The economy shrank 3.3 percent in 2009.

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Bond offerings tied to automobile loans and leases are poised to dominate sales of asset-backed debt for a third straight year in 2011 after issuance of all types of the securities plunged 31 percent in 2009.

Vehicle debt bundled into securities will likely total from $70 billion to $75 billion, up as much as 23 percent from 2010, as auto sales rebound from a 27-year low, according to Barclays Capital. Bond sales linked to auto and education loans, and credit cards may reach $115 billion in 2011, Barclays said.

Total issuance fell to $92 billion this year from $134 billion as banks relied more heavily on deposits to fund credit card lending and the Federal Reserve ended its Term Asset-Backed Securities Loan Facility, which financed investors buying asset- backed securities.

“The auto finance companies continue to originate good volumes of new loans,” Brian Wiele, a managing director at Barclays in New York, said in a telephone interview. “They are not banks, and securitization offers attractive funding.”

Automakers are tapping the so-called asset-backed bond market as they anticipate car and truck sales reaching 12.8 million next year. Dearborn, Michigan-based Ford Motor Co., the only one of the three Detroit-area automakers that didn’t take government aid during the financial crisis, was the biggest ABS issuer in 2010, Barclays data show, offering $9.8 billion.

Bond Spreads

More than 66 percent, or $61 billion, of this year’s asset- backed securities sales were connected to automobile debt.

Top rated securities linked to auto loans yield 56 basis points, or 0.56 percentage point, more than Treasuries , according to Bank of America/Merrill Lynch data. That compares with relative yields of 193 basis points for bonds backed by student loans and a spread of 68 basis points for credit cards.

Spreads for auto-backed debt narrowed 25 basis points from Dec. 31, 2009 through Dec. 24, the Bank of America index shows. Spreads for asset-backed securities linked to student loans shrank 3 basis points to 193, while bonds tied to credit card payments saw their relative yields contract 24 basis points.

Elsewhere in credit markets, corporate bond sales worldwide total $3.18 trillion this year, down from $3.877 trillion in 2009. The extra yield investors demand to own company debt instead of Treasuries finished last week at the lowest in a month. Prices of leveraged, or speculative-grade, loans rose for a third week, while emerging-market debt spreads narrowed.

Credit-Default Swaps

The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, increased 0.78 basis points to a mid-price of 85.53, according to Markit Group Ltd. The index typically rises as investor confidence deteriorates and declines as it improves.

Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

The extra yield investors demand to own corporate bonds worldwide instead of similar-maturity government debt was unchanged at 166 basis points, or 1.66 percentage points, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index. Yields averaged 4.2 percent.

Corporate bonds have lost 1.01 percent in December, trimming this year’s gains to 6.81 percent, including reinvested interest. That compares with 3.42 percent for the firm’s Global Sovereign Broad Market Plus Index and 11.9 percent for the MSCI World Index of stocks, including reinvested dividends.

Loans Rally

The S&P/LSTA U.S. Leveraged Loan 100 Index ended Dec. 23 at 92.55 cents on the dollar, up from 87.68 cents on the dollar at the end of 2009. The index, which reached as high as 92.9 cents in April, tracks the 100 largest dollar-denominated first-lien leveraged loans.

In emerging markets, the extra yield investors demand to own corporate bonds rather than government debt shrank 14 basis points to 240 basis points as of Dec. 24, according to JPMorgan Chase & Co. index data. Spreads have ranged from as wide as 346 basis points in May to as narrow as 219 this month.

Sales of bonds tied to consumer and small-business loans plummeted 42 percent in 2008 as lending shriveled during the credit crisis, according to data compiled by Bloomberg.

The Fed’s Term Asset-Backed Securities Loan Facility, or TALF, helped revive sales temporarily by lending to investors seeking to buy asset-backed bonds. The program lasted from July 2009 through March.

Credit-Card Slump

While TALF bolstered the market, sales of asset-backed debt tied to household borrowing are falling primarily due to an 85 percent drop in sales of bonds tied to credit card payments, according to a Dec. 13 Barclays report.

Financial Accounting Standards Board rules that took effect in January require banks to hold loans that were bundled and sold to investors on the balance sheet, meaning they have to maintain capital against the debt.

Credit card companies are also enjoying cheaper funding from deposits, said the New York-based analysts at Barclays led by Joe Astorina.

“A majority of issuers are banks flush with deposits,” said Barclay’s Wiele. “Banks incentives to securitize credit cards aren’t what they used to be.”

Prices on bonds linked to credit-cards may get a temporary boost as supply remains muted before demand wanes, said James Grady of Deutsche Asset Management.

‘Orphan Sector’

“At some point this becomes an orphan sector,” said Grady, a managing director in New York at the firm, which manages $240 billion. “There will be less liquidity, and it can’t have a meaningful impact large investors’ portfolios.”

Issuance of securities tied to student borrowings fell to $17.8 billion in 2010 from $20 billion the previous year as the U.S. government eliminated the Federal Family Education Loan Program. The change cut private lenders out of the market for originating government-guaranteed loans, slashing the volume of debt available for companies to package into bonds, according to Barclays.

Sales will be between $12 billion and $15 billion in 2011, Barclays analysts said in the report earlier this month. Issuance of so-called esoteric asset-backed securities, or bonds tied to unusual or riskier assets, are set to climb in 2011, according to Barclays’ Wiele. Barclays and Morgan Stanley sold $253.75 million of bonds tied to revenue from billboards operated by Adams Outdoor Advertising LP on Dec. 3, Bloomberg data show.

“The market has recovered to the point where people are willing to look at these transactions and consider the risk and reward,” he said. “As spreads have tightened on other assets, investors have to look beyond those assets for yields.”

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China’s government failed to draw enough demand at a bill sale for the second time in a month as seasonal demand for funds and higher reserve-requirement ratios left banks with less cash.

The finance ministry sold 16.76 billion yuan ($2.53 billion) of 91-day securities, falling short of the planned 20 billion yuan target, according to traders at the lead underwriters of government debt, who asked not to be identified. The average winning yield was 3.68 percent, higher than the 3.22 percent rate for similar-maturity debt in the secondary market yesterday.

“The market is desperate for cash,” said Chen Liang, a bond analyst at Guohai Securities Co. in Shenzhen. “It’s too costly to park money with the debt at such a price given the seven-day repo rate has risen above 5 percent.”

Policy makers on Dec. 10 ordered lenders to set aside more money as reserves for the third time in five weeks to contain inflation. The seven-day repurchase rate, which measures lending costs between banks, has more than doubled in the past two weeks and yesterday reached a three-year high of 5.67 percent, according to daily fixings published at 11 a.m. by the National Interbank Funding Center. The rate slid seven basis points today to 5.60 percent.

The cash shortage has also sapped demand for bills sold by the People’s Bank of China. The monetary authority has sold 1 billion yuan of one-year bills at each of its last four weekly auctions, the lowest sales amounts since October 2007 cash advance in one hour.

Accelerating Inflation

The finance ministry sold 11.55 billion yuan of 91-day bills on Nov. 26, less than the planned 20 billion yuan. The average yield was 2.74 percent. China’s inflation accelerated to a 28-month high of 5.1 percent in November, the statistics bureau said on Dec. 11.

The finance ministry in February published a list of 48 lead underwriters required to bid at its debt sales, including Industrial & Commercial Bank of China Ltd., Agricultural Bank of China Ltd., Bank of China Ltd., China Construction Bank Corp., China Citic Bank Corp, Postal Savings Bank of China, Guotai Junan Securities Co, BOC International (China) Ltd.

The yuan strengthened 0.15 percent to 6.6331 per dollar today, according to the China Foreign Exchange Trade System. It’s risen 0.34 percent in the week.

Twelve-month non-deliverable forwards climbed 0.23 percent to 6.4925 per dollar, reflecting bets the currency will strengthen 2.2 percent in one year, according to data compiled by Bloomberg.

–Judy Chen. Editors: James Regan, Sandy Hendry

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at +86-21-6104-3043 or xchen45@bloomberg.net.

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OTTAWA

Major stock indexes rose slightly Wednesday after a report showed that the U.S. economy grew faster than previously thought over the summer.

The Commerce Department said Wednesday the country’s gross domestic product rose at an annual rate of 2.6 percent between July and September, a small increase from its earlier estimate of 2.5 percent. Analysts had expected the number to rise to 2.8 percent.

“Some folks will look at 2.6 percent as a disappointment, but the market is taking a look at the bigger picture,” said Phil Orlando, the chief stock market strategist at Federated Investors. Many traders expect the economy to grow by 3 percent or more during the fourth quarter and through 2011, he said.

Separately, the National Association of Realtors said sales of previously-occupied homes rose 5.6 percent in November to an annual rate of 4.68 million. That was slightly below analysts’ estimates of 4.75 million, according to data provided by FactSet.

“The home sales numbers are significantly off the highs that we saw in the go-go years earlier this decade, but 5 million home sales a year is good enough to keep prices from falling,” said Paul Zemsky, the head of asset allocation at ING Investment Management.

In midday trading, the Dow Jones industrial average rose 11.76 points, or 0.1 percent, to 11,544.92. The S&P 500 rose 3.23, or 0.3 percent, to 1,257.83. The Nasdaq composite index gained 3 payday advance online.76, or 0.1 percent, to 2,671.35.

Bank of America Corp. led the 30 stocks that make up the Dow index. It gained 3.2 percent to $13.40. Intel Corp. had the largest fall. The technology company lost 1 percent to trade at $20.89.

Before the market opened, Walgreen Co. reported revenue and earnings that beat analyst estimates. The country’s largest drugstore chain said its income rose 18.8 percent. The stock rose 6.4 percent to $39.17.

Late Tuesday, Nike Inc. said it planned to raise some of its prices because of higher costs for cotton and shipping. Revenue and earnings per share were better than analysts had forecast. Nike fell 5.6 percent to $87.18.

December is shaping up to be a good month for stocks. The S&P 500 has risen 6.5 percent this month and the Dow has gained 4.9 percent. On Tuesday, the S&P 500 closed above the level it reached on Sept. 12, 2008, the last trading day before the collapse of Lehman Brothers at the height of the financial crisis. The Dow Jones industrial average closed at its highest since Aug. 29, 2008.

Bond prices fell slightly. The yield on the 10-year Treasury note rose to 3.33 from 3.30 late Tuesday.

The dollar was unchanged against an index of six heavily traded currencies.

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The number of Australian homes worth A$1 million ($1 million) or more listed for sale is about 40 percent higher than average for this time of year, Real Estate Institute of Australia estimates, suggesting price cuts in 2011.

“There’s about a 5 percent gap in what sellers expect and what buyers are willing to pay,” said Perth-based David Airey, president of the institute. “In the first and second quarters of 2011, there will be a rise in activity as sellers adjust prices down.”

Australia’s house prices may be overvalued by 5 percent to 10 percent, the International Monetary Fund said last week. An 11 percent advance in the Australian dollar this year, the second biggest among Group of 10 nations, is deterring foreign and expatriate buyers, while the most aggressive tightening of monetary policy in the developed world raised borrowing costs.

Prices of the most expensive 10 percent of Sydney properties dropped 7.5 percent in the six months to September, compared with an average 1.1 percent increase in the rest of the market, according to real estate researcher RP Data. Melbourne’s top end property prices fell 10.8 percent in the period, compared with an average 2.5 percent price climb for the remaining homes.

Australia’s luxury properties “were once considered to be safe havens during a downturn,” RP Data economist Tim Lawless said. “More recently, however, the premium housing sector has displayed a higher level of volatility.”

Auction Flop

An auction of homes ranging from A$2 million to A$10 million last month, held at the Sydney Opera House by real estate broker Ray White Group, sold only two of the 11 homes on offer.

“The luxury market is certainly softer than what it was,” Dan White, a director at Brisbane-based Ray White, said in an interview. “There’s a lot of speculation about house prices, comments that they’re overvalued. And that happened at the same time that rates started to increase. Buyers are now feeling that they can search for value.”

While the number of properties listed for sale is unlikely to rise further next year, volatility will remain until confidence in global markets returns, said White.

John McGrath, chief executive officer of Sydney-based realtor McGrath, said his company has seen a 50 percent increase in listings from the same time last year.

‘Buyers’ Market’

“The market above A$1 million is a buyers’ market now,” McGrath, whose company now has 37 offices in New South Wales, Queensland and Canberra, said. “There is underlying strength, but people are cautious. And if in doubt, these buyers will stay put till there’s more certainty.”

There will be a recovery of between 5 percent and 10 percent in the top end of the market next year, primarily in the second half, as economic confidence returns, said McGrath.

Demand for homes between A$2 million and A$5 million in particular has been slow, said Chris Curtis, managing director of Sydney-based buyers’ agent Curtis Associates payday advance lenders. Professionals including investment bankers, accountants and lawyers — the most likely buyers in that range — are waiting out the uncertainty surrounding the U.S. and European economies, he said.

More properties are selling before auction, “a sign of vendor nervousness,” Curtis said, with some sellers willing to cut prices by as much as 15 percent.

U.S., Europe

The U.S. is struggling to maintain a sustained recovery as mortgage foreclosures mount and the nation’s unemployment rate hovers near 10 percent, prompting fears of a double-dip recession. Uncertainty over Europe’s economic health lingers after Ireland last month followed Greece in seeking a European Union bailout.

Overseas buyers’ demand has dried up after the Australian dollar reached parity with the U.S. currency in October for the first time since 1982, said L. Janusz Hooker, chief executive officer of Sydney-based real estate broker LJ Hooker.

LJ Hooker, which has 695 offices across the Asia-Pacific region, had about 23 percent more listings in November compared with a year earlier, according to data from the company.

“We had a robust first half and have seen a slowdown in the second half,” he said. “Investors typically look at the bigger trends, the U.S., Europe, and these have been one element contributing to that. There’s also a big portion of properties that have unrealistic pricing and this needs to come off.”

Record Sales

The market is “patchy,” with some strong sales still taking place, according Ken Jacobs, managing director of Sydney- based real estate agent Ken Jacobs, an affiliate of Christie’s Great Estates, which has the world’s biggest network of luxury property brokers.

An eight-bedroom mansion in Portsea, a resort town some 120 kilometers (75 miles) south of Melbourne, sold for more than A$25 million on Dec. 13, a record for Victoria state, according to Gerald Delany, executive chairman at Melbourne-based real estate broker Kay & Burton Pty, which handled the sale. The A$52 million September sale of Villa Veneto in Point Piper, an eastern suburb of Sydney, by LJ Hooker agent Bill Malouf, set a record for the country.

“I don’t think things will decline further, but I don’t think they’ll suddenly get better,” Jacobs said. “The market will become more firm, but the change will be gradual.”

Reserve Bank of Australia Governor Glenn Stevens raised interest rates seven times since October last year, citing a surge in home prices among reasons for the increases. Economists expect the central bank to raise rates by another three quarters of a percentage point by the end of next year, according to the median forecast of economists surveyed by Bloomberg.

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Republican leaders in Congress say they have “deep concerns” about Ben S. Bernanke’s second round of quantitative easing. The U.S. stock and credit markets don’t share those reservations.

The Standard & Poor’s 500 Index has climbed 17 percent since the Federal Reserve chairman first indicated on Aug. 27 that the central bank might buy more securities to boost the economy. Junk bonds rallied, with the extra yield that investors demand to own the securities instead of government debt shrinking to 5.45 percentage points yesterday from 6.81 points, according to Bank of America Merrill Lynch index data.

“It has been successful,” Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York, said of Bernanke’s policy of pumping money into the financial system, dubbed QE2. “It’s contributed to the rally in the stock market” and has “been important in reducing substantially the downside risk of deflation.”

Economic reports signal the recovery is gaining strength. A bigger-than-projected increase in retail sales in November prompted Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, to raise his outlook for fourth-quarter consumer spending. Industrial production in November also exceeded forecasts, and a gauge of consumer confidence rose to a six-month high in December.

The data, coupled with the prospect Congress will pass an $858 billion plan to extend Bush-era tax cuts, has prompted economists to boost their estimates for growth next year. The economy will expand by 2.6 percent in 2011, according to the median forecast in a Bloomberg News survey of 66 economists this month, up from a 2.5 percent prediction in November.

Confidence Grows

“As people get more confident about the economy, money is coming into the stock market,” said Jeremy Siegel, a finance professor at the University of Pennsylvania’s Wharton School in Philadelphia. “The most important way quantitative easing works is the provision of liquidity.”

New York Fed President William Dudley said Oct. 1 that asset purchases would reduce borrowing costs and support the value of homes and stocks, leaving consumers with more money to spend and lowering the cost of capital for businesses.

The extra yield investors demand to own investment-grade corporate bonds instead of government debt narrowed to 1.7 percentage points yesterday from 1.91 percentage points on Aug. 27, Bank of America Merrill Lynch index data show.

“Markets in general have moved in a growth-friendly direction,” said Dean Maki, chief U.S. economist at Barclays Capital in New York.

Contrast With Summer

The latest economic data are in contrast to a drumbeat of negative economic reports last summer, including declines in home sales and payrolls, that prompted economists such as Harvard University’s Martin Feldstein to warn that the risks of a renewed recession were rising.

On Aug. 27, Bernanke said the Fed “will do all that it can” to support the recovery and signaled it was ready to start a second round of securities purchases, in addition to the $1.7 trillion it bought through last March to pull the nation out of the worst recession since the Great Depression.

The Fed’s Nov. 3 announcement that it will buy $600 billion of Treasuries through June came a day after Congressional elections gave Republicans a majority of seats in the House of Representatives.

‘Dangerous Experiment’

Sarah Palin, the 2008 vice presidential nominee who says she’s considering a run for president in 2012, wrote to the Wall Street Journal last month, saying “it’s time for us to ‘refudiate’ the notion that this dangerous experiment in printing $600 billion out of thin air, with nothing to back it up, will magically fix economic problems.”

Representative John Boehner of Ohio, nominated to be House speaker, and three other Republican leaders sent Bernanke a letter Nov. 17 expressing “our deep concerns over the recent announcement that the Federal Reserve will purchase additional U.S. Treasury bonds.”

“Such a measure introduces significant uncertainty regarding the future strength of the dollar and could result both in hard-to-control, long-term inflation and potentially generate artificial asset bubbles that could cause further economic disruptions,” they wrote.

Since then, the dollar has gained about 1.8 percent against the currencies of six major trading partners as measured by IntercontinentalExchange Inc.’s Dollar Index as of 1:19 p.m. in New York. The dollar is down 2.9 percent since Aug. 27.

The cost of living increased 0.1 percent in November, less than forecast, indicating higher prices for commodities aren’t filtering through into other goods and services, according to a Dec. 15 Labor Department report payday loan lenders.

Seen as Favorable

“We don’t expect a rapid move higher in inflation anytime soon,” said Maki, who was the No. 2 forecaster overall for the U.S. economy in the two-year period ended on Sept. 30, according to data compiled by Bloomberg. “What we’re expecting is a very gradual upward trend that is likely to be seen by the Fed as favorable.”

Policy makers are concerned that too-low inflation will push up borrowing costs and increase the risk of deflation, or a debilitating decline in prices that boosts debt and reduces wages and profits.

The Fed’s policies have led inflation expectations to increase. The breakeven rate for 10-year Treasury Inflation Protected Securities, the yield difference between the inflation-linked debt and comparable maturity Treasuries, has risen to 2.3 percentage points from 1.63 percentage points on Aug. 27, according to data compiled by Bloomberg. The rate is a measure of the outlook for consumer prices over the life of the securities.

Diminished Risk

“Because the Fed is acting, I would say the risk is pretty low” of deflation, Bernanke said in an interview with CBS Corp.’s “60 Minutes” program broadcast Dec. 5. “But if the Fed did not act, then given how much inflation has come down since the beginning of the recession, I think it would be a more serious concern.”

Not every indicator is going Bernanke’s way. Payrolls in November increased by 39,000 jobs, less than the most pessimistic forecast in a Bloomberg News survey of economists, and the unemployment rate rose to 9.8 percent from 9.6 percent.

The pace of economic growth is “insufficient to bring down unemployment,” the Federal Open Market Committee said this week as it affirmed its bond-buying plan and renewed a pledge for an “extended period” of low interest rates.

An increase in Treasury bond yields has provided fodder to critics such as Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut.

‘Dismal Failure’

“Their effort to achieve the stated objective of pressing long-term yields lower has been a dismal failure,” Stanley said in a Dec. 14 report. The yield on the benchmark 10-year Treasury note has climbed to 3.36 percent from 2.64 percent on Aug. 27, according to data compiled by Bloomberg.

Kevin Hassett, director of economic-policy studies at the American Enterprise Institute in Washington and a former Fed economist, said the central bank can’t take sole credit for the stock rally, which he said was caused by “a slew of slightly better economic data.”

Hassett, one of 23 mainly Republican academics and former policy makers who signed a letter last month to Bernanke telling him to arrest his expansion of monetary stimulus because it will cause a surge in inflation, also questioned whether stock gains will spur consumer spending through the so-called wealth effect.

While consumers’ stock investments have gained in value, “their bonds are going down,” said Hassett, who is also a columnist for Bloomberg News.

Too Early to Judge

Former Fed Governor Lyle Gramley said it’s “too early to make any definitive judgment” on the Fed’s bond purchases.

“I don’t know how you parse out the effects of QE2 given the changes in the environment,” including the sovereign-debt crisis in Europe and prospects for an extension of tax cuts in the U.S., said Gramley, senior adviser at Potomac Research Group in Washington.

Others say the rise in bond yields is a positive signal that reflects the outlook for faster economic growth and rising inflation expectations.

Fed asset purchases are keeping yields lower than they otherwise would be, Citigroup Inc. analysts led by Robert DiClemente said in a Dec. 10 report. At 3.36 percent, the yield on the 10-year Treasury note is below its 10-year average of about 4.16 percent, Bloomberg data show.

‘Bad Mistake’

“Looking only at the long-term rate is a bad mistake on those interpreting this policy” because quantitative easing works by increasing liquidity, University of Pennsylvania’s Siegel said.

Siegel pointed to the rise in commodity prices as another sign of increased confidence in the economy. Oil futures increased 17 percent since Aug. 27 to settle at $87.70 yesterday on the New York Mercantile Exchange.

“What the Fed is trying to do is reflate the economy,” said Ward McCarthy, chief financial economist at Jefferies & Co. in New York. “To the extent it has prevented expectations of outright deflation and encouraged an increase in the stock market, then it’s been a success.”

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Discover Financial Services Co. says its fourth-quarter profit rose slightly as sales volume jumped and the credit card issuer wrote off fewer uncollected bills.

The Riverwoods, Ill.-based company says net income attributed to common stockholders was $346.5 million, or 64 cents per share, versus $330.5 million, or 60 cents per share. last year. Wall Street was expecting profit of 43 cents per share.

Sales volume of $23 billion is up 6 percent from last year.

Discover says net charge-offs _ bills the company doesn’t expect to collect _ dropped to 6 payday lenders.58 percent of balances from 7.98 percent last year. Payments late by 30 days or more also fell, and the company lowered its reserves for covering souring loans.

Discover shares rose 25 cents to $19.38 in premarket trading.

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Best Buy’s stock plunged on Tuesday after the retailer reported sales and earnings for the quarter which includes Black Friday that missed Wall Street’s estimates. The company also lowered its guidance.

Best Buy reported that revenue totaled $11.89 billion in the third quarter, which ended on Nov. 27. That’s a decline from $12 billion during the same quarter a year ago. It also fell short of expectations from analysts, who had forecast $12.45 billion, according to a consensus from Thomson Reuters.

Best Buy’s (BBY, Fortune 500) stock fell about 14% after the opening bell.

Best Buy’s dismal performance was in spite of an overall nationwide rise in retail sales. The Commerce Department reported on Tuesday that retail sales rose 0.8% in November.

"Best Buy was not effective promotionally around Black Friday," said Colin McGranahan, analyst for Sanford C. Bernstein.

As a result, he said the retailer was unable to take advantage of a "shift towards online sales in consumer electronics."

Best Buy also reported diluted earnings per share of 54 cents for the third quarter. That’s an increase of one cent from the same quarter last year. But it was significantly lower than analysts’ estimates of 61 cents per share.

The company lowered its guidance for the fiscal year to a range of $3.20 to $3.40 a share, compared to its previously announced guidance of $3.55 to $3.70. Analysts had been forecasting a profit of $3.59 a share.

Best Buy said that its same-store sales dropped 3.3% for the quarter, compared to a gain of 1.7% in the year-ago quarter.

Shares of rival electronics retailer RadioShack (RSH, Fortune 500) slipped about 2%. Shares of Corning Corp., (GLW, Fortune 500) which provides glass for flat screen TVs, an important product for Best Buy - fell about 2%. Best Buy specifically cited disappointing television sales in its earnings report. 

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