Daily News: Amazon, Burger King, JP Morgan, Sprint

  • Amazon jumps into the TV-over-the-Internet fray. Amazon (AMZN) is entering the market to deliver television services over the Internet. The online retailer is working on a subscription service that would provide television shows and movies over the Internet. It recently pitched the idea to executives at General Electric’s (GE) NBC Universal, Time Warner (TWX), News Corp. (NWSA), and Viacom (VIA). The race to lead the digital delivery of television shows and movies is quickly heating up, as Apple (AAPL), Netflix (NFLX), and Google (GOOG) have also recently made moves to better position themselves in online delivery of such content.
  • Burger King exploring a potential sale. Burger King (BKC), the nation’s number two hamburger chain, has held talks with potential suitors and is thought to be looking at options for a potential sale of the company. One company that may be interested is private equity firm 3i Group. Burger King currently has a market cap of $2.3B, and has been public since 2006, although private equity firms including TPG, Bain Capital, and Goldman Sachs (GS) still hold a sizeable stake in the company. Burger King was up 16.11% in pre-market trading.
  • JPMorgan Chase halts proprietary trading to comply with Volcker Rule. JPMorgan Chase (JPM) is shutting down its lucrative proprietary trading desk as it seeks to come into compliance with the Volcker Rule, a part of the new financial reform law that limits proprietary trading on the part of commercial banks. Roughly 80 people, mostly in New York and London, will lose their jobs over the move. It could cost the firm as much as $1.4B in lost annual profit.
  • Sprint debates sharing 4G investment with rival provider. Sprint Nextel’s (S) board met to discuss whether it will let rival T-Mobile (DTEGY.PK) invest in its majority-owned wireless network provider, Clearwire (CLWR). Clearwire has said it could announce new funding by the end of the fourth quarter and it is in talks with new and existing investors, including T-Mobile. It needs additional funds to pursue secondary markets and continue to build out its network.
  • Motorola will capitalize spin-off with $3.5B; Icahn ups investment. Motorola (MOT) said it will put $3.5B into the phone and set-top box unit that it plans to spin off in the first quarter of next year. The cash will be used for operations, to expand the business, and possibly to fund acquisition activity, according to a company executive. Meanwhile, activist investor Carl Icahn disclosed in an SEC filing that he has recently purchased an additional 3.3M shares of the company. He currently owns more than 10% of Motorola.
  • SEC declines to pursue fraud charges against Moody’s. The SEC said it will not bring charges against Moody’s (MCO) for securities violations, even though it found that the ratings agency failed to comply with its own procedures for rating complex derivative securities in 2007. The SEC said that the decision was based on jurisdictional issues, since the securities in the case were issued and rated in Europe. However, it warned ratings agencies that the new financial reform law gives it new powers to pursue such cases even if they originate outside the U.S.
  • Hitachi plans IPO of hard-drive unit. Japanese electronics firm Hitachi (HIT) is planning an IPO of its hard-drive unit in the U.S. and could close the offer by the end of the year. Analysts said the world’s number three hard-drive maker could be valued at $3B. The company is also exploring a sale of the unit, but an IPO is thought to be the most likely outcome.
  • Citigroup plans to triple its China workforce. A Citigroup (C) executive said that the firm plans to almost triple its workforce in China by hiring up to 7,500 people in the next three years. The bank currently has 4,500 employees in China and the addition would be the biggest expansion for Citigroup in the region. The plans support Citigroup’s effort to expand in China to compete with HSBC (HBC). Citigroup has said that it plans to open two branches a month there for the foreseeable future.
  • Staples to sell Kindle, Borders slashes price on e-reader. Staples (SPLS) announced plans to begin selling Amazon’s (AMZN) electronic reader, Kindle this fall. It plans to sell the $139 version of the Kindle, the 3G model, and the more expensive Kindle DX. The announcement intensifies Amazon’s battle with Barnes & Noble (BKS), Borders (BGP), and Apple (AAPL) for market share in the increasingly crowded space. Meanwhile, Borders said it would cut the price on its branded e-reader Kobo from $150 to $130.
  • FOMC Minutes Recap: GDP and housing down but not out. The FOMC minutes released yesterday from the August 10 meeting indicated that GDP growth was worse than most members anticipated, but they still expect it to pick up in 2011. Many noted the protracted downturn in housing prices seems over, and a few said prices were rising in their districts. Credit conditions aren’t restraining bigger firms’ capital spending. Labor looked worse than expected. Splits are becoming apparent over whether moves toward easing send the wrong message, yet the policy statement got all votes except Thomas Hoenig’s.

Source: SeekingAlpha