WSJ : Snapchat Fetches $10 Billion Valuation

Snapchat Fetches $10 Billion Valuation Kleiner Perkins Investment Gives the Messaging Service a Shot in the Arm

Kleiner Perkins Caufield & Byers has agreed to invest in Snapchat Inc., an ephemeral messaging service, at close to a $10 billion valuation, people with knowledge of the matter said.

More Snapchat Said to Have More Than 100 Million Monthly Active Users Snapchat, which has talked to several potential investors in recent months, is in the process of raising a large investment round that would make it one of the most valuable private, tech startups despite virtually no revenue.

The venture-capital firm committed to invest up to $20 million in May, one person added.

At least one strategic investor has also committed to invest in the round, which isn't yet closed, two of the people said.

A spokeswoman for Kleiner Perkins wasn't immediately available for comment.

WSJD is the Journal's home for tech news, analysis and product reviews.

Amazon's Play: Videogames as Sport For Steve Ballmer's Next Act, a $2 Billion Impulse Buy Google Search Results Are Disrupted by Repeating Image Blacks, Latinos Dominate Silicon Valley's 'Invisible Workforce' A Snapchat spokeswoman said: "The valuation of our business and our capital requirements are the least exciting aspects of supporting the Snapchat community. We have no further comment at this time."

Snapchat's valuation, at about $2 billion last year, has soared even as the startup lacks a clear business model. Investors see potential to make money from the millions of teenagers and college students on the three-year-old app, a group that is highly coveted by advertisers and increasingly difficult to reach through traditional media like television and magazines.

New capital could help Snapchat gear up for its first foray into advertising, expected later this year. The company has held talks with media companies and advertisers in recent weeks about a new content service called Snapchat Discovery, a person familiar with the matter told The Wall Street Journal earlier this month. The service that would let users read daily editions of publications, video clips and ads by holding down a finger on the screen, like they do with photos and other messages on the app before disappearing.

>>> US Close Dow+0,17% S&P+0,10% Nasdaq +0,29%

Closing Market Summary: Small Caps Lead Stocks Higher

Equity indices ended the Tuesday session on an upbeat note with small-cap stocks pacing the advance. The Russell 2000 jumped 0.9%, while the S&P 500 posted a slim gain of 0.1% with seven sectors ending higher.

In some ways, today's session resembled yesterday's affair as the key indices climbed out of the gate, reached their highs during the first half of action, and spent the remainder of the session in a slow retreat from their best levels of the day. Trading volume was light once again, but today's session generated a bit more activity (501 million) than what was observed yesterday.

Biotechnology outperformed for the second day in a row with the iShares Nasdaq Biotechnology ETF (IBB 275.71, +3.08) climbing to a new record high. The ETF rose 1.1%, while the health care sector (+0.4%) was the only outperformer among countercyclical sectors.

Meanwhile, the cyclical side fared a bit better with energy (+0.5%) and financials (+0.3%) spending the entire session ahead of the broader market. Energy rebounded from recent underperformance, while crude oil added 0.5% to $93.85/bbl.

For its part, the financial sector received support from heavily-weighted components like Citigroup (C 52.13, +0.50) and JPMorgan Chase (JPM 59.74, +0.40). Similarly, foreign banks fared well with the likes of Deutsche Bank (DB 34.55, +0.66) and UBS (UBS 17.96, +0.11) posting respective gains of 2.0% and 0.6%.

The remaining cyclical sectors ended on a mixed note with consumer discretionary (+0.1%) and technology (+0.1%) finishing right behind the S&P 500, while industrials (-0.3%) settled in the red.

In the discretionary space, shares of Best Buy (BBY 29.80, -2.19) fell 6.9% after the company's cautious second-half outlook masked better than expected earnings. On the flip side, DSW (DSW 30.99, +2.62) soared 9.2% in reaction to strong results. Overall, retailers displayed strength with the SPDR S&P Retail ETF (XRT 89.17, +0.66) climbing 0.8%.

On the downside, the industrial sector lagged amid weakness in transport stocks. Alaska Air (ALK 46.28, -0.61) and Delta Air Lines (DAL 39.90, -0.62) both lost near 1.4%, while the Dow Jones Transportation Average shed 0.4%.

Treasuries ended little changed after surrendering their overnight gains. The 10-yr yield finished at 2.39%.

Also of note, Presidents of Russia and Ukraine met in Minsk today for the first time since the conflict between the two governments broke out. The meeting did not produce any results, but both parties have agreed to return to the capital of Belarus for future talks.

Economic data included Durable Orders, FHFA Housing Price Index, Case-Shiller 20-city Index, and Consumer Confidence:

* Durable goods orders soared 22.6% in July after increasing an upwardly revised 2.7% (from 1.7%) in June, while the Briefing.com consensus expected an increase of 7.0% 

* The headline surge was due to Boeing (BA 128.60, +0.27) reporting record-setting orders in July, which resulted in a 318% increase in orders of nondefense aircraft and parts, leading to an outsized 74.2% increase in transportation orders  * Excluding transportation, orders fell 0.8%, while the consensus expected an increase of 0.6% 

* The June Housing Price Index from the FHFA rose 0.4%, which followed a revised increase of 0.1% observed during the prior month (from 0.4%)  * The Case-Shiller 20-city Home Price Index for June rose 8.1%, while an 8.3% increase had been expected by the Briefing.com consensus  * The Conference Board's Consumer Confidence Index rose to 92.4 in August from a downwardly revised 90.3 (from 90.9) in July, while the consensus expected a decline to 88.3 

* The Present Conditions Index increased to 94.6 in August from 87.9 in July, while the Expectations Index fell to 90.9 from 91.9 

Tomorrow's economic data will be limited to the weekly MBA Mortgage Index, which will be released at 7:00 ET.

* Nasdaq Composite +9.4% YTD  * S&P 500 +8.2% YTD  * Dow Jones Industrial Average +3.2% YTD  * Russell 2000 +1.0% YTD

(BFW) Apple Said to Prepare New 12.9-Inch IPad for Early 2015 Release



Apple Said to Prepare New 12.9-Inch IPad for Early 2015 Release
2014-08-26 18:52:39.347 GMT


By Jeran Wittenstein
Aug. 26 (Bloomberg) -- Apple suppliers are preparing to
manufacture the largest-ever iPad with production scheduled to
start by 1Q of next year, people familiar tell Bloomberg’s Tim
Culpan, Adam Satariano and Ian King.
* AAPL currently makes iPads with 9.7-inch and 7.9-inch
displays
* AAPL has been working with suppliers for at least a year to
develop a new range of larger devices
* AAPL spokeswoman declined to comment
* NOTE: Suppliers have recently started making an updated 9.7-
inch screen iPad and were also set to enter productin of a
new version of the iPad mini, people familiar have said;
those devices are set to be available in time for this
holiday season
Full story: NSN NAXGBB6TTDS7 <GO>


For Related News and Information:
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To contact the reporter on this story:
Jeran Wittenstein in San Francisco at +1-415-617-7203 or
jwittenstei1@bloomberg.net
To contact the editor responsible for this story:
Arie Shapira at +1-212-617-1488 or
ashapira3@bloomberg.net

WSJ : Berkshire to Pay U.S. Tax Rate on Burger King Investment

Berkshire to Pay U.S. Tax Rate on Burger King Investment
Fast-Food Chain to Buy Tim Hortons, Set Headquarters in Canada

Warren Buffett's Berkshire Hathaway Inc. BRKB +0.35% will pay the U.S. corporate tax rate on any income it receives from helping to finance Burger King's BKW +19.51% planned takeover of Canadian coffee-and-doughnuts chain Tim Hortons, THI.T +19.26% according to a person familiar with the deal.

Under the agreement, announced Tuesday morning, the merged company will be based in Canada. For Berkshire, which is providing $3 billion of the total $12.5 billion in financing for the deal, there won't be significant tax savings by having the company based in Canada, the person said.

Although Canada has a lower corporate tax rate than the U.S., the parties are likely to say that a lower corporate-ax bill isn't the motivator for this particular combination.

Combined federal and state corporate taxes for Canada are in the neighborhood of 27%, while in the U.S. they are closer to 40%.

If the deal goes through, Berkshire will get preferred stock in the combined Canadian company, according to the person familiar with the deal. The preferred shares will pay Berkshire a dividend at a high interest rate.

However, since Berkshire is a U.S. company based in Omaha, Neb., it would pay U.S. federal corporate taxes at the rate of 35% on the dividend amount. Canada's federal corporate income-tax rate is about 15%.

Mr. Buffett drove a hard bargain during negotiations, even though Berkshire is a passive equity investor and won't have an operational role.

Berkshire has structured its portion of the deal so that it gets compensated for more than $50 million in higher taxes it expects to pay as a U.S. financier, the person familiar with the matter said. In other words, the combined Burger King-Tim Hortons will help subsidize Berkshire's higher tax bill.

Burger King's controlling shareholder, 3G Capital Management, likely obliged Mr. Buffett's demands because the two are already partners. As another person familiar with the matter said, "it doesn't hurt to be associated with Berkshire."

Last year, Berkshire and 3G teamed up to buy ketchup maker H.J. Heinz for $23 billion, and that partnership is said to be doing well.

Also, part of the reason for getting Berkshire involved is to keep Burger King's current debt rating, one of the people said. Preferred-share investments usually get counted as equity rather than debt.

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: DSW +11.7%, PINC +2.1%, DAKT +0.9%.

M&A news: THI +11.8% (Tim Hortons shareholders will receive C$65.50 in cash and 0.8025 common shares of the new company per Tim Hortons share from BKW), BKW +4.2% (also, Warren Buffet (BRK.B) plans to invest in Tim Horton's (THI) & BKW deal, according to reports).

Select pharma/biotech related names showing strength: BABY +13%, ENZN +5.2%, IDRA +4.9%, ACHN +4.5%, DNDN +4.5%, PVCT +4.5%, ICPT +3.2%, REGN +1.6%, TKMR +1%.

Select metals/mining stocks trading higher: IGLD +2%, GDX +1.4%, ABX +1.3%, GFI +1.2%, SLV +1.1%, GOLD +1.1%, AEM +0.9%, KCG +0%, .

Other news: GENE +18.3% (announced earlier further patent success in USA), KITE +16% (announced patients with aggressive non-Hodgkin's lymphoma experience positive results afte rreceiving anti-CD19 chimeric antigen receptor T Cells; 12 out of 13 evaluable patients had complete remissions or partial remissions), ZGNX +15.4% (Armistice Capital discloses 5.9% passive stake in 13G filing) DGLY +13.2% (following 50%+ move higher yesterday), MNOV +12% (to initiate clinical trial of MN-166 (ibudilast) in ALS ), KNDI +8.8% (China will consider $16 bln in funding for electric vesicles, according to reports ), PE +3.4% (acquired Midland Basin assets for ~$252 mln;), CMTL +2.6% (confirmed it is exploring strategic alternatives), PINC +2.1% (announced the acquisition of Aperek, Inc. for $48.5 mln in cash; co also reported earnings), PT +1.6% (still checking), AMKR +1.1% (poisitve Mad Money Mention), NEM +1.1% (mining arbitration case against Indonesia has been withdrawn, according to reports).

Analyst comments: MBLY +3.7% (initiated with an Overweight at Barclays, initiated with an Outperform at William Blair, among others), MT +3.2% (upgraded to Buy from Sell at UBS), VE +2.4% (upgraded to Outperform from Neutral at Exane BNP Paribas), ENPH +2.2% (initiated with a Buy at Needham), MPEL +1.6% (upgraded to Overweight from Equal-Weight at Morgan Stanley), PCYC+1.2% (Hearing positive comments at Deutsche Bank related to prospects of Imbruvica)

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: ADEP -17.4%, KANG -16.3%, TSL -8.8%, SAFM -6.2%, MOV -4.3%, BBY -3.7%, PSEC -3.5%.

Other news: DRL -19.1% (Co disclosed that it was unable to reach a settlement agreement with Treasury of Puerto Rico), ASTI -7.7% (announced 1-for-10 reverse stock split), COCO -5.9% (disclosed it expects a $55-59 mln impairment charge; co also disclosed it continues to need to obtain additional sources of liquidity), BLMN -2.7% (negative Mad Money Mention), RWC -2.4% (following late strength on story that FBI has scuttled a contested $500 mln deal with Motorola), NES -1.7% (announced that VeroLube has proposed a reduction in the purchase price of Thermo Fluids to $145 mln from $175 mln), ROYT -0.9% (declared a September cash distribution of $0.11417 per unit, 14% below prior months distribution of $0.13234 per unit).

Analyst comments: ARCO -1.8% (downgraded to Neutral from Buy at BofA/Merril), SPG -0.4% (downgraded to Market Perform from Outperform at BMO Capital Mkts).