Loss leadership lessons from Amazon's Jeff Bezos
Recapping the day's news and newsmakers through the lens of CNBC.
Some business truisms never go away, like the one about giving away the razor so you can sell the blades. In the newest high-tech twist on that, Amazon says its upcoming Kindle Fire HDX tablet will sell at a loss, even though the price will jump 25 percent to $379 to cover new features like Mayday, a one-button link to tech support. Kindles, of course, are designed to steer users to Amazon's main business, selling content like books and movies. Few CEOs can hold a candle to Amazon's Jeff Bezos when it comes to increasing stock value by "giving the house away." Watch and learn ... on your Kindle Fire.
"We think we're better aligned with our customers if we make money when people use our devices, not when they buy them."—Amazon CEO Jeff Bezos
London whale: Just an appetizer
Remember last week's story about the $620 million fine over the "London Whale" debacle at JPMorgan Chase? Turns out that was just an appetizer. The full-course is a possible $3 billion to $7 billion settlement of a string of investigations and lawsuits over the firm's sale of toxic mortgage securities. The era of slap-on-the-wrist civil settlements is ending for Wall Street, and treading the legal line can now be awfully expensive, and embarrassing.
"Forget the money, forget the fines, this is about making an institution heel. It isn't like the Justice Department is trying to get money. [They're] trying to make JP Morgan look horrible in order to be able to show that they are tough."—CNBC's Jim Cramer
Analogies CEOs should never, ever use
It's every executive's nightmare: you open your mouth before an important audience and something awful comes out. The latest victim of foot-in-mouth disease is Robert Benmosche, CEO of American International Group. He's apologizing for widely criticized comments to The Wall Street Journal that compared attacks over AIG's role in the financial crisis to lynchings in the South. Maybe those diversity sessions for employees should be mandatory for the bosses.
"[It] was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that—sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong."—Benmosche
The global one percent
Quick wealth quiz: the biggest cache of well-to-do customers is in ... ? If you answered the U.S., you're wrong! Or soon will be. By sometime next year, wealth in the Asia-Pacific region could surpass that of North America, according to a new study. Total wealth of individuals with assets worth at least $1 million could rise to $15.9 trillion in Asia and the Pacific, compared to the latest figure of $12.7 trillion in North America. But wherever they are, wealthy folk are happy. The Millionaire Confidence Index, which has been rattling around the not-so-good single digits for years, suddenly spiked to 23, a record. Possible reasons: the survey predates depressing news like the crisis in Syria and the Washington budget fight; or the rich, from up in the catbird seat, can see economic improvements coming from farther away.
"My theory is that the wealthy spent so much time cavorting in the Hamptons and the South of France in August that their brains got sunburned. Now that they're back in the office, we may see a more realistic number in September."—CNBC's Robert Frank
"The Asia-Pacific market is clearly one to watch. Its leadership in global high net-worth wealth growth positions it to become the largest wealth market by population as early as 2014."—M. George Lewis, Group Head of RBC Wealth Management & RBC Insurance
Does BlackBerry's suitor really want it?
Fairfax Financial intends to buy BlackBerry, but some analysts speculate that the $9-a-share deal is a ploy to force other potential bidders to ante up. Fairfax already owns about 10 percent of the communications-device firm, giving it good reason to see that BlackBerry goes for the highest possible price. Supporting evidence for the stalking-horse view: Fairfax faces no penalty if it pulls out of the deal, and will get a $157 million "incentive fee" if another buyer ends up paying more than $9.
"I would look at this as putting a line in the sand, as telling the market that at $9 there is a buyer going through due diligence."—James Gellert, CEO at Rapid Ratings
—By Jeff Brown, Special to CNBC.com