BUSINESS-01
Spin Off Alibaba Stake; South African President Removes Finance Minister;
North Face Founder Dies at 72; Maine's Booming Lobster Industry; DuPont and
Dow Considering Merger; The Journey to Machu Picchu; The Grammar of
Texting; A Look Into "Hacktivism". Aired 4-5p ET - Part 1>
La Monica, Laurie Segall >
resignation of the city's mayor; Yahoo! has announced plans to split itself
in two, with the Internet company it's best known for becoming an entirely
separate company; South African president Jacob Zuma has removed his
finance minister as the country's economic struggles continue; Founder of
fashion companies The North Face and Esprit, Douglas Tompkins, died after a
kayaking accident in Chile; The lobster is helping Maine's fishing industry
claw its way back from the brink. Shares of Dow Chemical and DuPont both
closed up about 11 percent this Wednesday. And that's following reports
the two companies are considering a mega merger. Machu Picchu is one of the
most famous views in the world and the beauty begins in the journey to get
there. A look into superhero hackers who participate in hacktivism.>
Technology; Travel; Business; Chemicals; Mergers & Acquisitions; Grammar;
Machu Picchu; Security>
[16:00:00]
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PAULA NEWTON, CNN HOST (voice-over): Celebrities including Sharon Osbourne (ph), ringing the bell today on the markets, very few (INAUDIBLE) stars on those markets today after a solid start things have not ended well on Wall Street. It's Wednesday, the 9th of December.
Tonight, coming to the spin: Yahoo! says it will split off its core business.
South Africa's finance minister is removed while Iran is left reeling and it's all about the chemistry. Two titans of American industry are set for a gigantic merger.
I'm Paula Newton in for Richard tonight and this is QUEST MEANS BUSINESS.
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NEWTON: Good evening. We will bring you the day's business news in a moment. But first we want to take you to Chicago, where hundreds of protesters have gathered to call for the resignation of the city's mayor. Now Rahm Emanuel apologized earlier for how the death of a black teenager at the hands of police was handled.
Laquan McDonald was shot dead by an officer --
(CROSSTALK)
NEWTON: -- last year. Jason Van Dyke was not charged with his murder after another 13 months. Martin Savidge is with the protesters there in Chicago.
And Marty, just to bring our international audience up to date who may not have been following this, even if they're following the story, what happened today?
How did this all unfold?
MARTIN SAVIDGE, CNN CORRESPONDENT: Well, today there was a very passionate, very strong speech that was made by Mayor Rahm Emanuel and a special address to city council. He took responsibility and he also apologized and at one point his voice seemed choked with emotion.
To many Chicagoans, though, a lot of the words he said they have heard before. These people that are out on the street are calling for him to resign.
The whole investigation into the police department, the charges of both corruption and in some cases actual murder charges against officers, has sparked a political firestorm. And it was one clearly he wasn't really initially prepared for.
Today he was trying to get back on his feet. You can tell by the crowd here not everyone is buying the solutions he's put forward.
Right now we're walking on the Miracle Mile; this is the heart of Chicago's financial but most especially its shopping district. You can see a lot of high-dollar stores here. Macy's coming up, you've got Cartier. It has all been peaceful. It is all carefully organized. It's been going on for several hours and it's being led, ironically, by the Chicago police.
Primarily what they do is march ahead, close down the intersections, let the protesters through and then move on. There are about as many police as there are protesters. It may sound loud; there are several hundred participants. But for the most part, it has been peaceful. We have heard of only one arrest -- Paula.
NEWTON: Extraordinary scenes of what's going on there.
Give us a sense of how much this has basically snarled the city traffic and what the end game is here. It's extraordinary that you tell me that this is being led by police, obviously they don't want anyone to get hurt and they want to make sure that everyone there can just let off some steam.
SAVIDGE: Well, here I can show you.
See how the police are lining the intersections; this is pretty typical. They will next cut off the traffic to allow the protesters to come peacefully through. They also create this kind of bicycle shield to protect the storefronts, to try to keep the protesters off the sidewalks.
The organizers themselves are following with bullhorns; they're directing the crowd. They tell them when to go and tell them when to stop. So it is being carefully maneuvered, both with the help of the police -- I won't say in cooperation with the police and also with those who have organized this protest.
It's snarling traffic without a doubt but it's not city-wide. It's a very limited, focused area, several hundred demonstrators. You're not shutting down the city, you're shutting down block after block of a moving demonstration -- Paula.
NEWTON: Yes, and it certainly seems that right now authorities are quite tolerant of it.
But you know, Marty, to get back to the protest here and the reason they're having it, what is the end game?
I mean, are they saying they're not going to stop until Rahm Emanuel quits?
SAVIDGE: That's what the protesters are saying. It's not just Rahm Emanuel. It's Anita Alvarez. She is the county state attorney who many believe that she has not properly gone after the officers when those officers, at least according to the public here, have been involved in crimes against primarily young black men.
So the anger is focused both at the mayor -- the police chief here has already been forced to step down. And there are at least two other people this crowd wants to see, one being the mayor and the other being the state attorney.
So whether they will stop until they get that, hard to say. They have already announced this protest --
[16:05:00]
SAVIDGE: -- once they have finished on the street is moving on to a police meeting tonight. It's quite clear they feel that they have leverage on their side at least in the term of voice and numbers they've got on the street. It's drawing quite a crowd; most people are only coming to watch though -- Paula.
NEWTON: OK. And we will hope that it stays peaceful. Martin Savidge, thanks for taking us on that walk through those protests for us in Chicago. We will continue to watch those developments there as they unfold in the next few hours.
Now one of the most famous names in Internet history plans to spin off its own core business, Yahoo! has announced plans to split itself in two, with the Internet company it's best known for becoming an entirely separate company.
Previous plans to spin off the Alibaba stake have been scrapped and now it's the Yahoo! business itself that will be spun off. Yahoo!'s 15 percent stake in the Chinese ecommerce giant is worth about $30 billion.
Now here's the problem. Spinning that off could mean that the stock market would value Yahoo!'s Internet business as being worthless, absolutely zero. Yahoo!'s chairman insists the firm is not looking to sell any part of the company to another bidder. Today Yahoo! shares fell more than 3.5 percent on the back of that news.
Now CEO Marissa Mayer told CNBC the company is on the right path.
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MARISSA MAYER, CEO, YAHOO!: I think that our strategy on focusing on search communications and digital content is the right one for Yahoo!, given our (INAUDIBLE). And when you look at our mavens (ph) mobile video native and social, those are the growing areas of digital advertising. And so we are proud of our decision to focus on that.
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NEWTON: Now if Yahoo! wants to move forward, it has to act like its users and search. The firm will have to start with what will be left once it spins off its Alibaba stake.
Now it will still have its Web portal. And that's what's most familiar to us. And the reason why it became successful in the first place, that's what we know Yahoo! to be. Now Yahoo! is still one of the most visited sites online. And Yahoo! Japan is still quite successful.
Now there's then the online advertising business. Now one advertising research firm predicts Yahoo! will snap up more than $3 billion in worldwide digital ad revenue this year alone, and that would be about 2 percent of a market that's still a good revenue number there.
And as you heard today, Mayer doubled down on her commitment to improving the company's mobile products.
Nicholas Carlson, the editor-in-chief of "Insider" and he's also the author of a book on Marissa Mayer and Yahoo!.
You really got to help me here. We have been reading about this for a while. This kind of threw me through a loop today. We have gone through the details. You tell me, what is this going to mean for Yahoo!?
NICHOLAS CARLSON, EDITOR-IN-CHIEF, "INSIDER": Well, what this means for Yahoo! is going forward it's going to be two companies and one is going to be worth very little and one will be worth about $30 billion, as you said. And that will be the one that's got a bunch of stock in other companies, mostly Alibaba, actually apparently the Yahoo! Japan stake that Yahoo! also owns a state in Yahoo! Japan.
And it will go with the new company, the new spun-out company. And that'll be mostly that company's value as well. So basically what the market is telling us right here is that Yahoo!, the company we all have heard of, is worth basically nothing.
NEWTON: It's worth basically nothing because Marissa Mayer's plan hasn't worked or it just in general the model that they already had in place didn't work?
CARLSON: Right. So Marissa Mayer came in 2012 and it would have taken a miracle to turn the thing around even at that point. I think she's made mistakes but if, you know, you could resurrect Steve Jobs, put him in charge of this company and it's unclear that it would have been successful.
Mayer did make one very big mistake and that was sort of her first initial strategy. She said, let's do what Yahoo! has always done, which is make the Internet easy to use.
Yahoo! was very successful in the late '90s, early 2000s, because it made the Web easy to use. And so she said let's make mobile easy to use. The problem is, by the time you do that in 2012, Google and Apple and thousands and thousands of developers have already been doing that for many years.
NEWTON: In terms of what we -- you know, Yahoo! was an Internet pioneer. Let's face it.
Can you see a time where Yahoo! is completely wiped off the Internet?
We won't see it's footprint anymore.
CARLSON: Well, here's the funny thing about Yahoo!, right, so the Internet is more increasingly becoming the mobile Internet, what you use on your phone.
NEWTON: It's only on your phone.
CARLSON: I mean, basically people already use their phones to access the Internet more often than they do their desktop computers. Yahoo! is just like a magazine company or a newspaper company in that it's a legacy media business at this point. And that's the desktop Web.
The desktop Web is a dwindling arena. And Yahoo! dominated that and then kind of got beaten at that by Google a little bit. So it was second or third place in that. And the that whole arena has just sort of shrunk and Yahoo! hasn't really been able to figure out how to way to dominate mobile.
If you go to the Apple iTunes store and you look at the top apps --
[16:10:00]
CARLSON: -- the first one that's a Yahoo! app is at number 56 and it's Yahoo! Mail. Facebook has three apps in the top five and Google has I think about eight in the top 50. So that just gives you some perspective on where Yahoo! really stands.
NEWTON: You have to give me a prediction. You know a lot about Yahoo!.
Is this the end?
I mean, and how soon could it come?
CARLSON: I think this is the end in this sense. I think that maybe even before spin-out, some sort of private equity firm, some sort of strategic firm comes in, buys this smaller version of Yahoo!, which as we just noted, still throws off $3 billion in cash.
NEWTON: Amazing flow there.
CARLSON: So maybe they go in and they cut the head count by 10,000 and turn this thing to a profit machine. Then it's a useful business for somebody.
NEWTON: But not what it was. And not what Marissa Mayer wanted it to be.
Nicholas Carlson, thanks so much for taking us through that. Appreciate it.
CARLSON: My pleasure.
NEWTON: Now, the big change in South African government -- and this made headlines today. We'll analyze the president's decision to remove the country's finance minister and look at the impact on the economy.
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NEWTON: The South African president Jacob Zuma has removed his finance minister as the country's economic struggles continue. Nhlanhla Nene will be moved to another key role, according to the president. Now the South African currency, the rand, has fallen to a record low in the wake of the news.
CNN's Eleni Giokos joins us now from Johannesburg.
Eleni, this really stunned markets today and, yet, is there a presumption with Jacob Zuma's government that, by removing the finance minister, that things will change?
I mean, clearly, they failed in their policies as the entire government to really be able to recharge this economy.
ELENI GIOKOS, CNN BUSINESS CORRESPONDENT: Well, I mean this is the thing. What was Nhlanhla Nene doing that wasn't working in favor of the economy?
Remember Nhlanhla Nene actually inherited a lot of legacy issues and was dealing with a lot of external factors as well as domestic issues from Janet Yellen monetary policy to commodity prices coming under pressure.
He was very well known, very respected. He was deputy finance minister since 2008 before taking on the role of finance minister. He was making very bold decisions to try and steer the economy back on track.
That said, South Africa is only expected to grow by 1.4 percent and now he's being replaced by a very little known lawmaker, David Van Rooyen, where --
[16:15:00]
GIOKOS: -- when we look at the actual announcement that came through from government today, a very short announcement, saying that David Van Rooyen was formerly a mayor of a small town in a province in the country and also had started politics in the 1980s, a form of freedom fighter together with Jacob Zuma.
So he doesn't have a very strong portfolio, not very well known on the international community front, either locally as well. A lot of the chief economists that I spoke to are voicing concerns, saying they're very shocked and not only that, saying that this could actually be some kind of political interference within the finance ministry.
NEWTON: That's what I was going to ask you.
In terms of a game plan here for President Zuma, it seems that he obviously just wants to take hold of these issues on his own.
And yet, what is he pointing to, in terms of -- I know that he's met with the Chinese president recently and they are trying to recharge that economy.
But what is he pointing to in terms of what he thinks is going to get growth or more growth started in South Africa?
GIOKOS: One of the things that we need to focus on is the fact that it's coming, this decision comes at a really bad time. Firstly, it's December. Liquidity is low. South Africa shuts down.
We're also two months away from the national budgets. And just drawing on the old adage of money is a coward; whenever there's uncertainty, you see a flight out of an emerging market like South Africa, this is why the rand is now plummeting to a record low.
This also comes just a week later after we saw a credit ratings downgrade that came from both S&P as well as Fitch. We are now teetering on basically junk status in South Africa.
So what is it going to take to get this country back on track? It's to actually pull back on spending, trying to focus on putting money to work.
And it's interesting you say that the government met with China just last week, signing $6.5 billion worth of deals. If you drill into those deals, those are mostly funding projects for Paris staples (ph) in the country, such as Eskom, the power utility, which has come under pressure.
We also need to mention that South African Airways, which has been under disarray for a very long time and (INAUDIBLE) just a few weeks ago had made the announcement saying that South African Airways couldn't go ahead with a very big deal with Airbus. We know that that created quite a bit of tension within the government as well.
So it remains to seen what David Van Rooyen is going to do going forward and that's going to be one of the big items to kind of -- that's going to be very telling about whether there's going to be government interference going forward, specifically on the South African Airways deal.
NEWTON: Yes. And there will be a lot of interest in that deal as this goes forward. We'll continue to watch that South African economy. Eleni, thank you very much, there live for us from Johannesburg.
Joining the home stretch at climate talks in Paris. We'll look at the legacy of a clothing business pioneer turned environmental advocate. And when it comes to global warming, we'll look at some unexpected winners.
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UNIDENTIFIED FEMALE: Coming up after the break, why lobster is propping up the entire fishing industry here in Maine.
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NEWTON: Leaders from around the globe wrap up climate talks in Paris. The business world has lost a passionate advocate for the environment. The founder of fashion companies North Face and Esprit, very popular brands, he was Douglas Tompkins and he died after a kayaking accident in Chile on Tuesday.
Now Tompkins sold his share of Esprit in the late 1980s and became a conservationist. He started the Foundation for Deep Economy and founded nature sanctuaries in Chile and Argentina that cover hundreds of thousands of acres of land. Tompkins hoped to challenge people to seek a new way of life and a new type of economic plan to help keep endangered species alive.
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DOUGLAS TOMPKINS, FOUNDER, THE NORTH FACE: It's worth reflecting deeply on why we find ourselves in this slow motion catastrophe we call the extinction crisis and ponder deeply if we do not need another economy, an economy whose intrinsic logic is to be thrifty and not over-consumptive, to be conservative and not wasteful, to be restorative and nontoxic to these wild and wonderful creatures that are our fellow members in the biotic community.
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NEWTON: Tom Butler joins us now and he is from the Foundation for Deep Ecology.
Thanks so much for joining us, Mr. Butler. I mean, ultimately death, a tragic death and yet a very full life.
What do you think his legacy will be?
TOM BUTLER, FOUNDATION FOR DEEP ECONOMY: His legacy will go on forever. Doug Tompkins was a force for nature. And all of us who had the privilege of working with him and seeing that passion for wild nature were inspired by it.
When the history books are written, he almost certainly will be considered one of the great conservationists of our time and very likely the greatest national park-oriented philanthropist of all time.
NEWTON: The North Face is such a ubiquitous outdoor brand and then you have Esprit. He talked about consumerism.
Do you see it as an irony or do you see it as a progression that this is a man who started out pioneering that kind of consumerism, cheap consumerism and those kinds of products to everybody and ended up ending his life, a significant portion of his life, really fighting against that kind of lifestyle?
BUTLER: Certainly did fight against it, passionately for the last 25 years of his life. He felt like he was making up for that time that he had spent in the business world, inculcating desire for throw-away fashions.
He wanted to use his wealth and his time and his passion to save wild nature. He often said everybody has the opportunity to be either an activist or an inactivist and he very much wanted to be active in a way -- he would often quip that you have a choice of paying your rent for living on the planet or not.
And that was what he chose to do. And the numbers speak for himself, 2.2 million acres of conservation land, five new national parks, one major national park expansion, it's really an extraordinary legacy and it will go on forever.
NEWTON: I'm sure will continue to live on in your foundation. Mr. Butler, thanks so much for joining us. Appreciate it.
BUTLER: Thank you.
NEWTON: Now, at the climate summit in Paris, U.S. Secretary of State John Kerry announced Washington will double its grant-based program for some countries most vulnerable to climate change over the next five years.
Within the United States, one community that's feeling the effect of climate change is Portland, Maine. Fish stocks are plummeting. But there is one species helping the fishing industry claw its way back from the brink: the lobster. Last year it accounted for three-quarters of Maine's fishing revenue.
Clare Sebastian finds out why in our latest installment of "Sea Change" in Maine.
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CLARE SEBASTIAN, CNN CORRESPONDENT (voice-over): Even at the end of a long day at sea, these lobstermen take their time. Each fresh specimen must be carefully unloaded. For the state of Maine, there's a lot riding on these spindly frames.
UNIDENTIFIED MALE: People come to Maine, they want to eat a lobster. They want to see a boat go by. They buy a postcard and -- but we're more than that. You know, we have got 5,000-plus lobster licenses in the state of Maine. And that's 5,000 small businesses --
[16:25:00]
UNIDENTIFIED MALE: -- scattered from one end of the coast to the other.
SEBASTIAN (voice-over): Those 5,000 businesses have had a very good year. In 2014, lobstering in Maine brought in a record $450 million, almost 25 percent more than the previous year.
Rising demand, coupled with a unusually cold winter which delayed the start of the lobster season, pushed up the price per pound. Even so, Train (ph) says, they're not tempted to overfish.
UNIDENTIFIED MALE: Now on a typical day, I throw 10 to 20 times as many back overboard as I keep. And I think that's a very good thing because every time we're doing that, we know there's something the next time. We built a buffer in to our fishery to accommodate changes in the environment.
SEBASTIAN (voice-over): From the lobstermen to the restaurants that sell their catches, this is an economic success story.
Gamilo's (ph) Restaurant is an institution here in Portland, Maine. At peak season, they sell more than 200 of these every day. For $55 each for the largest, daily revenues can run into the thousands.
It's a simple business model for a rather complicated eating experience.
UNIDENTIFIED MALE: What we got here is a bowl for your shells.
SEBASTIAN: OK.
SEBASTIAN (voice-over): Luckily I'm getting a crash course.
SEBASTIAN: I've got my bib.
UNIDENTIFIED MALE: You have got your bib on.
(CROSSTALK)
UNIDENTIFIED MALE: And from the body with the tail, I like to give it a little twist. And it will come right apart like so.
SEBASTIAN: And what's the trick to this?
Is it you have to be patient? You don't want to break it -- ?
UNIDENTIFIED MALE: A little bit. You know, some people like to just take a fork and a knife and open it right up, eat it piece by piece. I prefer to see the entire tail.
SEBASTIAN (voice-over): The trick, of course, is to get your hands dirty.
SEBASTIAN: I'm already covered.
(LAUGHTER)
UNIDENTIFIED MALE: Part of the Maine lobster experience is opening one up yourself.
SEBASTIAN: Right.
Ah, victory.
UNIDENTIFIED MALE: Perfect.
SEBASTIAN (voice-over): Victory indeed for the first-time diner and a real Maine experience to remember.
For those working the lobster boats off of Portland, hoping for another banner year, thoughts have already turned to the next catch -- Clare Sebastian, CNN in Portland, Maine.
(END VIDEOTAPE)
NEWTON: Not bad, Clare. Next time, we'll take you to Prince Edward Island and you're going to roll up your sleeves before you destroy that lobster. Thanks for that. Our Clare Sebastian.
A massive chemical merger is being cooked up right now. We'll take a look at what could come from a combination of Dow Chemical and DuPont.
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[16:30:45] NEWTON: Hello, I'M Paula Newton. Coming up in the next half hour of QUEST MEANS BUSINESS, Richard gives us a guided tour of one of the most magical sites in the world - Machu Picchu. And one little piece of text message grammar could be ruining your credibility and apparently I have none because I do it all the time. I'll tell you what that's all about a little later. But before that, these are the top headlines we're following for you this hour. French officials say Foued Mohamed-Aggad was the third attacker at the Bataclan in Paris in November. He was a 23-year-old from a small town near Strausberg. Now, a lawyer for his brother told (ph) once said he wanted to become a suicide bomber when he was in Syria in 2013 but his family said they never believed he would return to France. U.S. officials tell CNN the neighbor who gave Sayed Farook two assault rifles used in last week's attack in California is the accomplice who helped him in another attack back in 2012. The FBI says the husband and wife behind the San Bernardino terror attack had been radicalized before they met. FBI director James Comey says Farook and Tashfeen Malik were inspired by foreign terrorist organizations before they started online dating in 2013. Pentagon chief Ashton Carter has opened the door to possible American ground support for Iraqi forces. Now, the U.S. defense secretary was testifying at an ISIS strategy hearing on Capitol Hill and said military advisors could help the Iraqi army retake the town of Ramadi from ISIS.
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ASHTON CARTER, U.S. DEFENSE SECRETARY: The reality is we're at war. That's how our troops feel about it. The defense of the homeland must be strengthened to be sure, but it is absolutely necessary to defeat ISIL and its parent tumor in Syria and Iraq.
(END VIDEOCLIP)
NEWTON: Israeli Prime Minister Benjamin Netanyahu has condemned Donald Trump's proposal to ban all Muslims from entering the United States. The Republican presidential candidate will meet Mr. Netanyahu later this month at a previously-scheduled event. He has been widely criticized for his statement including by members of his own party. Trump has refused to rule out running as a third-party candidate in 2016. In an interview with the U.S. network ABC he said he could run as an independent if he didn't get what he called "fair treatment" from his fellow Republicans.
(BEGIN VIDEOCLIP)
MICHAEL STRAHAN, CO-HOST, "LIVE! WITH KELLY AND MICHAEL" SHOW: With that being said, would you consider a run as a third-party candidate?
DONALD TRUMP, Well let me tell you. First of all, I don't want do that. I'm leading in the polls by not a little bit like by 20 and 21 points. I mean, the people, the Republican party has been - the people have been phenomenal. The party, I'll let you know about that. And if I don't get treated fairly, I would certainly consider that.
(END VIDEOCLIP)
NEWTON: Hundreds of protesters have gathered in Chicago to call for the resignation of the city's mayor. Rahm Emmanuel had earlier apologized for the handling of the death of a black teenager at the hands of police. Laquan McDonald was shot dead by an officer in October of last year. Jason Van Dyke was not charged with his murder for another 13 months. Big business story today. Shares of Dow Chemical and DuPont both closed up about 11 percent this Wednesday. And that's following reports the two companies are considering a mega merger. And it would be staggering. We want to give you a little bit of a lesson on these two though. Both go way back in American history. DuPont founded by the great E.I. DuPont is actually one of the oldest businesses in the United States. Dow, founded by Herbert Henry Dow also dates back to the 19th century and is one of the world's largest chemical companies. Now, it has attracted its fair share of controversy. For example, it created mustard gas which was used as a weapon during World War I. Now the two companies are reportedly considering a merger -- a synthesis if you will. The new business will eventually split though into three separate elements. My children would appreciate this science lesson. If we add the value of Dow to DuPont, the total sum is $120 billion. [16:35:09] As always, CNN Money's Paul La Monica is here to try and get us through this merger. Now, before we deal with what this all entails, let me get this straight. They're going to merge so that they can separate into three separate entities.