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for Corruption; Danes Pass Law Allowing Confiscation of Valuables from
Immigrants; Examining French Business Protests. Aired 4-5p ET - Part 2>
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LAKE: A make or break moment for Apple investors. We'll bring you the latest quarterly results in just a moment.
[16:31:19] MAGGIE LAKE, CNN INTERNATIONAL BUSINESS ANCHOR AND CORRESPONDENT, FILLING IN FOR RICHARD QUEST: Hello, I'm Maggie Lake. Coming up in the next half hour of "Quest Means Business," Apple results are about to come out. Has it managed the biggest profit in corporate history?
And gaining dollars by shedding pounds - Oprah Winfrey has two reasons to celebrate tonight.
Before that, these are the top news headlines we are following for you this hour.
Brazil admits it is losing in the fight against the Zika virus. The health minister says it is failing, quote, "Badly" to stop the mosquitoes that carry the virus. Zika has been linked to serious birth defects and it's expected to spread across the Americas. A new case of the virus was discovered Tuesday in the U.S. state of Arkansas.
Lawmakers in Demark have vote in favor of a controversial new law affecting refugees. One would allow refugees' belongings to be confiscated in order to pay for their expenses. Another prevents them from applying to bring their families to Denmark for three years instead of one. A spokesman for the country's Liberal Party told CNN the family law was meant to help refugees integrate better into Danish society.
(BEGIN VIDEOCLIP)
JAKOB ELLEMANN-JENSEN, SPOKESMAN, DANISH LIBERAL PARTY: This is not a measure that is put in to deter people from coming here. This is because we know that the number people who come through or not has an impact on our ability to integrate people into Danish society. And it has an impact on our ability to continue having a welfare society in Denmark.
Therefore, if every one of the refugees come into Denmark should have family unification at once or after one year, then we would receive three times as many people as we do today. This would have a serious impact. So we need - in order to treat people decent, we need to limit the number of people coming to Denmark.
(END VIDEOCLIP)
LAKE: Swedish officials are calling for more security at overcrowded asylum centers. This comes a day after the fatal stabbing of an employee at a facility for unaccompanied young people. Sweden's prime minister says his country has taken in many migrant children and teens who have had traumatic experiences.
Pope Francis has met with Iranian President Hassan Rouhani at the Vatican. The two leaders found what the Vatican called common spiritual values. President Rouhani is on a four-day trip to Europe trying to mend business and trade relations after years of sanctions.
In Syria, ISIS is claiming responsibility for two bombings in the city of Homs. More than a dozen people have been killed. The death toll could go higher. The Syrian government controls most of the city and a U.K.-based monitoring group says 15 regime soldiers are among those killed.
This just in to CNN, Apple has missed expectations on iPhone sales. This is significant because the company relies on iPhones for two thirds of its revenues.
CNN Money's Paul La Monica joins me now with more. Paul, investors are not going to be happy about this.
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Yes, at last check -- I mean, granted the numbers have only been out a few minutes - the stock was down a tiny bit after hours. That may have changed. But Apple did importantly report a small bit of growth in iPhone sales from a year ago. They were still below forecast but a lot of people were fearing that the number would actually be lower than last year.
I think what's most alarming is the guidance -- the revenue outlook for the next quarter does look really light. Apple does historically low-ball investors with their guidance.
[16:35:00] They did that, you know, notoriously in Steve Jobs' era and Tim Cook is still doing that. But investors that were hoping for Apple to wow Wall Street with really strong iPhone sales - that didn't happen.
LAKE: You know, it's amazing about investors. I'm looking at it in free market, and you're right, it' still holding on to modest gains. You and I were talking - it was not participating in the rally for most of the day today. Maybe investors ae hanging on until they actually wait to hear the conference call from Apple executives and get a little bit more detail on what's going and maybe why those phones were a little light. Maybe China, they want to hear about China I guess too.
LA MONICA: Yes, I think they definitely want to hear about China. We know that there are many concerns about the slowdown in China's economy as Apple becomes a more important player in that market. But even with Apple growing in China, it still faces the concerns of very strong competitors - WowWay (ph) and Xiaomi are both very, very strong in their home market of China.
And, Maggie, if you want to talk about just like the psychology of Apple and investor sentiment in general, look no further than the closing price for the stock -- $99.99.
LAKE: (LAUGHTER).
LA MONICA: As if Wall Street couldn't dare make it $100 or higher than $100 out of fear of what might happen after hours if they missed work.
LAKE: Exactly. Everyone tried to play it safe. And that's why we may be seeing a little hesitation until the news comes out. You know, Paul, this is an important stock - not just really for the professional investors, but this is a very widely-held stock, especially when you're talking about retail, about funds, about people's retirement. On the conference call, what else is going to matter aside from the iPhone? We have seen Apple, you know, we always talk about the TV, a lot of people wonder about the watch. They'd been doing some - hired somebody from Virtual Reality. So there are definitely people really curious about where they are heading in the future.
LA MONICA: Yes, right now for the foreseeable future, this is all about the iPhone. I think there will be questions about the rumored 5SE that may be coming out in a few months or return to the foreign screen. There may be questions about what the 7 is going to be like even though that's months away - that wouldn't be until the second half of the year. In terms of newer products, the rumor that really excites people I think the most is whether or not Apple is really developing its own self-driving car - the Project Titan. Some people think Apple should just go out and buy Tesla. It certainly has the cash to do so.
LAKE: Yes, and that's one thing we have to remember as you pointed out, they are sitting on a mountain of cash. So we'll have to see how the stock continues to trade. It does look like it is trending lower in the red right now, but not by very much. All right, Paul, thanks so much.
LA MONICA: Thank you.
LAKE: Paul and the whole Money team going to be watching that in after hours.
Now, bread, one of Oprah Winfrey's favorite things. The media mogul and Weight Watcher's pitch woman wants everyone to know it.
(BEGIN VIDEOCLIP)
OPRAH WINFREY, AMERICAN MEDIA PROPRIETOR: This is the joy for me. I love bread. I love bread. I now just manage it, so I don't deny myself bread - I have bread every day. I have bread every day. That's the genius of this program. I lost 26 pounds and I have eaten bread every single day.
(END VIDEOCLIP)
LAKE: I want to eat bread every day. Well in case it wasn't clear, that was an ad for Weight Watchers, and investors ate it up. The company's shares rose as much as 20 percent after Oprah posted that video. That is a gain of five points -- $6 million to Weight Watcher's market value for every pound Oprah has lost. Her first endorsement in October gave the stock some help back then as well. It has shed some of those gains and faded a bit.
As for Oprah herself, the carbs haven't hurt. Check it out - on the left, a photo taken just days before Oprah took her stake in Weight Watchers. On the right, one taken a month and a half later.
Joining me now, Alex Fuhrman, senior research analyst at Craig-Hallum Capital. Thanks so much for being with us. You know, it is amazing - a lot of people have been watching this drama with Oprah and wondering if her involvement was really going to help out Weight Watchers fundamentally. Is today's rally proof that it is? How do you see this?
ALEX FUHRMAN, SENIOR RESEARCH ANALYST, CRAIG-HALLUM CAPITAL: Well I think today's rally was a long time coming. Oprah brings a lot to Weight Watchers. It's an iconic brand that's really struggled historically with the marketing, especially last year. Oprah really comes in and does two main things right off the get go. You know, her financial contribution really gets them past any liquidity concerns they had about a looming debt payment that's due in about three months.
But more importantly, she brings a lot to the marketing front. I mean, as you see from that commercial right there, Oprah has a huge following both here in the United States and globally. And if you just look at even Google search traffic for the Weight Watcher's name, I mean, that has spiked very quickly ever since Weight Watchers began running those Oprah commercials. So I think she is having a pretty big impact right off the get go.
LAKE: Alex, it's amazing. There have been a lot of pitch people, you know, a lot of people who struggled with their weight. What is it about Oprah that has the ability to be such a game changer?
FUHRMAN: Well, I think she's known as someone who wouldn't endorse a product that she doesn't use herself, that she doesn't really believe in.
[16:40:05] You know, you can see that from the commercial that you just aired that she was in that she's obviously had success with the program. She's trusted by consumers around the world and I think this is a great fit with her and Weight Watchers.
LAKE: Yes, and you can see in the theme now they're going for, it's more of a wellness, about being good to yourself. You can see that through a larger Oprah message, really permeating some of the marketing they are doing now. What do they need to do to ultimately be successful? They've clearly got the Oprah effect right now. How do they sort of build that in to the DNA of Weight Watchers and succeed? This is a crowded space, a crowded area, and especially if you're talking about moving more into wellness and fitness. What does Weight Watchers ultimately need to become in order to have success for the long term?
FUHRMAN: Well I think getting Oprah onboard was certainly a big part of it. But really I think that the timing of Oprah joining is extraordinary because this year for diet season 2016, I think Weight Watchers did something that it really needs to do to evolve into the - really the future of where dieting companies are going. And that was the transition to the beyond the scale program, moving away from points plus and moving toward the new smart points program, really emphasizing healthier foods.
So, you know, really an emphasis on having more protein, less sugar, lower amounts of saturated fat and more incorporating fitness into the everyday Weight Watchers programs. I think those changes are really what the consumer is looking for in terms of a more holistic approach to health and not just the number on the scale. And having Oprah as a spokeswoman at this key juncture in the company's evolution to communicate those changes really just adds fuel to the fire.
LAKE: Yes, and not only a spokesperson but a partner in the journey I think as she likes to say. It certainly looks like a new chapter for Oprah, we'll see if it's a new chapter for Weight Watchers. I know you're bullish on the stock. Maybe this is one where we all win from this, Alex. But thank you so much for coming in and sharing your views with us. Alex Fuhrman for us tonight.
FUHRMAN: Thanks for having me.
LAKE: Well a battle - let's stay on the billionaire streak - a battle of two other billionaires could be on the cards in the U.S. presidential election. We take a look at the possibility of Michael Bloomberg joining the race.
(COMMERCIAL BREAK)
LAKE: Donald Trump has hit a new high in the race for the U.S. Republican nomination. According to a CNN ORC poll, more than four in ten Republican voters now say they back the billionaire for U.S. president. He has more than doubled the support of his nearest rival Ted Cruz. Neither of the remaining candidates managed to gather double-digit support in the polls. Trump has told CNN he is also confident he would beat the former mayor of New York Michael Bloomberg if he joined the race. Bloomberg is said to be weighing up a run as an independent candidate. Phil Mattingly takes a look at the potential battle of the tycoons.
(BEGIN VIDEOCLIP)
PHIL MATTINGLY, CNN NEW YORK-BASED CORRESPONDENT: Billionaire businessman, three-term mayor of New York, presidential candidate? Frustrated by the polarized nature of a race rife with anti-business sentiment, --
BERNIE SANDERS, DEMOCRATIC CANDIDATE FOR U.S. PRESIDENT: Who is going to be prepared to stand up the billionaire class and wage a political revolution?
(AUDIENCE CHEERS)
MATTINGLY: -- and strongly concerned about a President Trump or Sanders.
DONALD TRUMP, REPUBLICAN CANDIDATE FOR U.S. PRESIDENT: -- where I could stand in the middle of Fifth Avenue and shoot somebody and I wouldn't lose any voters, OK?
(LAUGHTER)
TRUMP: It's like an incredi-
MATTINGLY: Michael Bloomberg weighing a 2016 run as a third-party candidate. One of his advantages? Having the resources to self-fund his campaign, reportedly to the tune of $1 billion.
[16:45:06] Polls showing self-financing of independents have been particularly potent messages for Donald Trump.
TRUMP: I would love him to do it actually. I love the competition, I love the competition. I would like for Michael to do it. You know, we used to be friends. I guess we're not friends anymore, I don't think we are.
(NEW YORK STOCK EXCHANGE OPENING BELL)
MATTINGLY: According to "Forbes," in 2015, Bloomberg was the 8th richest American worth an estimated $37 billion, his wealth coming from a computer system used by just about everyone who sets foot on a Wall Street trading floor. Trump who says he doesn't believe Bloomberg is worth that much, is 121st on that list, worth $4.5 billion.
A Democrat turned Republican turned independent with a record of working across party lines in New York City and spending tens of millions on causes like gun control, climate change and immigration, issues that may also be his biggest roadblocks and potentially a major problem for Democrats.
RAND PAUL, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: It's going to be split the Democratic voters (inaudible) control (inaudible) might be good for Republicans.
MATTINGLY: Bloomberg's path to the White House, if it exists at all, is a tight one, one his advisors say that a strong performance by Hillary Clinton could close out entirely.
HILLARY CLINTON, DEMOCRATIC CANDIDATE FOR U.S. PRESIDENT: He's a good friend of mine and I'm going to do the best I can to make sure that I get the nomination and we'll go from there.
MATTINGLY: And the 73-year-old has been here before, weighing runs in 2008 and 2012.
MICHAEL BLOOMBERG, FORMER NEW YORK CITY MAYOR: Number one, I'm not running for president, OK? I couldn't be clearer about that. If I thought I could win, I would. But you can't win - thank you, I'll be very happy running my company and my foundation.
MATTINGLY: Now Bloomberg has only a few weeks to figure out if that has changed. Phil Mattingly, CNN New York.
(END VIDEOCLIP)
LAKE: Spain held its elections back in December and there is still no sign anyone can form a government. Prime Minister Mariano Rajoy gave up on his chance to form a government saying he is unlikely to win a confidence vote. New talks with King Felipe are planned for Wednesday. The turmoil comes as Spain's economy is improving. Richard Quest spoke with Spain's finance minister at the World Economic Forum in Davos. Richard put it to him that whichever government ends up in power, it won't have staying power.
(BEGIN VIDEOCLIP)
LUIS DE GUINDOS, SPANISH FINANCE MINISTER: Well that depends, no, that depends on the nature of the government. If we are talking about, you know, a coalition of losers, then it will be much more difficult. But if we are talking about the right coalition, I think that, you know, it will be a vote-based government with a lot of support from the Parliament.
RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: How do you win an economy when there is such uncertainty? Because you still have to make decision.
DE GUINDOS: Well, it's not (inaudible) because the Spanish economy is performing quite well. We are growing quite fast. We are outperforming the majority of our peers in Europe. But the Spanish economy's vulnerable. We have to issue all of it (ph), we have fairly good market situation at this, you know, quite dramatic because we have had unemployment rate about 20 percent. And so uncertainty might have a negative impact. So I think that it's very important to reach a rapid agreement with respect to the new government and that the agenda of this new government is according to one (ph) because we have to continue making reforms.
QUEST: And on this question of - I mean, the banking system - a lot of money has been spent recapitalizing it, but it wouldn't take much for another crisis.
DE GUINDOS: No, I think that the situation with the banking industry in Spain is a totally different. We have - it is a lot of clarity, a lot of transparency. The provisions of the Spanish banking industry are second to none all over Europe. And we have injected a lot of capital and we have incorporated (inaudible) banks. So this situation is totally different. There are challenges, but of a totally different nature.
QUEST: Mario Draghi and I know that you're going to tell me you do not comment on monetary policy - I am aware of that. But he's getting to the point where he can't do much more. He says he'll do whatever it takes.
DE GUINDOS: Yes.
QUEST: But everybody accepts now that much more printing of money just is not going to have much of a difference. It really is up to the governments.
DE GUINDOS: Well, here the point is that the mandate of the European central bank is to have inflation below but close to 2 percent. And now if you look at the inflation expectations, they are clearly below 2 percent. So in order to fulfill its mandate, he has to inject more money. And to take - let's say, you know - extraordinary measures. And so the program that of quantitative easing that was started by this city is open-ended. And this is something that we have to take into consideration.
QUEST: But you as ministers have to do more on the fiscal front.
DE GUINDOS: I fully agree, I fully agree.
QUEST: The problem here is everybody agrees -
DE GUINDOS: No, no.
QUEST: -- I had Mr. Diesel (ph), had yourself, had - you know - everybody agrees, but what happens?
[16:50:00] DE GUINDOS: Well, but see in the case, in the case of Spain, we have delivered quite a lot. There reason why Spain is growing much faster than the European average is because we have implanted reforms. We restructure of our banks, we overhauled the labor - the labor code, we have liberalized the services markets and I think that this is having an impact. That's why Spain is growing again.
(END VIDEOCLIP)
LAKE: Lennon-McCartney, Vinny and Buran (ph), you can hear the music just by saying their names. But up next, modern-day songwriting is not the romantic business it used to be.
(COMMERCIAL BREAK)
LAKE: How much do you think a hit song is worth? I'll give you a hint - it's a lot less than you think. All this week we are looking at the future of the music industry in this digital age. Claire Sebastian joins some songwriters at a recording session and found out why their work is going for a song.
(MUSIC PLAYING)
UNIDENTIFIED MALE: This is captured by (inaudible).
CLAIRE SEBASTIAN, CNN PRODUCER: It's lunch time at the Manhattan studios of songwriter/producer team The Eleven -
UM: -- 1:04 p.m.
SEBASTIAN: -- and they're starting on a brand new song. Brothers James and Matt Morales and their partner Dave Rodrigues are collaborating today with singer/songwriter Ginette Claudette. They start with a chord progression and then the song's core message.
GINETTE CLAUDETTE, SINGER/SONGWRITER: I'm anticipating being with you kind of live.
SEBASTIAN: So we're just half an hour into the process and things are progressing really quickly. This is not the romantic notion of songwriting that you might think - the thunderbolt of inspiration that just happens. These guys are under intense pressure to keep churning out music as quickly as possible.
CLAUDETTE: (SINGING) So I could never be (HUMMING).
MORALES BROTHER: There are a lot more songwriters I would say today because the technology allows us to do that.
MORALES BROTHER 2: Technology makes everything so much faster and quicker, we have to expedite the process.
SEBASTIAN: Three hours in and a song is starting to take shape.
CLAUDETTE: (SINGING).
SEBASTIAN: The Eleven got a lucky break four years ago when a friend and music manager spotted one of their tracks. That led to a publishing contract at one of the world's biggest publishing companies, Sony/ATV and the work started flowing.
MORALES BROTHER (PH): We've had records with Meghan Trainor, Sean Pinkston (ph), Jesse McCartney - we did his entire last album.
SEBASTIAN: Theirs though is a rare success story. Jason Blume, a 20-year veteran of the industry whose written songs for Britney Spears and the Backstreet Boys says this is the most difficult time he's ever seen for songwriters.
JASON BLUME, SONGWRITER: I personally have had a situation where more than a million airings on YouTube earned me $30. Streaming has not caught up in terms of the payments and it's almost impossible for songwriters to earn a living. So what do songwriters do? We have to write amazing songs. Good is not good enough anymore.
CLAUDETTE: (SINGING).
SEBASTIAN: It's a message keenly felt by this group even with the extra money they earn from producing their own music.
JAMES MORALES, SONGWRITER AND PRODUCER: Now, if you write a hit record and you have 5 percent of a smash multi-platinum-selling record, 5 percent may not sound like a lot, but the music business is a business of nickels and dimes.
[16:55:07] And if you make enough nickels and dimes, then you can make a lot of money.
CLAUDETTE: (SINGING).
SEBASTIAN: After five hours of work, they have the skeleton of a new record. Is it going to be a hit?
J. MORALES: We hope so. I mean it's hard to say. We don't get to make that call -
(LAUGHTER).
SEBASTIAN: The laughter is nervous. In an industry where profits are spread ever thinner, that next big hit means everything.
CLAUDETTE: (SINGING). I don't want to wait another minute.
SEBASTIAN: Claire Sebastian, CNN New York.
(END VIDEOCLIP)
LAKE: Mark Zuckerberg's life is full of changes. He recently entered fatherhood, and he's constantly adapting as CEO of Facebook. One thing that's staying the same though, his wardrobe. We'll peek inside Zuckerberg's closet next.
(COMMERCIAL BREAK)
LAKE: Facebook CEO and proud new father, Mark Zuckerberg has returned to work after taking two months of paternity leave. To announce his first day back in the office, he posted a picture of his closet and asked Facebook followers what he should wear. Predictably it was a row of heather-gray tee-shirts and dark gray hoodies. At least he has a sense of humor in his sleep-deprived state. Zuckerberg's famous of course for wearing the same outfit every day. He once said, "I really want to clear my life so that I have to make as few decisions as possible about anything except how to best serve this community."
LAKE: Zuckerberg is not the only leader who has deliberately limited their wardrobe, most famously Steve Jobs kept his attire to an iconic turtleneck tucked into blue jeans. Elizabeth Holmes who founded the health tech startup Theranos continues the black turtleneck theme.
And President Obama told "Vanity Fair" he only likes to wear blue and gray suits. He says it leaves him more time for important decision-making.
That's it for "Quest Means Business." I'm Maggie Lake in New York.
END
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