BUSINESS-01
AIPAC; Solving Valeant's Problems; Indian Wells CEO Derides Women's Tennis
Apple Unveils Devices and Vows to Protect Privacy; Republican Candidates
Address AIPAC; John Kasich Addresses AIPAC Meeting; Kasich Addresses Pro-
Israel Lobby Group - Part 1>
Lieberman, Cristina Alesci>
launch with a strong statement saying Apple will not shirk their
responsibility and give in to the FBI. Apple says they will protect your
privacy and that they owe it to the customer and our country. John Kasich
speaks before the American Israel Public Affairs Committee making a
commitment to strengthen our ties to Israel is he was president. Kasich
spoke of his 35 years of supporting Israel and he also promised that no
kind of business agenda will push our relationship with Israel aside.>
Kasich; Valeant; Finance; Cuba; Tourism; Sports; Women; Tennis>
[17:00:27]
ELENI GIOKOS, HOST: The woman's (inaudible) continues for the Dow, stocks finished higher about an hour ago on Wall Street. It's Monday, the 21st of March.
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GIOKOS: Tonight, new Cuban links. Top American companies join the U.S. President to strike deals in Havana. Valeant hopes a CEO switch can save the company from financial ruin. And time is money, now Tim Cook says the Apple watch will cost you less.
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I'm Eleni Giokos and this is "Quest Means Business."
GIOKOS: Well a very good evening to you. Tonight, President Obama shakes hands with President Castro and American business leaders set to work on tapping the Cuban marketplace.
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GIOKOS: The U.S. and Cuban President met for over an hour, marking a once unthinkable shift in attitude between the two nations. Mr. Obama is trying to bring change to Cuba; a key part of his plan is to pry open economic channels with the island. Now both leaders took questions from reporters. It's a rarity in a country where the state controls the press. Mr. Obama went on to make a declaration about the longstanding trade embargo on Cuba.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The embargo is going to end. When? I can't be entirely sure. But I believe it will end. And the path that we're on will continue beyond my administration. The reason is logic. The reason is that what we did for 50 years did not serve our interests or the interests of the Cuban people.
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GIOKOS: The U.S. President is certainly not alone on this historic trip to Cuba. Mr. Obama is accompanied by the CEOs of some of the major American companies including Arnie Sorensen of Marriott, Daniel Schulman of PayPal, Ryan Chesky from Airbnb and Ursula Burns of Xerox. Now these business leaders are looking to get a jump on the new opportunities for commerce as relations between Washington and Havana sore.
Robyn Curnow has been speaking to some of those CEOs on the ground with President Obama, and she joins me live from Havana. And it's not only historical for the country, Robyn, it's also going to change the way that U.S. business is going to view Cuba, as basically a country that has so many opportunities, and untapped opportunities.
ROBYN CURNOW, CNN INTERNATIONAL CORRESPONDENT: Absolutely. And as you said, I've spoken to a lot of the CEOs here on the ground, a massive delegation that President Obama has brought with him. And specifically the CEO of Marriott Hotels says Cuba captivates the imagination, and it does, doesn't it? It was isolated so long, the potential, the opportunities really exciting people and companies like Marriott.
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CURNOW: Now they want this rush of tourists to come here. They're excited about that. And of course Marriott is talking to me on the very day that the deal to buy -- their deal to buy Starwood Hotels and Resorts was given a new life. Starwood said last week, if you remember, Eleni, that it was accepting a bid from a Chinese firm. However Marriott has upped its offer and now the deal is back on. And when combined, let's not forget, these two companies will create the largest hotel chain in the world. This is what Arne Sorenson had to say to me about this new and improved deal.
ARNE SORENSON I think it's the biggest deal announced from Cuba which we did this morning. So we issued a press release this morning, we reached a new agreement with Starwood last night, pursuant to which we revised our offer, increased it by about 15% to acquire Starwood for Marriott stock and cash, about $3 and a half billion of cash and about $10 billion worth of stock. And we're moving forward towards the integration and hopefully closing by mid-year.
CURNOW: So you jumped in ahead again of the Chinese, the previous bid. There's been a lot of movement here.
SORENSON: Because - well that's right. We had a deal until last Friday. And last Friday Starwood announced that they had determined to proceed with Unbond, a Chinese Insurance company that had submitted a bid about a week ago. And so we negotiated over the weekend and reached a deal last night which we're very excited about. It is substantially more value for the Starwood shareholders but still a deal that we think makes sense for Marriott shareholders. And combined we think that this platform of SPG and Marriott rewards, of their brands and our brands, will create a transformative company in the hotel space.
[17:05:25]
CURNOW: No doubt going to make an impact on people travelling and staying in all of these hotels. Let's then talk about Cuba. We're here; you're wearing a very smart traditional Cuban shirt. What does this mean for Starwood's deal that they signed with the Cuban's a few days ago as well?
SORENSON: Well, Starwood will be proceeding with that deal. Starwood obviously is an independent company today. We're not working together in this. On Friday of last week, the U.S. State Department approved both Starwood's application to do business in Cuba and Marriott's application to do business in Cuba. Starwood has already signed two definitive management contracts for existing hotels.
CURNOW: One Memorandum of Understanding as well as --
SORENSON: Correct, there is a third that we're working on but not quite as definitive yet. We have conversations underway with a number of prospective Cuban partners, we're optimistic that we can get to the same place fairly quickly. They, like we, are very interested in the potential for tourism to Cuba. It is a place that absolutely captivates people's imagination. And so, maybe in part because of the complicated history, people want to come and see this place, see its history, see its culture, see the architecture and we can't wait to be here to welcome them.
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CURNOW: Now, I also spoke to the head of Starwood's operations here in the Latin America about that deal he says he's signed with the Cubans, they're going to roll out of course their operations here in Cuba. This is what he had to say about how difficult it had been doing the deal and what they expected it to be like on the ground.
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JORGE GIANNATTASIO, CHIEF OF LATIN AMERICA OPERATIONS, STARWOOD HOTES: Having local knowledge in the ground, plus a good powerful desire to open a new market is the key. We never went - we have a lot of possibilities to do that. I mean you may imagine, there has been a process where there were many opportunities to give up and to say no more, "no mas." But reality is that we have a commitment to fly the flags of our hotels in Havana, and that's what we did.
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CURNOW: Patrick Oppmann our Havana bureau chief is with me and we heard the Starwood head of Latin America just say there were lots of opportunities to give up and say no more. I mean -
PATRICK OPPMANN, CNN CORRESPONDENT: He's being diplomatic.
CURNOW: He is being diplomatic. A lot of the business people I've spoken to have tried to put on a brave face but clearly we have been hearing how cultural differences have really stymied a lot of the optimism.
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OPPMAN: You know, you have a communist Latin bureaucracy. It's a unique combination for Americans maneuvering through all the different very strange and foreign concepts of doing business here. But then they see the opportunities. And I've talked to people who do agricultural sales from the U.S. and they come and see the Cubans buying food from New Zealand, and they say, we're closer, this should really be our territory, we could do it for better and for cheaper. It just makes sense.
CURNOW: So what are the things that are limiting expansion of business opportunities here?
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OPPMANN: Well before it was the U.S. embargo, to some degree it still is. But you know we've seen industries that before could not operate here, whether it's telecom, whether its hotels, they've got to partner with the Obama administration. Then you get to the Cuban government which does not have a lot of money.
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OPPMANN: They want to -- they'll pay more if they can pay later. And then it's just getting the right meeting with the right official. There are so many different ministries, no one really knows how it's all working. People are writing the book as they're doing this. It's a wild west. So you have to be in a bit of an adventure, you have to be in it for the long haul. But I think for the people who can say they are, it is worth the frustration, the hair pulling.
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OPPMANN: It's difficulty either -- it's not easy, but it's not difficult and we are seeing deals get done, which is really surprising.
CURNOW: Surprising, because two currencies. We've got, you know trying to hire people here via the Cuban government. The minutiae of this is fascinating.
OPPMANN: And you don't just come in and open up a business. You have to partner with the Cuban government. And the Cuban government can be a very fickle partner sometimes.
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OPPMANN: You might be working with someone who learned economics in Moscow. And as well - you know they don't know necessarily what they need or how to go about this. The service industry is so new for people who have said we are the vanguard of the revolution.
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OPPMANN: They are learning as they go along. But I think you know America is obviously the heart of capitalism and Cubans are also incredible entrepreneurs. So I think as more and more American's come here, some will get frustrated and go home, but for the people who stick it out, and have the language skills. You know the (inaudible) now is before very few people were doing business in Cuba. Now everybody wants to do business in Cuba. So you hear about e-mails not being returned, calls not being returned. It's just a different business environment. It's meeting after meeting, lots of cups of very strong Cuban coffee and building trust.
[17:10:25]
CURNOW: OK, Patrick Oppmann, thanks so much.
And of course as Patrick was saying there a lot of officials, got their economics degrees in Moscow and they're doing deals where with Google, with Airbnb, with Cruise Line. So exciting times, confusing times and as Barack Obama also said though today in his statement, he said it's about people, and that's why he's brought such a huge delegation with him. He wants people to literally sit down and have a coffee. And he's hoping that's the best way, that diplomacy will win out in the end.
GIOKOS: And absolutely lifting embargoes overnight you know is very difficult to do so this is going to of course take some time. Robyn, thank you very much for that update, live for us from Havana.
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GIOKOS: Also happening in the coming hour, three Republican candidates hoping to replace Barack Obama will face their own foreign policy test. They'll be speaking to the influential American Israel Public Affairs Committee, better known as APAC.
Now Hillary Clinton spoke there a little earlier today. The economic ties between Israel and the U.S. run deep.
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GIOKOS: The two countries have had a free trade agreement since 1985, that has helped make the United States, Israel's single largest trading partner. The U.S. and Israel exchanged $38 billion worth of goods last year. In addition the U.S. sends Israel some $3 bill a year in military aid.
CNN's Oren Liebermann now joins us live from Jerusalem.
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GIOKOS: And Oren, thank you very much for joining us today. It's going to be really important in terms of what is going to transpire at APAC today. We heard from Hillary Clinton. Of course a big one is going to Donald Trump. And it's said that this is going to be important for him to smooth over some of the issues that of course have been plaguing the Republicans.
OREN LIEBERMANN, CNN CORRESPONDENT: Absolutely. He came out and said he wanted to be the neutral guy on the Israeli-Palestinian conflict. That was seen as being a very -- I don't want to say an anti-Israel comment, but certainly not a pro-Israel comment and he caught a lot of flak for that. Saying something like that, waffling like that in front of APAC would not be a good move for Donald Trump. That would turn this crowd into a hostile crowd very quickly. This crowd wants to hear a pro-Israel message.
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LIEBERMANN: They heard it from Hillary Clinton. She came right out and said she is pro-Israel, and then she went right after Donald Trump including that neutral guy comment. I suspect he'll hear even more about that as the other Republican candidates speak before him and they'll have to make up for that somehow. An apology probably seems unlikely in this case, but that is what hangs over his head. That single "neutral guy" comment that he had to walk back, we'll see how he smooths over that one, what his promises are.
In terms of what he says, all the Republicans will come out, they've been arguing about who is the most pro-Israel. We've spoken with political analysts on this end who say there really isn't that much of a difference on how pro-Israel these candidates are. It will be the APAC crowd, the American-Jewish crowd and the Israeli crowd on this end looking for Donald Trump to say something definitively and not to make any wishy washy comments here.
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GIOKOS: And Oren, just lastly, what are the views on the ground by way of the - the way that the elections have been ongoing? I mean Hillary Clinton was talking about ensuring there is a steady hand when it comes to foreign policy. What is the perception on the ground?
LIEBERMANN: Well, for Israelis, they're familiar really with only two candidates, Hillary Clinton and Donald Trump. They view Trump with a bit of curiosity. They're not nearly as familiar with the other names, with Cruz and Kasich. And they worry to an extent about Donald Trump because of some of his unclear comments. He doesn't have a history in foreign policy. He doesn't have a long history here. He does have Jewish son-in-law but that doesn't score him too many points. So there will be a lot of people curious here.
There have been some recent surveys, Hillary Clinton has a big lead in public opinion polls over Donald Trump. A lot of that is because of Bill Clinton, Bill Clinton is still very, very popular in Israel, and with the American Jewish vote, Hillary Clinton has a big lead there simply because American Jews are overwhelmingly Democrats. So she has the advantage. Donald Trump will be trying to make up for that.
GIOKOS: Thanks very much for that update, Oren, live for us from Jerusalem. And we are now waiting for those speeches to begin in Washington. Any minute now, once they begin, we'll bring them to you live.
Up next, the pharmaceutical company Valeant is sick. It says the first step to a cure is getting rid of its CEO. Don't you go anywhere.
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[17:16:30]
GIOKOS: Welcome back. U.S. Stocks finished largely flat today. As you can see, the Dow Jones up just 22 points and that's basically slightly in the green. Several Federal Reserve officials hinted the Fed could raise rates as early as April. They also expressed confidence that inflation would hit the Fed's 2% targets in the coming years.
Now the patient has seen an immediate and dramatic improvement. And that patient is Valeant Pharmaceuticals. The improvement is a 7% jump in its share price. And that's because the company has just received a new prescription. So the CEO Mike Pearson is on his way out. Activist investor, Bill Ackman is in.
He will join Valeant's board and Valeant's symptoms are serious. Its stock is down 70% this year. And the company has also downgraded its profit outlook and warned of possible defaults.
Now the underlying issue, a series of investigations into the way that Valeant prices and distributes its drugs. One research firm even accused Valeant of Enron-like fraud. Now, as Valeant's treatment begins, there's one complication. The former CFO, Howard Schiller, refuses to step down from the board. He is denying accusations of improper conduct.
Now CNN Money's correspondent, Cristina Alesci joins me now live. It's a conversation that we started last week. Are we seeing a seven percent jump in today's session? That's nothing compared to the 70% that we've seen over the past year. The CEO is now on his way out, no surprise, actually, right?
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Right, yes. No surprise. Because this problem as we found out today, radiates all the way to the top. And not only - and this is like a really dramatic turn of events right, because a week ago we were talking about how the board, and everyone - and all the investors, were right behind him, affirming confidence in him. Today we find out not only has the strategy that the CEO was pursuing all wrong, but also the tone that the CEO set was all wrong. Because in this release it suggests that the tone and the aggressive targets that came down from the CEO was part of the decision - was part of the reason decisions like the one the CFO made and others that the company made to perhaps inflate earnings and revenue, it really came down from the CEO, and that why this is happening.
GIOKOS: What perplexes me is that we know that Pearson came in in 2008 to turn the company around. But if you look at the business model in itself, you could see that there were problems from the very beginning.
ALESCI: That's right.
GIOKOS: So acquisitions basically debt fuelled acquisitions. You saw very little money on RND and then obviously the business model is made around trying to increase prices on some products which doesn't work at this point in time.
ALESCI: Right. It was a huge political backlash against raising prices on drugs. It's been a subject as we discussed before on the campaign trail from many of the candidates, both on the Republican and Democratic side. So there's clearly an effort to reduce drug prices so this brilliant turnaround strategy that Mike Pearson was championing is all wrong. But again, it's not just the business strategy here. It seems to be something way more nefarious than that in the sense that Mike Pearson may have set unrealistic targets. He may have encouraged people to be aggressive. And that tone may have encouraged people to make bad decisions, which is why they're asking for the resignation of the CFO, because there were some accounting problems, including potentially booking revenue, you know that should have not been booked.
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[17:20:13]
ALESCI: And now the CFO feels like he was the guy that got thrown under the bus. And he doesn't want to resign because he doesn't want to be the scapegoat. But clearly that's who they're throwing under the bus.
GIOKOS: So where to from here?
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GIOKOS: What are expecting further investigations? What are we going to see?
ALESCI: That's a very good question. Because there's still ongoing investigations, not just internal but external as you said. The Federal government is now looking in and all over Valeant's business. So there's going to be a lot of questions that it's going to have to answer. And the company is going to have to spend so much money now on lawyers and advisors to reinstate those financial statements that they said that they were going to reinstate today. So there's a tremendous amount of cleanup that the company is going to have to do. I mean, the 7% stock bump is great, but it's going to need a lot more turning around before it even gets close to that stock price just about a year ago.
GIOKOS: All right, Cristina thank you very much for that update, of course much appreciated.
GIOKOS: All right, so Serena Williams and other female tennis players are taking a stand against comments claiming they should be on their knees thanking men for their success and popularity. This coming up next, stay with us.
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GIOKOS: Female tennis players rely on their male counterparts for the sport's popularity and success. Well that was the message from the director of one of the sport's most prestigious events.
Indian Wells CEO Raymond Moore says women should be grateful.
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RAYMOND MOORE, CEO INDIAN WELLS: They ride on the coattails of the men. They don't make any decision. They're lucky. They're very, very lucky. If I was a lady player I would go down every night on my knees and thank good that the Roger Federer and that Rafael Nadal were born, because they've carried the sport.
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GIOKOS: Well the comments have sparked outrage among some of the sport's top athletes. Billie Jean King tweeted that "all top players, male and female, contribute to the sports' success." Chris Evert, tweeted that many women's matches have been bigger draws than mens. Serena Williams, the world's best female tennis player, told reporters no one should not have to listen to - no one should have to listen to those kinds of comments.
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SERENA WILLIAMS, RANKED NO. 1 IN WOMEN'S TENNIS: There's only one way to interpret that. Get on your knees, which is offensive enough, and thank a man, which is not -- we as women have come a long way. And we shouldn't have to drop to our knees at any point.
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GIOKOS: Well BNP Paribas, the main sponsor of the Indian Wells tournament stated that it supports all tennis players. Let's take a listen.
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GIOKOS: And Raymond Moore has already apologized for his comments about WTA, and that's the association that runs women's tennis. "BNP Paribas is a supporter of a single type of tennis from amateur through to professional and is strongly committed to diversity as an organization." And that statement coming through from BNP Paribas.
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GIOKOS: Joining me now to discuss this further is Don Riddell from Atlanta. Don, thank you very much for joining us. Shocking comments, many are calling them ignorant. Backlash coming through from all rounds but also when you see what the comment is from BNP Paribas some have said that it's not really taking a strong stance against these shocking words.
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DON RIDDELL, CNN WORLD SPORT: Yes, I would agree with that. Of course it remains to be seen how much longer they want to be associated with this tournament. You've already mentioned that it is one of the biggest tennis tournaments in the world, arguably the biggest, just outside the four grand slam events. It's very hard to see that Raymond Moore can remain in this position for so many different reasons.
First of all, Larry Ellison, the co-founder of Oracle, took over this event a few years ago and made it into one of the biggest events in world tennis. I can't imagine how pleased he is about the fact that neither the men's or women's finals yesterday are getting any coverage at all because this is what we're talking about.
We've got the fact that Martina Navratilova is now talking about women's players perhaps even boycotting this event last year. And I can tell you that Serena and Venus Williams have no problem boycotting this particular tournament.
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RIDDELL: Serena didn't play it for 14 years after she claimed to be racially abused by fans in the 2001 final. So none of these things are looking very good for Raymond Moore or for this tournament.
And what he said was just extraordinary, wasn't it? I mean it wasn't even just an off-the-cuff remark that was picked up by a single press journalist.
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RIDDELL: I mean this was on camera. And it was so explicit, so detailed. And he now as a result of this finds himself under investigation by the WTA. And the last man to find himself in that position for a breach of conduct ended up being suspended from all involvement in tennis for 12 months.
GIOKOS: Well then we look at comments coming through from Novak Djokovic. And while you know he came out and said that you know we should all be looking to some form of equality, he did then mention that the statistics show that men actually draw more audience to the men's games. Which is interesting, because then could then counter argue that and say, well, there's more sponsorships and more attention given to the men within the industry. What do you think is going to happen by way of some of the backlash that we've seen?
RIDDELL: Well, it certainly reignited the debate. And it's a very controversial one. Many of us thought it had been put to bed several years ago when all four of the grand slams agreed to pay both their male and female players equal prize money regardless of how many sets they played.
So this is perhaps a new line to the argument from Novak Djokovic. But I'm not sure how many people would actually agree with him. Serena immediately countered with the fact that her final at the U.S. Open last year sold out quicker than the men's final. Of course she was chasing history at the time.
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RIDDELL: But there is no doubt that there are a lot of major stars in women's tennis. They are stars in their own right. They have their own following. They have their own fans. And I'm not sure that really they need to be thankful for anyone other than their own efforts for getting themselves to where they are.
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GIOKOS: Well Don, thank you so much for that update. And that was Don Riddell joining us from Atlanta.
It was a big event for small devices.
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GIOKOS: And Apple's CEO included one more thing that had nothing to do with new hardware, coming up, right after this.
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[17:30:00] (COMMERCIAL BREAK)
[17:31:23] Hello, I'm Eleni Giokos. Coming up in the next half hour of QUEST MEANS BUSINESS, we're live from California where Apple has unveiled its latest products. The Xerox CEO tells us there are huge challenges to undergo before they can do business in Cuba. Before that these are the top news headlines we're following for you this hour.
U.S. President Barack Obama says the American embargo on Cuba will end as he continues his historic visit to the island nation. Mr. Obama made the announcement during the first state visit to Cuba by a sitting American President in nearly 90 years. Speaking at a joint press conference, Mr. Obama said changing the relationship between the two countries would benefit both Cuba and the United States.
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BARACK OBAMA, U.S. PRESIDENT: Our growing engagement with Cuba is guided by one overarching goal, advancing the mutual interest of our two countries including improving the lives of our people, both Cubans and Americans. That's why I'm here. I've said consistently, after more than five very difficult decades, the relationship between our governments will not be transformed overnight.
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GIOKOS: The press conference was notable for Raul Castro also took questions from the media, which is highly unusual for the Cuban president. Now In response to a question from CNN's Jim Acosta, Mr. Castro promised to release any political prisoners held by the Cuban government.