BUSINESS-01
Expectations; Verizon Expected to be Top Bidder for Yahoo; Yahoo Management
Believes Company is Undervalued; EU to Charge Google with Antitrust Over
Android; Huawei Launches Dual-Camera Phone; President Obama Travels to
Saudi Arabia; Republican Nomination Delegate Fight; Priebus: Republican
Contest Is Not Rigged; Chinese Group Seals Giant Beef Deal - Part 2>
Tuchman, Mark Preston>
line with Wall Street. What is Yahoo worth and what will the bidding price
be? Google is coming under fire from its EU competition for unfairly
favoring its own apps. Thomas Vinje from FairSearch says it limits
consumer's choice and the power of the default app is very intense. Huawei
a Chinese smartphone company has come out with a new phone with two camera
that take professional looking photos. The P-9 dual camera can take a
picture with foreground focus and the background blurry or the other way
around. President Obama is on his way to Saudi Arabia for talks of
reshaping U.S. relations with Mideast nations. Saudi Arabia feels the U.S.
ruptured their relationship with the U.S.-Iran nuclear deal. Republican
National Committee has met with party congress people to try and reassure
them that the nomination process is fair. In Georgia Trump won the primary
but the delegate have pledged their for Cruz on the second ballot at the
convention.>
Telecommunications; Yahoo; Verizon; Google; Election; Republicans; China;
Food and Beverages>
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: I'm not trying to enmesh you in the domestic politics of the referendum but I do need to put to you what the other said once the report came out, you will have seen it. Nigel Farage and the "Vote to Leave" Campaign said "The IMF would say that wouldn't they? They're doing George Osborn's pro-E.U. business for them."
LAGARDE: We are looking at it as independently as we can. And we have totally unbiased assessment of facts, figures, taking into account the negotiation time in case of "brexit," understanding the untangling of the many trade relationships that have been established over time between the U.K. and the other European countries. I mean, this is a whole marriage of 40 years or so. That you try -- that could be unraveled from an economic point of view.
I'm not - you know we're not opining on the political aspect of it. On several other dimensions that I'm sure are critical also for the voters but from an economic standpoint we know for a fact that it is going to produce number one uncertainty, number two, a difficult untangling of existing relationships which will probably slowdown growth, certainly for a period of time.
(END VIDEO CLIP)
NEWTON: Turning to Brazil now, President Dilma Rousseff says the summer's Olympics will be the best ever, despite the threat of her impeachment.
(BEGIN VIDEO CLIP)
DILMA ROUSSEFF, PRESIDENT OF BRAZIL: (As translated) I hope to win. Not only in the court, in the stadiums, in all the sporting venues but also outside them where we have done a series of works which have transformed Rio de Janeiro, works which we carried out together with City Hall and the state government. I am certain it's the best Olympic games of this country.
NEWTON: Meantime, the Brazilian markets climbed more than 1% Tuesday, markets are up more than 20% this year largely on the fact that Dilma Rousseff looks likely to be impeached.
(END VIDEO CLIP)
NEWTON: Now meantime, Colombia's finance minister says the way Brazils handles the challenges its facing will have a broader impact on the entire region. Richard asked Mauricio if he expects any spillover from Brazil's crisis.
MAURICIO CARDENAS, COLOMBIAN FINANCE MINISTER: Markets consider Latin America as an asset class. But of course, and Brazil plays an important role, I mean it's the largest country in the region. But a group of countries is differentiating itself from Brazil, particularly the pacific alliance which we're members of, Mexico, Chile, Peru and us. We follow different paths, different policies. But of course we're observant to what happens in Brazil.
QUEST: You're still suffering, obviously, the oil price continues -- although it has improved slightly and you're still - you've still got problems on currency issues.
CARDENAS: Well we're still adjusting to these new normal.
QUEST: What is this new normal?
CARDENAS: Well, to me it's oil at 40 rather than 100 or 80. And we think that it's going to stay there for a long time so we have to adjust to that. That means we're going to have less stimulus from our commodity exports, less investment in the oil sector. We need to develop other sectors and the weaker currency helps a lot in our culture, tourism, manufacturing.
QUEST: But the weaker currency is not giving you the boost in exports that you would have hoped for yet.
CARDENAS: Because of the slow growth in demand globally, including the United States. I mean, if the U.S. doesn't grow faster, that's not good news to us because we have a weaker vis-a-vie the dollar.
QUEST: But everybody else has a weaker currency vis-a-vie the dollar. So those other markets are not able to pick up the slack.
CARDENAS: Absolutely. That's why we're so dependent on U.S. growth.
QUEST: Panama is being clobbered left right, and center at the moment on the question of the "Panama Papers." You must be feeling some spillover because if there's any questions about Panama's legitimacy in the financial services sector or as an offshore center, you get hit as well.
CARDENAS: Absolutely We're so dependent on everything that panama does and we need them to do something that is simple, basic; exchange tax information. Tell the world who owns those corporations, who owns those assets, those accounts in Panama. That is simple. And this is the world where we live now. I think in the spirit of progress and cooperation, all jurisdictions are now engaging in this automatic exchange of information and we need Panama to go in the same direction.
QUEST: And you told them that?
CARDENAS: Yes. We're actually negotiating with them as we speak in Bogota, Colombia. There's a round of negotiation between Panama and Colombia on the exchange of tax information. It's crucial, and they need to do it and do it with everyone else.
(END VIDEOTAPE)
PAULA NEWTON, CNN ANCHOR: Yahoo is slashing forecasts facing a shareholder revolt and up for sale. We'll break down the potential suiters and first quarter results. That's up next.
[16:30:00] (COMMERCIAL BREAK)
NEWTON: Hello, I'm Paula Newton in New York. Coming up in the next half hour of QUEST MEANS BUSINESS, Google faces a massive antitrust case in Europe over Android phones and I'll speak to one of the lawyers leading that case. And we'll break down a Yahoo's latest earnings numbers and the future from Marissa Mayer.
Before that though, these are the top news headlines we're following this hour. At least 28 people mostly civilians have been killed after a powerful explosion in Kabul. Now, a suicide bomber detonated a car full of explosives before a gunman attacked security forces. The Afghan Taliban has claimed responsibility for the attack, which appeared to be targeting a security team that protects members of the government. Speaking at The Hague, U.N. Secretary-General, Ban Ki-moon, condemned the violence.
(BEGIN VIDEO CLIP)
BAN KI-MOON, U.N. SECRETARY-GENERAL: First of all, I'd like to express my deepest condolences for the victims and their families and friends for -- and I condemn strongly this terrorist attacks for the people in Afghanistan. There is no justification whatsoever attacking civilian people, as well as even security people. We must fight against this terrorist attacks.
(END VIDEO CLIP)
NEWTON: The death toll in Saturday's earthquake in Ecuador has risen to 443. The country's defense minister says more than 200 people are still missing and more than 4,000 injured after the 7.8 magnitude quake. It's the deadliest earthquake to hit the country since 1987.
New Yorkers are going to the polls to vote in Democratic and Republican presidential primaries. Hillary Clinton and Donald Trump both voted in New York State earlier as they look to solidify their leads. The first exit polls from the primary are due out in about a half an hour from now.
U.S. law enforcement officials say breaking into the iPhone that belonged to the gunman in the San Bernardino shootings helped their investigation. Investigators say they now have a better idea of what Syed Farook did immediately after the mass shooting last December. Apple resisted the FBI's demand to unlock the phone. The FBI then got into the phone without Apple's help.
Dilma Rousseff says the upcoming Rio Olympics will be the best in the world. In a response to a question from CNN's Shasta Darlington. The president said she's confident the games to be a success despite the current impeachment proceedings against her.
Yahoo has posted its first quarter results and they're mostly in line with Wall Street's expectations. The stock though is trading flat in afterhours trading. Clare Sebastian joins me now. Giving everything that's going on perhaps flat is OK. I mean going into the numbers a little bit more deeply, what do you see there, Clare?
CLARE SEBASTIAN, CNN MONEY REPORTING: Well, I mean, the bottom line is could have been a lot worse. This came in roughly in line with and maybe even slightly better than some analysts were expecting. Revenue per share -- revenue just around 1.09 billion, earnings per share around 8 cents. So that is roughly in line with what's expected and there's a bit of up and down here in the earnings report. Some good and bad. You've got mobile revenue increasing. We've growth revenue declining. The thing that got investors excited in afterhours trading initially was the fact that Marissa Mayer said they've made substantial progress toward potential strategic alternatives for Yahoo. That is of course the major focus at this point.
We still expect many of the questions in the earnings call at the top of the next hour to be focused on that, on the future of the company going forward whether or not they're going to sell off all or part of the core business. That bidding process has been very opaque, very much the subject of rumors in the past week. And we now know, you know, this earning report shows that while this is roughly in line with what people are expecting, this is a company of revenue is declining and earnings declining and struggling to get it back on track.
NEWTON: Yes, and in fact even pricing Yahoo without the cash it has on its books has very difficult. I mean, Clare, she says there's been strategic progress but in terms of the suitors we see lining up for Yahoo, what are they buying here? Why would they buy Yahoo?
SEBASTIAN: Well the bidding price has revealed quite a bit to us about what it is that could be of value in Yahoo. We look at Verizon who has expressed interest. They could well be interested in the advertising assets. They acquired a company BrightRoll, which specializes in video advertising. There's also Yahoo's Gemini platform and Verizon of course also interested in media assets that Yahoo has, Yahoo Finance, Yahoo Sports, Yahoo news and it also owns AOL. So that would add to that portfolio. Also interest from the parent company of the "Daily Mail" in the UK and also sheds light on how valuable Yahoo's media assets could be.
It's said it has a billion monthly users. It ranks third in the U.S. in terms of most trafficked web properties in February behind Google and Facebook. But the point of the matter is, you know, when you strip out the parts of the car, they're of value. But altogether this company is still declining. So it remains to be seen who could, if anyone, could move in and turn the sum of the parts into something that's more reliably profitable.
NEWTON: Yes, which is so interesting that a lot of people believe that perhaps the Verizon deal is the best one. Who knows at this point? Is Yahoo Really going to string along shareholders for a long here? When will we see what Yahoo's future is going to like?
SEBASTIAN: The timing, Paula, really depend on how many bidders there are and how much they're offering, if there are lower bids, it could take longer. If there are many bid it could take a while for them to troll through the various offers. We at the moment, no published offers. It's like underlining. It's just the rumors and reports out there. So we really don't know at what stage is company is at in terms of -- all we know is that phrase substantial progress that came out of the earnings report today. And of course there's also the issue of the activist investor stock would value which is seeking to replace the entire board of Yahoo at their meeting in June. They're hoping to see progress before that on some kind of major move, either a sale or spinoff of the core business or perhaps something else. They could block a sale potentially if it doesn't fit with what they believe is the fair value of the company. So very uncertain still going forward for them.
NEWTON: Which is why it's going to be a very tough call for Yahoo. That's coming up in about 20 minutes and we'll continue to bring you more news on Yahoo. Clare Sebastian, thanks so much, appreciate it.
[16:40:00] Now Google is coming under fire from the EU's competition, Watchdog, over the way it uses the Android operating system. Now, reports say the European Commission plans to file official anti-trust charges against the company on Wednesday in Brussels. Competition Commissioner, Margret Vesger, argues that Google abusing its dominant position by unfairly favoring its own apps. Android used on a majority of phones in Western Europe and Google mandates that a suite of Google apps come preloaded on every device. Google denies that it's broken any rules. It says Android is what it calls open source and the consumer ultimately decides what apps to use.
Now, if google is found guilty, it could be on the hook for a fine as high as 10 percent of revenue. That's about 7 $billion. Now, FairSearch is one of the companies that launched complaints about Google to the European Commission. Earlier I spoke to FairSearch's legal counsel and spokesperson, Thomas Vanje, he told me Google is inhibiting competition and depriving consumers of choice.
(BEGIN VIDEOTAPE)
THOMAS VINJE, FAIRSEARCH LEGAL COUNSEL AND SPOKESMAN: I think if the commission does what it seems to be about to do then OEMs, manufacturers of phones in particular will be free to differentiate their products. To give space to other innovative providers of apps in particular. So consumers will have more choice of applications. And they might also have more choices with respect to the devices that they can purchase.
NEWTON: Now, Google argues that, you know, the customers already have choice. I'm holding an Android phone here and an Apple phone here. And I can tell you, both come with these prepackaged apps, but that doesn't mean you can't use other apps. And in some cases you can delete some of the apps. The crux of your argument, though is that somehow the customer does not have choice that they're locked in.
VINJE: The power of default is very intense. Lots of studies indicate that and I think it's fairly common knowledge it is the case so consumers tend to use, and this was true in the Microsoft case ten years ago, as well. They tend to use what they're provided. And so that means that the programs that are included by default with prominent placement are the programs that consumers tend to use. That means that competitors have difficulty reaching their audiences, that means they have difficulty competing, generating revenues necessary for further innovation and that I would suggest does in the end limit consumer choice.
NEWTON: It's the Microsoft case here and the fact that Microsoft lost that case, that is what's giving you hope here and some people estimate as much as 10 percent of Alphabet, the parent company's, revenue. Is that what is making you hopeful in terms of what your case rests on?
VINJE: There's certainly similarities of this case and the Microsoft case. And the European Commission showed that it was capable of being very strong in the Microsoft case. So, I think we have based upon the merits of this case and the president of the commission acting versus Microsoft and others. We have good reason to hope that this case will end in a finding of violation by Google. With respect to the fines, that's not at all what drives us. It is possible that Google will be fined some significant amount. But to us, the thing that really matters is the change in the conduct. And we hope that will give room for more competition and again more innovation and choice for consumers.
(END VIDEOTAPE)
NEWTON: Now whether you choose to use android software or something else, taking the best photos on your mobile device comes down to hardware. Chinese phone maker Huawei has equipped its latest smartphone with two rear cameras. And claims it's taking a leap toward professional quality photos. CNN Money Samuel Burke took the new P-9 for a test shoot around Manhattan.
(BEGIN VIDEOTAPE)
SAMUEL BURKE (voice-over): That line between professional cameras and smartphone cameras is blurring. Huawei's new P-9 smartphone with dual cameras. I'm not just the one in front and the one in back. It takes one picture with these two lenses and we went to three New York landmarks to test it out.
BURKE (on camera): The first up, the Brooklyn Bridge.
BURKE (voice-over): The two lens system lets you take high quality pictures with the foreground in focus and the background blurry or the other way around.
BURKE (on camera): Huawei worked with the famed German camera maker Leica to develop this technology. One camera takes photos in color, the other one in black and white. Combined the companies are promising a higher quality photograph.
Our next test is at one of New York's newest landmarks, the High Line. A bit of an artsy photo with the P-9 and compare it with the same shot of the iPhone 6S.
BURKE (voice-over): The Huawei lets you control just how soft you want the background to be. The iPhone, not so much.
BURKE (on camera): Huawei is already a top smartphone manufacturer in china. They're gaining ground middle markets like Mexico. And now looking to take on the West with the P-9 and set you back about 680 bucks. Of course, you can't spend the day sightseeing in Manhattan without a visit to Central Park. The dual cameras even let you focus after you've taken a picture. I've never seen pictures taken on a smartphone look quite this good and even if you're not in the market for an Huawei phone, rumors say Apple might bring a two camera system to the iPhone 7. With pictures like these, I'd expect to see a lot more smartphones with dual cameras soon.
(END VIDEOTAPE)
NEWTON: That was our Samuel Burke there. I have no excuse for bad photos.
We are covering President Obama who is traveling to Saudi Arabia. After the country said it might sell U.S. assets.
(COMMERCIAL BREAK)
U.S. President Barack Obama is on board Air Force One right now on route to Saudi Arabia for what could be a very testy meeting with the country's rulers. The White House is threatening to veto a measure that would let 9/11 victims' families sue the Saudi government. Saudi Arabia reportedly said it will sell off American assets if that's allowed to happen. Mr. Obama's trip comes at a highly sensitive time, as CNN's Nic Robertson explains.
(BEGIN VIDEOTAPE)
BARACK OBAMA, U.S. PRESIDENT: I am honored to be in the timeless city of Cairo.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR (voice-over): 2009 and just in office, President Obama came to Egypt.
OBAMA: We meet at a time of great tension between the United States and Muslims around the world.
ROBERTSON (voice-over): Talks of reshaping U.S. relations with Mideast nations. The crowds loved him. Less than two years later -- the same city, his host, President Mubarak overthrown in the Arab Spring Uprising. How Obama responded to the fall of his allies set the tone for of his relationship with the region since.
AF OBAID, SAUDI STRATEGIC ADVISOR: It wasn't so much that they fell. It was so much how the U.S. went about it and really the beginning of this schism.
ROBERTSON (voice-over): The schism that grew to rupture with the U.S.- Iranian nuclear deal. The Saudis were furious.
FAWAZ GERGES, LONDON SCHOOL OF ECONOMICS: They believe that Barack Obama has sold them at the altar of his own with Iran. Their arch enemy.
ROBERTSON (voice-over): In response to all this, Saudi Arabia has ramped up its armed forces. Overtaking Russia to become the world's third largest defense and security spender. And last year, formed a 34-nation Sunni Muslim coalition to follow Saudi's lead.
GERGES: As a result of their mistrust of Barack Obama, the Saudi's now have adopted a more muscular foreign policy. They are on the attack in Yemen and other places and they're trying to counter balance Iran in the region. The Americans really have lost control.
[16:50:00] ROBERTSON (voice-over): Where they needed control the most, solving Syria. The Saudi's new king is a very impatient ally. He wants Assad gone now and Iran's influence removed.
AF OBAID: Is that course going to change now is there's a new president more amenable to Saudi interest? I don't think so. The ship has sailed.
ROBERTSON (voice-over): But for all the strains, both sides still need each other. Saudi Arabia needs U.S. weapons. Obama wants regional stability. His time in Riyadh will not be about divorce, but easing the estrangement. Nic Robertson, CNN, Riyadh, Saudi Arabia.
(END VIDEOTAPE)
NEWTON: In a moment, something you really don't want to miss. It's a closer look at the fight for delegates within the Republican Party. But first, we have a highlight from "MAKE, CREATE, INNOVATE."
(COMMERCIAL BREAK)
NEWTON: Now, the head of the Republican National Committee has met with party congress people to try and reassure them that the nomination process is fair. Extraordinary that he has to do that because Donald Trump has blasted the nomination system in fears that the lead so far will not translate into a win with delegates at the convention. Gary Tuchman has an interesting look on how and why that would happen.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: Thank you for bringing it up.
GARY TUCHMAN, CNN NATIONAL CORRESPONDENT (voice-over): Katie Frost has just been elected as a Ted Cruz delegate. Dale Jackson and Denise Ognio will also be going to the Republican National Convention, but as Donald Trump delegates. However, as the two of them sign papers officially committing themselves to Trump, they have also committed themselves to abandoning Trump for Ted Cruz. As soon as possible. So why and how is that happening?
UNIDENTIFIED MALE: Congratulations to Katie Ross and Denise Ognio and Dale Jackson. They will represent us at the national convention.
TUCHMAN (voice-over): This is the Republican convention and 3rd congressional district of Georgia, south and west of Atlanta. Where many Donald Trump supporters say the fix was in.
UNIDENTIFIED MALE: You may say it wasn't determined before we got here but that's not true.
TUCHMAN (voice-over): Donald Trump won the Georgia primary in March. And he won Georgia's 3rd congressional district. According to the rules he automatically gets two delegates. Ted Cruz who came in second gets one. And this is the day that more than 200 active Republicans from the district elect the actual people who will be those delegates. Sounds simple enough. But things were not so simple early in the day when it came to selecting the Trump delegates. Listen to what Denise Ognio says at the end of this exchange, before she was selected as a Trump delegate.
UNIDENTIFIED MALE: What campaign did you work for?
UNIDENTIFIED MALE: She Told you.
DENISE: I worked for,. I worked for a lot of campaigns. You are asking do I support Ted Cruz? And I do.
TUCHMAN (voice-over): A Trump delegate, But a Cruz supporter. And then the other winning Trump delegate, Dale Jackson was asked if he supported Ted Cruz.
DALE: I support limited government and conservative principles.
TUCHMAN (voice-over): The clear evidence he supports Cruz was easy to find. Flyers were passed out that stated, "Please Vote for Ted Cruz Delegates." And it listed the names Dale Jackson and Denise Ognio who were later elected as Trump delegates. This man is a Trump supporter.
CLINT ROUGHTON, TRUMP SUPPORTER: The voters voted the majority for Donald Trump and knowingly sending Ted Cruz supporters up there I think is wrong.
TUCHMAN (voice-over): So even though the Trump supporters might not like it, but it's totally within the rules and Ted Cruz's campaign knows how to play them.
[16:55:00] Aggressively recruiting supporters to turn out for the conventions held in congressional districts throughout Georgia. Daniel Jackson and Denise Ognio are obligated to vote for Trump. But if it goes past the first ballot, bye-bye Trump.
TUCHMAN (on camera): What will it be like voting for Donald Trump and Ted Cruz will most likely still be fighting to be president of the United States? How will that make you feel, honestly?
DALE: Well, I mean, that's the rules. I'll follow the rules.
TUCHMAN: But how will that make you feel?
DALE: I know there's going to be a second vote.
TUCHMAN: So rules are rules and Donald Trump will get two votes from the newly elected delegates, but if the voting at the convention in Cleveland goes to a second round they'll do the political e equivalent of leaving Donald Trump at the altar.
So do either of you have any ethical issues at all with not voting for Donald Trump after the first ballot as Donald Trump delegates?
DALE: Absolutely not.
KATIE: No.
TUCHMAN (voice-over): Gary Tuchman, CNN, Noonan, Georgia.
(END VIDEOTAPE)
NEWTON: Eye opening wasn't it? I want to really thank Gary for that report. Think about why Donald Trump then and all the speeches saying the system is rigged. It's going to be quite a battle in the Republican nomination.
Meantime, Chinese investors had some serious beef with the Australian government last year over a giant cattle deal. Now, the deal has cleared the fences. And it's as Donald Trump would say huge.
(COMMERCIAL BREAK)
NEWTON: Chinese investors have put in one of the biggest beef orders ever. A group called the Dakang Australia is buying a cattle ranch that is bigger than Ireland. This isn't actually one giant ranch. We're talking about several across Australia that belong to the Kidman Beef Company. Together they come up to more than 77,000 square kilometers. That's bigger than the entire land mass of Ireland. The Australian government actually blocked the deal last year. It said one of the ranches was too close to a weapons testing site. So Dakang will have to settle for an Irish-size one instead.
And that's QUEST MEANS BUSINESS, I'm Paula Newton and I'll see you right back here again tomorrow.
END
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