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QUEST MEANS BUSINESS
Eight More Girls Kidnapped in Nigeria; Nigerian Government Responds; Fractured Nigeria; Improving Life in Nigeria; Triplet-Digit Losses for Dow; Twitter Tumbles; Pharma Mega-Deals; Bayer-Merck Deal; AstraZeneca-Pfizer Deal; European Markets Fall; Ahrendts' Apple Payday; Challenges at Apple; "Insane" Pay
Aired May 6, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
MAGGIE LAKE, HOST: Triplet-digit losses for the Dow as US markets spend the day in the red. It is Tuesday, May the 6th.
Nigeria's kidnapping crisis, eight more girls are snatched by militants.
Apple's new retail boss is given $70 million, and she's only just started the job.
And a deal a day means a lot of M&A. Bayer becomes the latest pharmaceutical company to grow its business.
I'm Maggie Lake, and this is QUEST MEANS BUSINESS.
Good evening. Eight more girls are missing in Nigeria as global outrage grows over mass kidnappings in the country. The latest young victims were snatched at gunpoint from a village in the northeast. More than 200 others taken from their school last month are still being held.
Nigerians have turned against their own government in protest for failing to find the victims and curtail the terror group, Boko Haram, which claimed responsibility yesterday.
There have been rallies and demonstrations around the world, such as this one in Washington, organized using the hash tag #BringBackOurGirls. The United States has offered support to help find and rescue the victims three weeks after they were taken.
Isha Sesay is in the capital, Abuja, where the World Economic Forum starts tomorrow. And Isha, so good to see you this evening. We've been watching your reporting throughout the day. You've been talking to government officials and pressing them about whether they have done enough, how they've handled this, and whether they are now doing enough to try to find these girls.
ISHA SESAY, CNN INTERNATIONAL CORRESPONDENT: Yes, hi there, Maggie. Yes, I think these are the questions that people around the world and especially here in Nigeria have wanted answers to. It has not been enough, and it isn't enough for any government in a time like this to simply say we are doing all that we can.
Details must be provided to back that up, especially when three weeks go by before you hear from the president of that country, before he makes on-camera remarks, to be clear, in which he comes out and says "We have no idea where these girls are, but we continue to do our best."
That simply isn't enough, especially when you bear in mind that the families on the ground in the area where these girls were abducted, say that the communication between themselves and the government has been intermittent at best.
So, there were a lot of questions that we needed answered by Nigerian officials, and I had the opportunity to speak to two senior government officials tonight and asked them some of those questions, such as, what are you doing? What does that operation look like? Give me a sense of the number of troops involved.
Have you gone into the Sambisa Forest, which is where people from that region believe those girls were taken in the immediate aftermath of their abduction. Questions like that.
And also, really, to explain why the president has been so unforthcoming with information. Take a listen to some of my conversation with Dr. Doyin Okupe, who is the senior special assistant to the president on public affairs.
DOYIN OKUPE, SENIOR SPECIAL ASSISTANT TO NIGERIAN PRESIDENT ON PUBLIC AFFAIRS: The fact that the president did not say anything does not mean that a lot was not going on. There have been a lot of meetings, there have been a lot of directives. I am aware that two battalions, special battalions, were devoted to searching for these girls.
SESAY: Well, this is the first time we're hearing that.
OKUPE: I'm telling you that --
SESAY: So tell us, now --
OKUPE: -- a lot more than that --
SESAY: -- you say two --
OKUPE: -- two special battalions were devoted to the pursuit of these girls. There have been over 250 area searches, with helicopters and airplanes, fighter jets that can utterly scan. I've seen them, and I've seen the --
SESAY: Did you go into the forest?
OKUP: I'm talking about the forest. The tapes were -- these tapes were shown on national television, NTA, two days ago.
SESAY: Well, it is the first time we've had that level of detail from the Nigerian government. We have been asking today for more detail about that operation. And then tonight, we hear from the senior special assistant to the president on public affairs, Dr. Doyin Okupe, speaking to us live on CNN and giving us some of that much-needed detail.
Detail that the families were desperate to hear, and details that they need to hear so that they can truly, truly believe that all is being done to find their children, especially in light, Maggie, of that horrific, terrifying video that came out yesterday, with the man believed to be the leader of Boko Haram saying that he intends to sell these girls and basically turn their lives upside-down. Maggie?
LAKE: Yes, absolutely, Isha. And the world pressure is growing. All eyes are watching Nigeria. It's got to be concerning that as they say they're doing all they can, there are reports of yet more girls being kidnapped.
Is there a sense that they are taking the international assistance that's been offered from the US and from others? We know it's been offered. Is there a sense that the government is using all of those international resources to try to find these girls?
SESAY: Well, I was very direct with Dr. Okupe there on that matter of international assistance and specifically from the United States, and he said on camera, live on CNN, that that assistance offered by the US has been accepted.
That is what he told us live on our air, that the president of Nigeria, Goodluck Jonathan, had a conversation with Secretary of State John Kerry a couple of hours ago, in which they discussed that offer of assistance. It was accepted, and he said that in the days ahead, that plan, that agreement, would be put into motion.
So, at least on that front, when it comes to the United States, the Nigerian government saying they are taking the help that is being offered. We know the United Kingdom has also offered help. We have not heard word on where that offer stands.
But we know that tonight the Nigerian government will -- have accepted help. And the hope is that that will be the turning point in the search and rescue mission, Maggie.
LAKE: Absolutely, and that is the goal. And hopefully -- time is of the essence, so hopefully they are now moving rapidly, not only with action, but also in terms of reporting to all of us. Excellent reporting today, Isha. Thank you so much for that.
Now, Nigeria's attempts to promote itself on the world stage by hosting the World Economic Forum has served to highlight its startling divisions. Let's look at some of this information. Among Nigeria's population of nearly 170 million people, US figures say that 62 percent -- 62 percent -- live in extreme poverty. Inequality remains a huge issue.
In the north, where Boko Haram has a stronghold, UNICEF says that up to three times as many boys attend school, compared to girls. Homosexuality is banned in the country. Gay people risk 14 years jail time for entering same-sex marriage. And the persistent claims of corruption remain from the top down, such as the $20 billion that disappeared from the treasury and still has not been found.
Against the struggle for stability, we see Nigeria's huge economic potential. It's now Africa's largest economy, with GDP worth $510 billion. It's also the continent's largest producer of oil and liquid natural gas, with Africa's largest telecommunications market as well.
Put all of this together and you have a dichotomy: concentrated wealth in the face of poverty, corruption, inequality. Now, it's all the more ironic for Nigeria to host the World Economic Forum, which opposes all of these things.
These are the issues which Oxfam International is well aware of. It has been campaigning to improve living conditions and rights for women. Richard asked its executive director what it would take to turn the country around.
WINNIE BYANYIMA, EXECUTIVE DIRECTOR, OXFAM INTERNATIONAL: It is an issue of poverty and inequality, extreme inequality. We have the solutions. We know that it's political and it can be solved. The solutions are a range of policy choices.
For example, fairer taxation, progressive taxation. Public -- free and public services, particularly education and health. Decent jobs and decent wages. These are some of the solutions that can reduce inequality and free up resources to invest in people.
RICHARD QUEST, CNN INTERNATIONAL: So, why is it so difficult to implement?
BYANYIMA: It is difficult because in many developing countries, particularly those countries that are highly dependent on natural resources, that wealth has combined with political power, and there is a culture of democracy.
So the rules, the policy-making is skewed in favor of the rich. So you don't get the policies that will bring about poverty reduction and reduce inequality. It's a capture of the -- a hijack of democracy, a hijack of politics.
That is why those policy choices are not made. But in countries where these choices have been made, we have seen change. We saw it in Brazil. Brazil was able to bring down high levels of inequality while also achieving growth.
LAKE: Two heavyweights of the pharmaceutical industry have shaken hands on a deal. There's plenty more action brewing as the industry grapples with change.
LAKE: US stocks fell on Tuesday, and it's not often that we say that. Alison Kosik is at the New York Stock Exchange with a look at the action today. We have seen this market behave in an awfully resilient way, Alison. Looks like they ran out of a little bit of steam today. What happened?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Very much so. You know what happened? There just wasn't a lot for investors to really sink their teeth into, so I think we saw investors really just gravitate towards the negative, and they sold stocks.
And I'm talking about negative earnings. AIG's downbeat results, they really dragged down the entire financial sector today. We saw shares of Goldman Sachs, CitiGroup, Morgan Stanley, all ending in the red.
And as you said, Tuesdays have really been kind of sweet for Wall Street. We didn't see that happen today. Stocks have ended higher for seven consecutive Tuesdays, but it looks like the bulls just couldn't get motivated to pull out another win. Maggie?
LAKE: Nothing lasts forever. It has to go down once in a while, doesn't it? But one of the big losers today, we were watching this with some interest, was also Twitter. Those shares down sharply. What was happening there?
KOSIK: Oh, yes, 17 percent. Just stunning. A stunning drop for Twitter. Company insiders were allowed to sell their stock after Twitter's IPO, that six-month lockup period, it ended, so everybody kind of sold. We saw shares fall below $35 a share.
Since Twitter went public, when it priced its IPO, it was at $26. We saw shares soar $45 on the first day. So, we saw a lot of selling going on even though Twitter's co-founders, Jack Dorsey, Evan Williams, along with CEO Dick Costolo, they said they aren't selling. But clearly, someone was selling today.
What investors are really worried about at this point with Twitter, Maggie, is that there's some concern about Twitter's user growth and how active users, they aren't tweeting as much. That could be a problem. Maggie?
LAKE: Alison, I think we're wondering whether it's insiders selling or whether it's some of that momentum, those short-term players, when you saw that downdraft, whether they jumped onboard and really made it something like 17 percent rather than 10 percent. We're going to have to see how that shakes out in the coming days. All right, Alison, thank you so much.
LAKE: Have a great night. Well, merger activity in the pharmaceutical industry has reached fever pitch. German pharmaceutical giant Bayer announced plans today to buy Merck's consumer health unit for $14 billion. And in the UK, the government said it made no apology for getting involved in Pfizer's $106 billion bid for AstraZeneca.
There are two factors driving drug makers to link up. Pharmaceutical companies loaded with cash are rushing to take advantage of low interest rates. They are also struggling to come up with new drugs to replace existing products whose patents are expiring. That's more of a long-term issue for them.
Well, Bayer will take on Merck's portfolio of consumer product brands, like Coppertone, Claritin, Dr. Scholl's. Now, many of those are not that well-known outside the US. That is something Bayer wants to change. The deal will make Bayer the world's second-biggest maker of over-the-counter products.
Bayer's CEO, Marijn Dekkers, said last week that his company did not look for growth through mergers and acquisitions. I asked him what had changed.
MARIJIN DEKKERS, CEO, BAYERS: We have very good organic growth momentum. We had in our business in all three subgroups very good growth in the first quarter. So, I don't feel necessarily pressure to do M&A.
But I have to say, when this consumer care opportunity of Merck came along for us, we took a very long, hard look at it and decided it was so attractive for us that we didn't want to pass it up.
LAKE: So, this is going to make you a huge player in that field, but it is one with its own issues, with its own pressures, one of which is that in a tough economy, consumers have been looking to some of those generic brands. They've been trading down. How do you plan to have pricing power?
DEKKERS: Well, that is obviously always a trend, particularly in a difficult economy. But on the other hand, I would say that a lot of consumers are very, very loyal to their brands. If I think about Bayer's aspirin that has been around for over a hundred years, and the sales that we have in that product even though generic competition is there in the stores.
People like the strong brands that they know, and they like the quality assurance that comes with the brands. So, yes, there is pressure. On the other hand, those are very stable and relatively profitable businesses with good cash flow and very good consumer loyalty.
LAKE: Is there any brand crossover? Could we see you consolidate in any way? Will consumers see any of their favorite brands go away as a result of this merger?
DEKKERS: No. Actually, no, because the beauty of this combination is that it's a very, very good complement to the Bayer portfolio. Bayer's consumer care business is about 2.5 times larger than that of Merck, and Merck is playing in areas that we were not so strong in. So, the combination makes us stronger in certain product areas, but also in geography. So, nothing is going to go away.
LAKE: And you're also going to work together in terms of coming with treatments for cardiovascular diseases. What's the growth potential in that area?
DEKKERS: The growth potential is very, very good there. This is really a sort of a new cellular pathway that Bayer and Merck are working on together to deal with certain cardiovascular diseases. Particularly an example is high blood pressure in the lungs.
And we both have capabilities and also commercial presence in that area. And the thought in doing this deal was if we combine our capabilities there, we'll be stronger for it. One and one is three in that area for us.
LAKE: That's some new math for you. Well, turning to Pfizer's bid for AstraZeneca, the UK's business secretary says he will not rule out intervening to stop the deal. AstraZeneca has already rejected two bids from Pfizer. Today, the British drug maker laid out plans to survive on its own. It forecasts sales will rise 75 percent by 2023.
The potential deal with Pfizer faces political pressure as well. The UK's Labour Party is calling for an inquiry, accusing Prime Minister David Cameron of cheerleading for the deal. UK business secretary Vince Cable told the House of Commons, quote, "We are very alive to the national interest considerations here. We see the future of the UK as a knowledge economy, not as a tax haven."
European markets were down across the board. OECD urged the ECB to cut interest rates to fight low inflation. Barclay's shares, meanwhile, down 5 percent on worse-than-expected earnings. UBS were up slightly after earnings beat expectations and that bank announced a special dividend.
Straight after the break on QUEST MEANS BUSINESS, she made millions after giving a new lease of life to Burberry. Now, Angela Ahrendts in line for another payday bonanza from her new boss. We'll tell you about it.
LAKE: Apple's new head of retail is set to get up to $68 million worth of company stock over the next four years. Part of it will be a reward for simply showing up. Angela Ahrendts, the former CEO of luxury brand Burberry, has only just started the job.
She is in charge of steering Apple's retail and online store operations. On the first of June, she'll receive her first batch of shares, worth nearly $10 million. Not bad for a month's work. How come I can't get that gig?
Jim Boulden joins me from London. Somebody else who doesn't have that gig, but who's going to tell us all about hers.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: That's right.
LAKE: Jim, we all know that, those of us who remember the $6 Million Man, wow, forget it. This eclipses that, right? The 60 -- almost $70 million woman.
LAKE: Is she worth it?
BOULDEN: Well, this is the thing. Angela Ahrendts was the face of Burberry, but you'd be forgiven if you didn't even know here, because she doesn't do a lot of media. But she did turn that company around, and that's why, of course, you saw Apple grab her and taker her away.
But now she's been subsumed into Apple, I don't think we'll hear much from her now either. So, we've gone back and found an old interview she did with Richard Quest to talk about what she did to change Burberry. And listen to it to see some of the things that she might use to help transform the retail side of Apple. Take a listen.
(BEGIN VIDEO CLIP)
ANGELA AHRENDTS, FORMER CEO OF BURBERRY: All we're trying to do is keep the brand so it keeps pace with as fast as consumer behavior is changing. So, we have 10,000 iPads in every sales associate's arms in every store. We have had for the last two years.
That drives a third of our digital business online, because every store cannot hold the full assortment that Burberry.com can.
(END VIDEO CILP)
BOULDEN: So, that's Angela Ahrendts when she was the CEO of Burberry. Let's look at some of the challenges, though.
One of the things is that the Apple Internet sites aren't really great for use on mobile phones, so she has a real challenge to try to do what she did at Burberry, which is using these mobile phones, mobile devices, to get people to do more shopping. So, I think one of her challenges will be optimizing for mobile.
Now, we know the Apple Stores are very successful, there's no doubt about that. But she needs to see if she can freshen it up, and one of the issues will be, well, the iPod is getting old. The iPod era is nearly over.
And the iPhone, of course, has stiff competition. You think of Samsung, you think of all the phones that have Google Android in them. So, the iPhone, even though we get new updates, it isn't the sexy phone that it was when it came out a few years ago.
And where are the wearables? And where -- the Google wearable -- and you can see, of course, that it has become a bit of a novelty, these wearables, I have to say. We keep waiting to hear, Maggie, about what Apple will do with wearables.
So, will Angela Ahrendts be the one to bring those out to us, and will we go into mobile phones, will we go into mobile devices and shop there for Apple instead of or on top of going into the stores, Maggie?
LAKE: It's sort of fascinating, isn't it, Jim? A lot of people were surprised by this hire. Clearly she has a relationship with Apple from the very beginning in terms of connecting with the iPad early on --
LAKE: -- being a believer. People don't really know whether she was hired to tell them what their products should look like, especially if you're going into wearable, which is more sort of fashion-bend, I guess you could say, than the previous sort of hardware of technologies, if it's going to move in that direction.
Or whether she was hired to tell them how people shop. We're not clear on that, are we? How much power do we think she's going to have at Apple?
BOULDEN: Yes, this is interesting. Of course, the last two men who have had this role, one you could say is pretty successful. The last guy only lasted six months and less, and that hole at retail Apple has been vacant, I think for more than a year, hasn't it?
And so, you think of why did they go for Angela? I was really surprised when it happened, not for bad reasons, but because she is fashion, she is the one who brought technology to fashion. So, now you're talking about bringing fashion, possibly, back to technology.
Because even though, of course -- the Apple has been very cool, what is it she can bring? You're absolutely right, it's going to be fascinating to see if when I walk into that store in Regent Street just down the road, am I going to see an Angela Ahrendts difference in a few months' time? I hope I do.
LAKE: Yes, and it will be a real comment on Apple, because lot of people wondering if they're still innovative. They've always been able to sort of disrupt what happened at Apple in the past in order to claim future sales.
Can they do that again? Especially if her views differ with some of the people who have been there for a long time. It's going to be fun. All right, Jim, great to see you. Thanks so much.
LAKE: Let's stay on the topic of executive pay. Warren Buffett's right-hand man, Charlie Munger, says executive pay is reaching insane levels in the US. Speaking at the Berkshire Hathaway meetings in Omaha over the weekend, he spoke about a moral obligation for those at the very top.
CHARLIE MUNGER, VICE CHAIRMAN, BERKSHIRE HATHAWAY: I think the people on the top of the heap ought to voluntarily take less as part of their duty to the republic. In other words, I don't think everybody should -- who's been especially favored should take the last dollar that he or she can get.
POPPY HARLOW, CNN CORRESPONDENT: Do you --
MUNGER: I think we all have a -- an obligation to dampen these fires of envy. When you rise to a certain point in life, I think you should voluntarily and eagerly take less than you're worth.
HARLOW: Executive compensation. This is front and center, of course, in the discussion over Coca-Cola, that was just had in the meeting. How does one determine what is excessive?
MUNGER: Well, of course, that's a hard question. But my views on this are different from most people. You start paying directors of corporations $200,000 or $300,000 a year, it creates a daisy chain of reciprocity, where they keep raising the CEO, and he keeps recommending more pay for the directors.
And in the end, I think the pay of both CEOs and directors in this country in the biggest corporations, I think the pay's too high.
HARLOW: When you have boards -- Warren Buffett, for example, said he's been on 19 boards over 55 years and never seen a board vote down a compensation package.
MUNGER: Oh, I'm sure that's quite accurate.
HARLOW: Is that indicative of a larger issue?
MUINGER: Sure. The answer is, there are social forces in place that are causing too much pay for some people. And when you try and fix it by paying the directors more, it's like trying to fix a fire by pouring gasoline on it.
HARLOW: Berkshire doesn't pay its directors. Is that --
MUNGER: For that very reason.
HARLOW: Is that the answer?
MUNGER: We don't pay them very much. Well, there again, you see, I think the people on the top should voluntarily take less, and I think if I were running the world, directors wouldn't be paid at all. I would treat the directors like the trustees of Stanford or something, who not only don't get paid, but they're expected to give.
HARLOW: Then how do you incentivize the people at the top to achieve, climb to the top?
MUNGER: Well, I think being a director is different from being an executive.
HARLOW: But --
MUNGER: I think you'd get plenty of wonderful directors at American companies if you didn't pay them at all.
HARLOW: You're saying also, though, CEOs shouldn't make as much, right?
HARLOW: So, how do you incentivize them to want to -- to want to work --
MUNGER: I think --
HARLOW: -- to get there.
MUNGER: -- if you really think that a man who is -- craves power and significance and likes decision-making is running a big company and has one of the most important public ranks in America and he makes $5 million a year, do you really think he'd work a lot more effectively if you raise him to $7 million? I think the whole thing is insane.
LAKE: I have to tell you, his ability to speak out on that makes him a minority in the business community.
Up next, Nigeria's kidnapping nightmare gets even worse. We'll find out why it is so difficult for the government to find the missing girls.
LAKE: Welcome back, I'm Maggie Lake in New York. These are the top news stories we are following this hour. Eight more girls have been snatched by Boko Haram militants in northeastern Nigeria. It comes three weeks after more than 200 schoolgirls were taken from their beds in the region. In the past couple of hours a senior presidential assistant told CNN two special military battalions are now in hot pursuit of the kidnapped girls. We'll have more on this story in just a moment.
Ukraine is asking world leaders to help ensure its presidential election will go ahead as scheduled despite what it calls provocations by Moscow. In a meeting in Vienna, Russian foreign minister Sergey Lavrov questioned the timing of Ukraine's May 25th vote citing the escalating crisis in the region.
South Korean officials say excess, poorly-secured cargo was behind last month's ferry sinking. At least 267 people were killed, most of them students. Thirty-four people are still unaccounted for. Earlier on Tuesday, a diver looking for bodies was killed after suffering problems with his oxygen supply. New aid is reaching landslide victims in Afghanistan. The World Food Program handed out wheat and other items to hundreds of families in the northern Badakhshan Province. Survivors said aid was slow in coming. The landslide buried villages last Friday. It isn't known how many people were killed. Some officials say it could be more than 2,000.
A reclusive German art dealer famous for keeping a trove of priceless artworks has died. Cornelius Gurlitt had more than 1,000 paintings confiscated from his home by German authorities in 2012. Many were thought to have been looted from Jewish collectors by the Nazis. With his death the investigations into that matter have now come to an end. Gurlitt was 81 years old.
Returning to the security situation in Nigeria, the United States has joined the effort to find hundreds of school girls who were abducted three weeks ago. A state department spokeswoman said the U.S. is ready to provide military and law enforcement personnel who have experience with investigations and hostage negotiation. Islamic group Boko Haram has claimed responsibility for the kidnappings. CNN's Vlad Duthiers explains how Boko Haram became so powerful in Nigeria and why the government is having so much trouble fighting back.
VLADIMIR DUTHIERS, CNN CORRESPONDENT: Boko Haram seen here in this training video has waged a violent campaign of bombings and shootings according to human rights groups. Boko Haram came to national attention in 2009, after more than 700 people were killed in widespread clashes in the northeastern part of the country between the group and the military. In the aftermath of those confrontations, hundreds of Boko Haram members were killed, including the group's charismatic leader Mohammed Yusuf. Boko Haram primarily focuses its attacks on Nigeria. It wants to overthrow the government and replace it with a regime based on Islamic law. But it has also proven itself capable to attack international institutions. In August 2011 a Boko Haram suicide bomber drove a jeep crammed with explosives into the U.N. headquarters and Abuja. The resulting explosions killed 24 including 12 U.N. staffers. It was one of the deadliest attacks in U.N. history. President Goodluck Jonathan declared a state of emergency in Borno, Adamawa and Yobe states.
GOODLUCK JONATHAN, NIGERIAN PRESIDENT: The troops and other scheduled jessis (ph) involved in these operations have orders to take all necessary actions.
DUTHIERS: The state of emergency gives state security services wide latitude in their fight to restore order but analysts contend that it will take more than military action, pointing to the crushing poverty, corruption and lack of accountability in a country that is one of Africa's oil producers.
ERIC GUTTSCHUSS, NIGERIA RESEARCH, HUMAN RIGHTS WATCH: Some of the root causes and the underlying factors that have led to this violence have not yet been addressed by the Nigerian authorities including widespread poverty, impunity for intercommunal violence, police brutality and corruption which gives - which has created a fertile ground for militancy, especially in northern Nigeria.
DUTHIERS: And since the state of emergency, the attacks and the killings have raged on. Vladimir Duthiers, CNN Lagos.
LAKE: Speaking on "Quest Means Business" on Monday, Nigeria's finance minister told CNN the government would accept any help it could to find the missing girls.
NGOZI OKONJO-IWEALA, NIGERIAN FINANCE MINISTER: And every country - any country - anyone who can help us with support to find these girls, we don't mind. They should help us. A first priority in the country is not about wealth ,(ph) it's about our girls - we must bring them back. So we're seeking for help - an international organization, any country that has different technology ways of detecting, please let them come and help us to get these girls back.
LAKE: Will Geddes is managing director of the International Corporate Protection Group. He joins me now from London. Well thank you so much for being with us today. As we have been reporting in the show, the Nigerian government says it's doing everything it can. It has two battalions that are allegedly in hot pursuit. What do we know about their security forces?
WILL GEDDES, MANAGING DIRECTOR, INTERNATIONAL CORPORATE PROTECTION: Well to be honest, the Nigerian forces are somewhat overwhelmed up in the northeast regions. Fundamentally, Boko Haram have a very good capability up there. They have a very large supply of weapons and munitions, they have well-trained and well-versed fighters amongst their teams and to a certain extent, the Nigerian forces have been struggling for quite some considerable time in trying to obviously combat them on their own ground if you like. And this is why there is this very large sort of call to arms if you like to the international community to try and support.
LAKE: And do what they can. A lot of times when you have a situation like this, we're not talking about one girl, we are talking about 200. It's a difficult area. Can they get or expect the assistance of the local communities? This is often where tips come from. Would we expect to see that? What's the situation in terms of their relationship with the people who live in that province?
GEDDES: Well it's going to be incredibly difficult because, again, Boko Haram it's believed also provide finance to the local community where the local government doesn't and there is abject poverty in the region and ultimately the local community are going to support what they can. And bearing in mind that Boko Haram have launched a number of very successful attacks, kidnappings in the local area. People are going to be finding it very difficult to speak up against them and to provide what can also be their intrinsic intelligence to try and guide both the Nigerian forces and international forces to try and determine the hostages' whereabouts.
LAKE: Absolutely, that's an excellent point and in fact we saw the videotape of what looks like an emboldened leader talking about the incident - very casual, laughing. It's very difficult to watch. Because they do seem to be emboldened, their - they - don't seem to be concerned about what's going to happen. We've got Nigeria also hosting the World Economic Forum. Now the world is watching. We hope that helps the search for the missing girls, but can also draw attention for Boko Haram. Are you concerned that they might try to do something? We saw more girls kidnapped. Could they try to do something - do something in the capital because they have the world stage right now? Is that a risk?
GEDDES: I think it's highly likely and I also think certainly though in terms of the risks down in Nigeria as a whole, Abuja is very much on the map and equally Lagos. So Boko Haram have had more success it's alleged certainly in infiltrating the government and certainly the military forces than they have the other way around. So ultimately their reach is quite long and certainly with the forum going to very soon take place, there are some considerable risks potentially about this and for the delegates attending.
LAKE: Absolutely and they are arriving. It is getting underway. There are expected to be world leaders there. We'll have to see if that changes. The government has essentially put Abuja on lockdown for the next three days. Is that the right move? Will that help at least sort of protect that situation, or again, could that just prove to embolden this group?
GEDDES: Well I think the Nigerian government have got to take every best efforts and steps they can to secure obviously the forum and the world leaders who are attending. How successful that is going to be? Again, we'll only be able to tell over the next few days. The problem is, is that Boko Haram have been highly successful not only in terms of suicide bombs but also in assassinations. So they have a good long history in these kind of actions. And it's inevitable that in advance of obviously the forum, they would've done their recognizance and their planning and there is every good possibility that they may be successful. So the international communities attending is also going to have to bring together obviously all their security mechanisms to find support and assist in their protection.
LAKE: Will Geddes, thank you very much for sharing your particular insight with us. Much needed tonight from ICP. Thanks so much. A new report on climate change has the White House calling for urgent action. We'll look at the findings when we come back.
LAKE: The White House says climate change is already having an impact on the U.S. economy and the ordinary lives of Americans. This map shows average temperatures across the U.S. over the past 22 years. Want you to pay attention to that very dark color red if you will. The areas in that dark red indicate an increase of 1 and 1/2 degree Fahrenheit. Now it comes from a report compiled by more than 300 experts. The study warms of the consequences of continued climate change. The Northeast could see more heat waves and heavy downpours. At risk - more than a 180,000 farms with sales of $18 billion per year.
Extreme weather and rising sea levels also threaten infrastructure in urban areas across the country. Keep in mind 80 percent of Americans live in cities. Hurricane Sandy shut down subway routes in New York City and New Jersey for days. Was going to say 12 days, it felt a lot longer than that -- but for days in 2012 we remember it well.
The Southwest could become hotter and dryer - a big concern. The region produces more than half of some of the nation's highest-value crops like vegetables, fruits and nuts. Peter Demenocal is a client scientist at Columbia University. He joins me in the studio now today. Peter, thank you so much. I feel like based on everything we've experienced, no where you live in the country that we feel like things have been changing, this report just underscoring that. They say "Action - Urgent action - is needed." Any indication we're going to see that?
PETER DEMENOCAL, CLIENT SCIENTIST, COLUMBIA UNIVERSITY EARTH OBSERVATORY: So, any indication we're going to see that? What's going to lead to change here is in fact what this document is revealing. Is that the way that people experience climate change is not through this slow rise in global mean temperature which is often the way scientists talk about this. It's in the rise and extremes and that's actually the most profound signal of climate change. And so I believe actually this is a call to action. I think this is something that will prompt us to act, because it's affecting the pocketbooks of everyday people.
LAKE: And we feel it. I mean, you're right because when you read, oh, it changed 1 and 1/2 degrees, you don't think very much of that, but when we see the devastation firsthand, whether it's the wildfires and the drought or what we went through with Sandy, it feels much more of the moment for us. The problem is in the political sphere. You already saw an immediate reaction from - this has been a politicized issue, Republicans coming out today saying the report is a political tool for the Obama administration and it imposes a regulatory agenda that's going to hurt the economy. Is addressing this bad for business? Does it hurt the economy?
DEMENOCAL: So I think that's - you know - there's a wonderful take home lesson for this which is that there actually have been businesses that are firmly taking into account the impacts of climate change and their bottom line. And those businesses such as the reinsurance industry adopted a change in business practices according to the climate change projections. Because they saw an immediate hit to their bottom line if they didn't do it. And I think this is increasingly the way the business or the - how industry and business together - are going to see this is that it's not so much a threat to their bottom line as a hedge against the future, --
DEMENOCAL: -- this information that scientists presented. I mean it's important to note that actually there were two oil company executives on this study. It's not like this was some inside job. I mean these are people who are brought in from a wide range of experiences and their coming to the conclusion that climate change is affecting the bottom line. It actually has an economic footprint if you will. It's not just that the climate is changing and it's going to impact people - of course there's the negative story in there which I think is really less useful to speak about than how climate impacts profitability, how one - as a business - establishes hedges into the future. And you can't --
LAKE: Right. Make decisions. They always say that they want visibility. This is the chance to get some visibility I suppose and takes action. And we know in other areas that they are feeling the impact from the global supply chain. It has been changed already based on this. I want to return to something that you said though - and this can confuse people when you say climate change and rising temperatures. You mentioned extreme weather. We just went through one of the coldest winters we can imagine in many parts of the U.S. This isn't just a U.S. story, but we're going to use it because the report came out here. The polar vortex - you never even heard of that before. People will say oh, they talk about global warming and look what just happened.
LAKE: But that isn't - those things are not contradictory are they?
GEDDES: Not at all. I mean what's interesting is that although we New Yorkers like to think we're in the center of the universe, we're not.
DEMENOCAL: The polar vortex affected a postage stamp part of the global real estate. The rest of the world was warming in an unprecedented way. In fact I just looked at the data this morning and this past quarter the climate data reposted and they're in the top ten numbers of 130 years we've been keeping records. So the rest of the world has been warming up, not paying any attention to New York. And I know that's hard for us New Yorkers to accept, but indeed it's true.
LAKE: and something that businesses should take a look at. Peter Demenocal from Columbia University. Thank you so much for sharing your expertise.
DEMENOCAL: Thank you for having me.
LAKE: we're going to stay with the issue of climate change. It resonates far beyond the United States as we were just talking about. Jenny Harrison is at the CNN International Weather Center and joins us now. And, Jenny, this is something that I know you watch very closely as well.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Absolutely, and of course as you've just been saying, it's not just extreme events so there'll be more drought the world over and of course the effects of it are that much greater. The same with floods and heavy rain events. So that is exactly what we mean by climate change. And have a look at this - I think a picture of course as we know tells a thousand words. This you can see here at the glaciers in Alaska. This is taken back in 1941 in August. That is what it looked like then. This is back in 2004, so still, ten years ago in August. And look at that just barely any ice to be seen. You can just see how far - there it is again - 1941. You can see just how far the ice has retreated. So, you know, that is a sign of what is going on with climate change.
Now when it comes to breaking it down region by region across the United States, and the reason we're showing you for the United States is of course the report had just come out from there. But it's a very good way still of thinking about different parts of the world. For example, the northeast of the U.S. - more heat waves. This is what we're talking about - you know - more events where it is hotter and dryer. At the same time though, increased coastal flooding. One of the things of course is the increase in the sea levels, so that's one of the concerns there - and more flash flooding and more of that could well be severe. Then you head down to the Southeast - fresh water issues here. One of those reasons is for the increase in the population of course, the Southeast because it really does continue to increase greatly and has been over the last decade. And again, an increase in storm surge flooding from these big tropical systems that come through, particularly if the sea level continues to rise.
Now, in the Midwest, a longer growing season because basically we're looking at, you know, a shorter winter season - not a good thing with the rise in temperatures. Again, more extreme heat, more extreme droughts will come from these heat waves. And again, on top of that dry land, when we do have rain, very heavy rain events, that could lead to flash floods.
Across the Great Plains - again, this huge increase in demand for water and energy because of the higher temperatures. So, all of this has a huge knock on effect for demand but also of course the cost of all this - can we even provide water is needing in the Southwest, particularly here - the drought has been so severe for such a long time, we could see more of these severe droughts. That then of course means that the increasing wildfires, again, think of the economic and the personal dangers and costs with all of that. And, again, the fresh water which is already scarce could become even more scarce.
Then in the Northwest of the U.S., an earlier than normal snow melt. Again, those rising temperatures mean that the snow will melt sooner, and again, this puts a stress onto the summer supply. So, this is how this all begins to have a knock on effect. And of course I've shown you Alaska - the glaciers are certainly shrinking. And then to the oceans. All of this C02, that's carbon dioxide but of course it's coming from humans -- 25 percent of that is absorbed in the ocean as indeed is the heat. And all of this leads to increased ocean acidification and that changes the marine ecosystem. So that again a huge knock on effect that takes time to actually happen. So, all these things we need to bear in mind.
Now meanwhile across in Europe - an example here of course of climate change - would be the severe storms and the flooding that impacted the U.K. and northern France over the last several months. There's more rain coming through as we head through the middle of the week. This next storm system we've already had some very heavy rain across the Central Med. As you can see through Monday, 51 million meters into parts Romania, 26 in Turkey. There is more of that on the way, but this time across northern and western Europe. So, again, we've actually got some warnings in place for those storms as we head Tuesday into Wednesday.
At the same time, Maggie, it is very warm in the southwest of Europe. Look at these quick temperatures quickly into parts of Spain - 34 in Seville, the average is 26. You get the general idea. And as I say, is this going to become a sign of the future with climate change? Quite possibly. We need to really, really pay attention.
LAKE: We certainly do and thank you for helping us do that. Jenny Harrison for us. Now some breaking news to bring you. Alibaba has just filed for an IPO. We will bring you more details after the break. This is CNN.
LAKE: China's largest e-commerce site has filed to go public. Alibaba's regulatory filing calls for a $1 billion listing. But remember that number is just a placeholder. Alibaba chose to make its debut in the U.S. to make the company more global. Analysts surveyed by Bloomberg estimate the company is worth $168 billion. Jim Boulden has more on one of the biggest IPOs of the year.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Imagine for a moment if Amazon, eBay and PayPal all started trading shares on the same day. Well, the Chinese equivalent is closer to doing just that. Alibaba is not only China's biggest online marketplace, it's also the biggest in the world. Its upcoming initial public offering is going to be one of the biggest tech IPOs ever.
PATRICK SHERIDAN, CNNMONEY: Jack Ma is a former English teacher, started it in his apartment and right now it's got the transaction volume of about two Amazon.coms. So if you think about it, it's huge and it controls about 80 percent of the online business in China.
BOULDEN: Here are some other numbers. In the fourth quarter of 2013, Alibaba's revenue soared 66 percent compared to Q4 2012 - to $3 billion, $1.4 billion of that was profit. And it's estimated more than half of all parcels delivered in China are done by Alibaba's various companies. And "The Wall Street Journal" estimates Alibaba's various arms ship in volume more than Amazon and eBay combined. Add to that its online payment arm, Alipay, is estimated to handle half of all of China's online payments.
While Alibaba may not be well known in the West, its connection to Yahoo is legendary. The U.S. internet firm owns a 24 percent stake in Alibaba. That stake has been one of the few bright spots for Yahoo and its fifth CEO in five years, Marissa Mayer. Until this year the only way to grab a slice of Alibaba's success was to buy shares in Yahoo, and Yahoo is now in for a huge payday.
SHELLEY PALMER, AUTHOR, "DIGITAL WISDOM": Yahoo's windfall you know could be somewhere between $10 billion and $20 billion, depending on how that comes to the marketplace. What are they going to do with that money? Are they going to invest it? Can you get a piece of Alibaba? If you own Yahoo, you might be able to get a piece of Alibaba if they decide to return some of that capital to the shareholders.
BOULDEN: And what could Alibaba do with all that cash and all those shares? Acquisitions in the West, as it looks to get even bigger. Jim Boulden, CNN London.
LAKE: We will have much more on that story in the hours ahead on "World Business Today." Well there were fears it would be an Anglo-French white elephant. Twenty years on, the Channel Tunnel proves all the critics wrong. More when we come back.
LAKE: It was late, cost double the budget and is nowhere near as popular as predicted. The Channel Tunnel is two decades old, and Britain/France are celebrating the tunnel - well there're actually two and a service tunnel - is an amazing feat of engineering. Deep beneath the sea, it's nearly 50 kilometers long, cost over $16 billion to build. It opened with great fanfare as the Queen and the then-president Francois Mitterrand drove onboard one of the trains putting behind them the huge financial problems not helped by the company's complicated structure.
EMMANUEL MOULIN, DEPUTY CEO, EUROTUNNEL, VIA TRANSLATOR: It's a source of great pride, one, is this project was completed , and two, that today it forms an absolutely essential link between Great Britain and the continent. Three hundred million people have used the Channel Tunnel - 300 million passengers.
LAKE: Those passenger numbers are far fewer than forecast. Even so, EuroTunnel moved back into the black two years ago for the first time since it opened, making profits of $34 million. Well that is "Quest Means Business." I'm Maggie Lake in New York. Thanks for watching.