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Erin Burnett Outfront

Facebook's First Earnings; Mitt Romney's Audition; Gag Order Issued in Colorado Shooting Case

Aired July 26, 2012 - 19:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ERIN BURNETT, HOST: OUTFRONT next, Facebook in the hot seat again and Mitt Romney tonight on the first leg of his first foreign trip and as a candidate, a big trip. So why, then, is the candidate refusing to talk about foreign policy? There's a conundrum. And on the day I come back from the northern Mali region, the issue -- the Defense Department issues a warning about the rising terror threat in Mali. What should America do?

Let's go OUTFRONT.

Good evening, everyone. I'm Erin Burnett and OUTFRONT tonight, Facebook not making many friends this evening because just a few hours ago, Facebook came out with its first earnings report as a big public company. And it did do about what people thought. Revenue was up 32 percent from a year ago. And that may sound good but the problem is Facebook's shares are taking a big hit.

You remember, this is a company that was second biggest stock market launch ever and today Facebook shares closed at $26 a share. You see that black diamond-looking ski slope. That's Facebook shares from its IPO. It's falling even after the market closed tonight. Down about 30 percent from where it went public.

This obviously has hurt a lot of people who struggled to try to get shares of this IPO. Why are people so nervous? Well there's one word and it's money. During tonight's conference call with investors, Mark Zuckerberg, the CEO of Facebook, made it clear that making money from advertising is a top priority.

(BEGIN VIDEO CLIP)

MARK ZUCKERBERG, FACEBOOK CEO (via phone): We know that social ads perform much better than nonsocial ads so our job over the next few years is to increase the percentage of ads that are social and engaging.

(END VIDEO CLIP)

BURNETT: Social and engaging ads, well, you know, advertising is a word Mark Zuckerberg would not have used when he first described Facebook, the site he created in his Harvard dorm room because here's what he actually said in a letter to investors earlier this year.

Quote, "Facebook was not originally founded to be a company. We've always cared primarily about our social mission." Well, the company's mission now is to make money off of you and its 955 million users. It has to make money. That's just the reality of it. Now you're a public company. So how does it plan to do that?

Well here's a couple of things they are planning to do supposedly. There's a rumored want button and there's a like button on Facebook now if you like something, but the want button tells you -- lets you tell your friends you know what you'd like them to buy for you. Maybe it's like a wedding or a baby registry thing. The bottom line is it's supposed to link you to spending money.

And there's also a new service called Facebook Exchange which tracks what you do on the Web and then shows you ads when you go back on Facebook based on where you have been. According to Bloomberg, Facebook is also working on a cell phone to try to make money from people on their cell phones which has been a real issue for the company. Mark Zuckerberg, though, shot down that report on the call.

Well the thing is, is that actually advertising on -- advertising here has been a soft spot for Facebook. Nobody wants to look at ads on their Smart phone, right? I mean it's hard enough to see something on there to begin with. And this has a lot of people worried, especially when you consider that half of Facebook users now go on to the Web site from a Smart phone.

So Facebook, can it ever get back to where it went public? That's the crucial question and OUTFRONT tonight Andy Serwer, the managing editor of "Fortune" magazine, and Peter Costa, president of Empire Executions and a trader on the New York Stock Exchange. All right, great to see you both.

UNIDENTIFIED MALE: (INAUDIBLE)

BURNETT: Andy, I just say the company doesn't seem to get a break here. Most people would say hey, look, your revenue is up 32 percent and you're a giant company. Why will people not stop slamming you?

ANDY SERWER, MANAGING EDITOR, FORTUNE MAGAZINE: Well there's a very simple reason. The stock was priced too high at the IPO. Facebook is a great company. There's nothing wrong with Facebook. It's growing like crazy still as you said.

BURNETT: Yes.

SERWER: And they're figuring out how to make money. But the fact of the matter is they priced the IPO so high it's priced for perfection and when they turn in just sort of normally great numbers the stock's going down. That's what's going on.

BURNETT: Peter Costa (INAUDIBLE) company and say there are two things that determine whether it can succeed, can it make money and can it grow?

UNIDENTIFIED MALE: Right.

BURNETT: Facebook certainly is growing.

UNIDENTIFIED MALE: Right.

BURNETT: But what about the making money part?

PETER COSTA, PRESIDENT, EMPIRE EXECUTIONS: Well I think you brought to the point about the cell phone and not being able to monetize their mobile apps and I think that's still going to be a major issue going forward. I don't think anybody's truly been able to monetize anything off of a cell phone.

BURNETT: Right.

COSTA: I mean, the only people that really make money off it are, like, Verizon and AT&T.

BURNETT: Right.

COSTA: And I think that they're still struggling to figure that out. It's going to take them a while to get to that point where they probably could be profitable in that end.

BURNETT: I mean I got to say, Andy, it's going to take a while but the world is moving to these sorts of devices.

UNIDENTIFIED MALE: Yes.

BURNETT: Somebody will figure it out at some time, right? I mean --

SERWER: Yes and phones are getting bigger. IPads and other tablets are getting smaller, so (INAUDIBLE) this device about this size maybe. But you know one thing they talked about on the call a little bit was sponsored stories. And these are stories that come from a company like Ben & Jerry's or a movie company that goes into your news flow. And you know they suggested that you're going to get -- they're getting about $1 million a day off this, so $300 million of advertising. But, you know, you got to ask yourself as a consumer how often do you want to see these things on your Facebook, right? I mean it detracts from the experience, so it seems like they're trying --

BURNETT: I would say not often at all.

SERWER: Right, exactly.

BURNETT: They're just kind of the core of the problem.

COSTA: I think it's a major issue. I really do. I think it's a major issue because I think that the people that use Facebook don't want to spend time trolling or scrolling through ads to get to what they really want to see.

BURNETT: There are people out there who like to say that this is going to be the biggest colossal failure ever and they say you know young kids are not using Facebook as much as they used to and there's other companies that can provide the same thing. And you know what this might just be a colossal massive failure. Other people say come on that's ridiculous. You're just a hater if you say that, but --

SERWER: I disagree with that. I mean I think -- I think listen, now they have up to 955 million users. I mean, that's staggering. Pretty soon they're going to hit a billion. I mean it's remarkable and they haven't really cracked China.

BURNETT: But they don't really disclose you know how many of those users are people with multiple counts, how many of them use it frequently versus infrequently --

(CROSSTALK)

SERWER: Let's just be conservative and say there's half a billion people use Facebook. I mean that's an amazing audience --

(CROSSTALK)

SERWER: And so I think you know if you think about Facebook going forward it's going to be like the telephone. The telephone company becomes a utility. Of course at some point when it becomes so (INAUDIBLE) or they try to monetize it so much with so many ads it becomes uncool, but they've got such a head start over anyone else at this point that I think Facebook is here to say. And they are growing. They're doing their thing. It is just the stock was too damn high, right? I mean and the other thing is they don't really want to be a public company. They never wanted to be. They were sort of forced to be. And you know what you can get from that is they're just not that into you if you're a public shareholder, right?

BURNETT: Peter, one final question to you about Mark Zuckerberg himself. Remember when Google went public and Larry Page and Sergey Brin were the genius founders of it --

UNIDENTIFIED MALE: Right.

BURNETT: -- brought in this guy, Eric Schmidt because he knew how to run a company and he ran the company really well. They stayed on. They got more experience and management. And then they came back eventually. Mark Zuckerberg from everything that I've heard is not -- the guy is maybe a genius but he certainly has no experience managing a company, never mind a company this size. Should he be the CEO or should he be sort of the chief genius and bring in a real manager?

COSTA: Well I think he should bring in a real manager. I mean he's a control freak I mean as you can see. I think that having someone with like true business acumen would really help them. You know, having a dual you know role where they -- could be chairman, he could be president or something like that and do -- move forward having him as -- you know whoever this financial guy is will come in and explain or build a product. He'll build the product base. The other guy will figure out the financials on it. And I think that would be very helpful. It would also take his mind off of worrying about shareholders so much because now he's worrying more about the product.

BURNETT: (INAUDIBLE) more confidence -- SERWER: And they did bring in Cheryl Sandberg as the COO. They have got Dave Edwards who is the CFO, so they do have some professional management.

BURNETT: Right.

SERWER: But he firmly controls that company. Remember --

BURNETT: Although whoever controlled the IPO, you have got to assume it was the CFO.

SERWER: Yes, I mean --

BURNETT: You can hardly say that that worked out --

SERWER: I mean that didn't work out so well. Right, exactly. I mean you know so right now Zuckerberg, stick to the news feeds, stick to the product. Stick to making it work and maybe let these other guys do their thing. Although as you suggest that didn't work out so well either.

BURNETT: All right. Thanks to both of you. We appreciate it --

(CROSSTALK)

BURNETT: A company a lot of people are curious about and maybe you know people are talking about it. (INAUDIBLE) it's a good thing. We'll see.

All right OUTFRONT next Twitter went silent. Plus, Mitt Romney in London for the first leg of his foreign tour but he's refusing to talk foreign policy. Does that add up?

Plus, trying to crack down on unauthorized leaks, tonight there's a new order from the judge in Colorado just a day after details leaked out about a package sent by the suspect in the horrific movie theater shooting.

And some cities say they want to ban Chick-fil-A over the restaurant's view on gay marriage. But do cities really have the right to ban a business for its beliefs?

(COMMERCIAL BREAK)

BURNETT: Our second story OUTFRONT tonight, Mitt Romney's international audition. The presumptive GOP nominee sat down with Piers Morgan while on his overseas trip today but he did not want to talk about foreign policy.

(BEGIN VIDEO CLIP)

PIERS MORGAN, HOST, CNN'S PIERS MORGAN TONIGHT: How will you be different as a Republican president? How will you avoid the kind of pitfalls perhaps that President Bush fell into?

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Well, first I have to note that as tradition for our nation (INAUDIBLE) on foreign soil avoid speaking about a new foreign policy or my foreign policy or doing that in a place that would in any way detract from the president's efforts to pursue his own foreign policy. So I really can't -- I can't go down that path.

(END VIDEO CLIP)

BURNETT: James Carville joins me along with David Frum. David let me just start with you. I'm just a little bit confused because he made you know a big, with great fanfare announced this foreign trip to you know show that he could be a great commander in chief and you know you'd think at least you'd talk about something that you would be doing, even if you weren't criticizing the president. Talking about something positive that you might do, right?

DAVID FRUM, CNN CONTRIBUTOR: You can talk about positive things. Of course you must avoid criticizing the president. That's very important. I'm glad he did do that. Mitt Romney gave an interview to "Haaretz" which is appearing in tomorrow's "Haaretz", which does give some more clarity on his foreign policy --

BURNETT: In Israel.

FRUM: -- for the Middle East. I think Mitt Romney is especially worried about getting drawn on the biggest foreign policy question at the moment which is also an economic question and that is the problem of the euro. That is a situation that is changing so fast that if you're a candidate for president you're very worried about saying things now that might bind you nine months from now in a completely different situation.

BURNETT: James Carville, I'm curious though, because Mitt Romney has spoken about Syria before. Just an example, you know Piers asked him a question about Syria and you're going to hear what Mitt Romney had to say tonight. I just want everyone to know though, I mean we've been very detailed, he's talked about it before. Here he is to Piers.

(BEGIN VIDEO CLIP)

MORGAN: In terms of Syria, you talk about dictators and so on. People who think Assad should go. There's a humanitarian crisis that's unfurling getting worse by the day. What do you do? I mean is the natural instinct of an American president, if you were there right now, would you just be saying, enough, we've got to get in there and take this guy out?

ROMNEY: Piers, again, I -- given the fact I'm on foreign soil, I really am not going to delve into foreign policy prescriptions that would interfere with the foreign policy of our current president.

(END VIDEO CLIP)

JAMES CARVILLE, CNN POLITICAL CONTRIBUTOR: Well, I haven't seen "Haaretz's" interview but I suspect why can't he talk to CNN about foreign policy and he can talk to "Haaretz" about foreign policy? It doesn't make any kind of sense to me and he could certainly -- BURNETT: Right.

CARVILLE: -- put out being overly critical. He could say, look, these are the kind of principles that I would take if I were president or something like that. But it's kind of a strange thing.

BURNETT: Yes.

CARVILLE: Without knowing what's in the interview that he gave to the Israelis --

BURNETT: To "Haaretz" --

CARVILLE: Yes, why can he talk to them and not us?

BURNETT: Well, I don't know what's in it. Although I would be surprised you're going to give an interview to an Israeli newspaper you're likely going to be talking about things like Iran or the Palestinian issue. But you know David Frum here's what I still don't understand about it. President Obama, remember when he went overseas in 2008? He gave that big speech about -- and it was, you know, the thing that he's best at, right, giving an inspirational speech, and here's what he said about foreign policy on the trip he took while running for president.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: This is the moment we must help answer the call for a new dawn in the Middle East. My country must stand with yours and with Europe in sending a direct message to Iran, that it must abandon its nuclear ambitions. We must support the Lebanese who have marched and bled for democracy and the Israelis and the Palestinians who seek a secure and lasting peace.

(END VIDEO CLIP)

BURNETT: I mean, David Frum, why can't Mitt Romney do that, what would -- I mean the Mitt Romney doctrine, right? That -- OK, that would mean I'm not going to talk about whether I'd put troops into Syria or not specifically. But here is what I believe in and what I stand for. Why not at least do that?

FRUM: Well, that (INAUDIBLE) Germany in 2008 left a bad taste I think in the minds of -- mouths of a lot of people. Because the real message that -- message that candidate Obama was then sending was not the content of the speech, it was that shot that you're showing right now. What he wanted -- he wanted to influence American voters by saying, see, I'm big in Germany, I'm big in Europe. You feel unpopular.

Elect me and the world will love the United States again. And that turned out by the way not to be true. That we still have a lot of difficulties with the rest of the world and ironically, it is with Germany that President Obama, now President Obama, has some of the most frigid relationships that he does with any international government. BURNETT: All right, if all that's true, James, then why is Mitt Romney -- why is he announcing he's taking this big foreign trip and do it all at all?

CARVILLE: I don't know. You know what, based on his performance in Great Britain, it might be good that he's shutting up because they're using the "P" word right now to describe his performance. That would be "Palin". I mean he's gone over there. He's insulted the British --

BURNETT: Because he criticized the --

CARVILLE: Yes, he criticized --

BURNETT: -- their preparation for the Olympics --

CARVILLE: (INAUDIBLE) London like you know gets up and criticizes (INAUDIBLE) the Olympic Games together. Then he goes to the spy service and says that he had a meeting and they -- you know they don't -- they barely acknowledge that they even have a spy service. I mean completely clueless as to what their traditions are. So maybe it's better that he don't say anything. It might be better for him and his campaign if he just kept his mouth shut between now and November.

FRUM: That's not fair. What's happened to him on this trip is he -- that Mitt Romney has fallen -- like when you drop a little clove of garlic into one of those mincing machines that he's dropped into the maw (ph) of the voracious British press that is just determined to take any little thing and make it a gigantic --

(CROSSTALK)

BURNETT: (INAUDIBLE) came out, gave him something big, right, if he had given them something that was big rather than only little things then maybe --

FRUM: And meanwhile, Boris Johnson, the mayor of London, is using Mitt Romney's one line to launch the "Boris Johnson for Prime Minister" campaign --

CARVILLE: By the way --

FRUM: -- a scene from "Love Actually" that --

CARVILLE: Let me point out that --

(CROSSTALK)

CARVILLE: -- conservative prime minister was highly critical of Mitt Romney. This is not Fleet Street man. This is David Cameron saying well we don't get to hold the Olympics in the middle of nowhere.

FRUM: He was not highly critical --

CARVILLE: Of course he was.

FRUM: He threw the guy an elbow over --

CARVILLE: Again David, he said we don't get to hold the Olympics in the middle of nowhere. He was clearly irritated at Romney saying -- he offended the prime minister who is hardly Fleet Street.

BURNETT: Sometimes men will be boys. Thanks to both of you.

And next the judge in the Colorado movie theater shooting has issued a new order after a series of leaks involving the case.

Plus Twitter, it was down for so long today. There is a reason and it could be a real threat to the U.S.

(COMMERCIAL BREAK)

BURNETT: Twitter crashed again today. It was the second time in just over a month that the service, where you can, well, tweet out about whatever you're doing at that moment or many more serious things, went down. Last time Twitter blamed the outage on a "cascading bug", quote/unquote. This time, they blamed data centers, saying when one data center system fails, another is supposed to take over but this time they both went down at essentially the same instant.

So how long were Twitter addicts without their fix? Our number tonight is 53, which is how many minutes Twitter was down according to the Web site monitoring service Pingdom (ph). Now for some users, this outage could have been longer or shorter. It was a very strange day overall for the Internet. Google's talk function also went down today. People had difficulties accessing Netflix Web site as well. (INAUDIBLE) anyone to be concerned about whether there could be some sort of a Trojan horse sort of an issue with security for the Internet in this country.

Now our third story OURFRONT the judge overseeing the Aurora shooting case is cracking down on leaks. District Court Judge William Sylvester (ph) issued a second gag order barring the release of information relating to the investigation of James Holmes. Now it's important to say this comes on the heels of some news reports that Holmes had sent a package to the University of Colorado's medical campus. Don Lemon is OUTFRONT tonight in Aurora, Colorado where he's been covering this story from the very beginning. Good evening, Don.

DON LEMON, CNN ANCHOR: Good evening. What they're saying, what the judge is saying in this order is that he is trying to preserve the integrity of this case. The DA, Carol Chambers, filed a motion regarding public access to the University of Colorado records in light of what you said that package that was supposedly delivered to the mailroom. And so the judge came back today and said yes, it was OK. The university does not and shall not, it says, which means they shall not give any information regarding this investigation.

That of course as always includes grades and also any e-mail or anything that has to do with this investigation. And that is usually under -- it's called the CORA (ph), Erin, which is Colorado's Records Act. It's Colorado's Records Act and you can file what we call a FOI, a Freedom of Information and get that. In this case not going to happen until the judge says it's OK not to release that.

BURNETT: Don, I know there was also a funeral today for one of the shooting victims. What can you tell us about that?

LEMON: Micayla Medek, she is a 23-year-old student here from the University -- Aurora Community College. There was a full funeral service for her today at the New Hope Baptist Church. The governor, John Hickenlooper, attended, as well as the mayor of Aurora. And she was -- she worked at a sandwich shop, a young 23-year-old. She was laid to rest today. That is her full funeral service. There were also some visitations to other -- two other folks as well, but her full funeral was today.

BURNETT: All right, Don, thanks very much to you.

And still OUTFRONT in our second half, the top man in charge of U.S. Special Operations expressing new concerns tonight about the situation with al Qaeda in northern Mali, the place we just returned from this afternoon. So what will the U.S. do and major cities in the U.S. may ban Chick-fil-A. Is that OK? OUTFRONT ahead.

(COMMERCIAL BREAK)

BURNETT: Welcome back to the second half of OUTFRONT. We start with stories we care about where we focus on our reporting from the front lines.

A big break for the stock market today, all three major indices up more than a percent, 212 points for the Dow. It was right out of the gate -- thanks to comments from the European central bank president who said that he'll do whatever it takes to support the euro. Traders say they're going to watch tomorrow's GDP report, going to be crucial.

CNN Money economists surveyed a group of them predict the economy grew 1.4 percent in the second quarter. That is abysmal. And it's below the 1.9 percent of the first quarter.

Victim number two, which is the boy Mike McQueary once saw in the shower with Jerry Sandusky, has come forward. His attorney says he plans on filing a civil suit against Penn State. The attorney's also released two voice mails they claim were from Sandusky. Both end with the words "love you."

Here's one from September 19th, less than two months before Sandusky was arrested.

(BEGIN AUDIO CLIP)

PURPORTED SANDUSKY RECORDING: I was just calling to see -- I don't know in you had any interest in going to the Penn State game this Saturday. If you could get back to me and let me know, I'd appreciate it. When you get this message, give me a call. And I'll talk to you later. Thanks. I love you.

(END AUDIO CLIP)

BURNETT: CNN cannot independently verify that voice is the voice of Jerry Sandusky.

Treasury Secretary Tim Geithner spent his second day on Capitol Hill today in front of the Senate Banking Committee, talking about problems in Europe and the fiscal crisis in this country.

But there were many questions, still, about the scandal, about manipulating the key interest rate called LIBOR to which American mortgages are linked. Here's what Tim Geithner had to say about how Washington can better regulate Wall Street.

(BEGIN VIDEO LCIP)

TIMOTHY GEITHNER, TREASURY SECRETARY: You can't regulate for ethics. You can't regulate for culture. You have to assume you're going to have incentives for the wrong things sometimes, take risk, they understand, don't understand. That's inherent in finance. The job of Washington and in government is to make sure that there are tough rules in place that can be enforced and that requires resources, not just authority.

(END VIDEO CLIP)

BURNETT: Geithner also said that he is still looking to see whether that LIBOR interest rate manipulation actually hurt American taxpayers.

Well, the Drug Enforcement Administration has arrested 90 people in a nationwide crackdown on bath salts. In addition to $36 million in cash, here's what the DEA told OUTFROINT was seized: 4.8 million packets of fake marijuana, 167,000 packs of bath salts. If you include the products that are used to make the drugs, the cocktail parts, the ingredients, the DEA took the equivalent of 19 million packets of synthetic drugs off the streets. The operation was dubbed Logjam and included law enforcement officials from 109 American cities.

Well, it's been 357 day since the U.S. lost its drop credit rating. What are we doing to get it back?

Well, there were a couple of good things to note in housing. Thirty-year mortgage rates hit another record low, 3.49 percent. That's the good news though. A index that tracks pending home sales fell 1.4 percent in June.

Our fourth story OUTFRONT: al Qaeda's surge in lawless Mali. I just returned from the western Africa country. I was on the border regions of northern Mali, and witnessed for myself how desperate the security situation is. How terrified people are of the radicals who are growing stronger.

Islamic radicals linked to al Qaeda have seized the northern half of Mali after a rebellion and coup left the country completely rudderless. Just today, the assistant defense secretary for special operations in America issued this grave warning.

(BEGIN VIDEO CLIP)

MICHAEL SHEEHAN, ASSISTANT DEFENSE SECRETARY FOR SPECIAL OPERATIONS: I'm very concerned about Mali. Obviously had a coup there. The government has collapsed. The current government is shaky. It's struggling with international recognition.

But right now, north of the Niger River in Mali is basically completely ungoverned space and AQIM, the al Qaeda affiliate in that region, has basically moved in and established a very troubling presence.

(END VIDEO CLIP)

BURNETT: We can tell you from being on the ground there that's true. In fact, that is true also for south of the Niger River as well. Sheehan went on to say the defense department is weighing its options when it comes to Mali.

OUTFRONT tonight, a man who knows the security situation in Mali, as well as anyone in the world. Rudy Atallah is the Defense Department's former Africa counterterrorism director, spent several years, in fact, living with some of the Tuareg who now are refugees in the camps we were visiting as well.

But let me ask you, you heard Michael Sheen there saying he's concerned about what's happening in Mali. And he's saying all options will be considered.

What options does the United States have? I mean, it's hard to really convey to people how remote and difficult it is to operate in this region.

RUDOLPH ATALLAH, FMR. AFRICA COUNTERTERRORISM DIR., DEFENSE DEPT.: Sure. Great question, Erin. Actually, if I take you back to 2003, when some of these extremists were starting to embed themselves in northern Mali, one of them named Lupara (ph), who is a former GSPC commander, which is the organization that became al Qaeda in the Islamic Maghreb. It kidnapped 32 tourists.

The way we solved it is to work with regional partners to chase him across the desert. We were able to stop him. That was a success story that launched a five-year package that the Department of Defense worked on. So that is one option we have.

BURNETT: And I want to ask you in a moment about drone activity and what the U.S. is doing and the CIA. Some interesting things we saw on that front.

First, I want to ask you about what's really at stake here. Viewers may remember we called the military leader of one of the key Islamic-linked, al Qaeda-linked militias. Here is a piece of tape of what he had to say about his ambition what he wants to do. And obviously CNN cannot confirm the complete authenticity of this. We want to play it. Omar Hamaha is the military leader of Ansar el Dine.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): This message is for France, the United States and all the countries of (INAUDIBLE). We're telling you the mujahidin are ready to fight at any moment. We're not here to dominate the village. We're here for jihad, to spread the message of the Prophet Muhammad.

(END VIDEO CLIP)

BURNETT: Is there any doubt in your mind that the intention of the leaders here, many of whom are coming from al Qaeda, Middle East, is to turn this into another safe haven country for operations in U.S. and Europe?

ATALLAH: In my mind, there is no doubt whatsoever, Erin. Actually, I'll use the balloon theory that we used to use in the Pentagon. Is whenever you squeeze a balloon, it's going to go out the path of least resistance. We've put a lot pressure on al Qaeda. We've had some great successes in the AfPak region against them. In the Sihel (ph) region, unfortunately, we have not had those successes.

About three weeks ago, al Qaeda in the Islamic Maghreb made a global call for all foreign fighters to join them in the fight but to come to Timbuktu. If you recall, the bulk of the foreign fighters in Iraq came from North African states.

So the leadership of al Qaeda in the Islamic Maghreb is from a North African country called Algeria. And so, this is where they have roots back to foreign fighters. They're trying to bring them in to expand.

BURNETT: One of the other things we found is there really is -- there are no borders. The border for whatever reason it's incredibly remote. A lot the countries on the border have weak militaries and governments as well. When you look at Northern Mali, Niger, Mauritania, Algeria, Burkina Faso, no borders. We were able to go back and forth.

And by the way, the Islamic radicals, some of the militias, were going back and forth.

ATALLAH: Sure.

BURNETT: So what's going to happen? How big could this cancer be?

ATALLAH: This cancer could actually spread. It can spread beyond the western -- West Africa. It can have some repercussions in Europe. It can have some repercussions in other parts of the Middle East and potentially the United States. It's very alarming. The big problem also is now they can -- they're setting up camps. They'll be some training. They also have weapons from Gadhafi's arsenal.

Still, to today, we don't have a very good handle on precisely what they have in their capabilities. It can be anything from surface to air missiles to more sophisticated weapons.

BURNETT: Well, OUTFRONT next, a major development in an international murder case that brought down a rising star in the Chinese communist party.

And Chick-fil-A being told it's not welcome in some cities because of the fast food's company's stance on gay marriage. All right. We're going to tell you the stance and we're going to ask the question -- whether you like what a company has to say or not, does a city or a mayor have the power to ban a company?

(COMMERCIAL BREAK)

BURNETT: We're back with our "outer circle" -- where we reach out to our sources around the world.

And tonight, we go to China, where there's a new development in the international murder case that has shaken the highest levels of the communist party. Today, the wife of Chinese politician Bo Xilai was charged with the murder of British businessman Neil Heywood. Bo had been a prominent party official, expected to rise to national leadership until his dismissal in March derailed his political career, and threw the leadership in the country into turmoil.

Eunice Yoon is in Beijing and told me about the charges brought against Bo's wife.

(BEGIN VIDEO CLIP)

EUNICE YOON, CNN CORRESPONDENT: Erin, the wife of the now disgraced Chinese politician Bo Xilai has been formally charged with the murder of a British businessman named Neil Heywood. In a brief statement, the state-run news agency Xinhua reported that authorities found that Gu Kailai and her longtime friend had a falling out over economic issues. It also said authorities believed she and her house aide had poisoned Heywood because of her concern that he could become a threat to her son's safety.

Heywood was found dead last November in a hotel room in the city of Chongqing, the same city where her husband had governed. Bo Xilai's political demise triggered by the mysterious death of Neil Heywood and continues to reverberate throughout the political circles here in China.

A trial date, though, has not yet been set -- Erin.

(END VIDEO CLIP)

BURNETT: Thanks to Eunice. Now our fifth story OUTFRONT: fast food and fast political reaction. So, Chick-fil-A. You've probably heard of it. Maybe you love it. Its president made some comments recently saying that personally he does not support gay marriage.

Local politicians from Chicago to Boston are now taking their political pulpits to tell Chick-fil-A to stay out of their town.

We sent our own Kyung Lah to see if the political firestorm adds up.

(BEGIN VIDEOTAPE)

KYUNG LAH, CNN CORRESPONDENT (voice-over): Chicken is the heart of Chick-fil-A's business, not that you'd know it lately -- after the president of the company said this on the radio.

DAN CATHY, CHICK-FIL-A CEO: I think we're inviting god's judgment on our nation when we shake our fist at him and say, we know better than you as to what constitutes a marriage.

LAH: Chicago City Alderman Joe Moreno in a middle of the deal of the Southern fast food to rezone an area to open a restaurant killed it. He says Chick-fil-A is no longer welcome.

JOE MORENO, CHICAGO ALDERMAN: That's the civil rights fight of our time. And, you know, to have those discriminatory policies from the top down it's just not something that we're open to.

LAH: A position backed by Chicago Mayor Rahm Emanuel.

RAHM EMANUEL, CHICAGO MAYOR: Chick-fil-A's values are not Chicago values. They're not respectful of our residents, our neighbors and our family members.

LAH: But later appearing to backpedal. In a statement, the mayor's office says, "He did not say he would block or play any role in the company opening a new restaurant here. If they meet all the usual requirements, then they can open a restaurant. But he does not believe the company's values are reflective of our city."

The Chick-fil-A controversy is cooking in other Northern cities. Boston Mayor Thomas Menino urged Chick-fil-A in a letter to back out of plans to locate in Boston. City Councilman Jim Kenney in Philadelphia, "Take a hike and take your intolerance with you".

Something stinks here, says Daniel Mitchell of the libertarian- leaning Cato Institute. It's not just the Chick-fil-A's president's intolerant attitude toward gay marriage.

DANIEL MITCHELL, SENIOR FELLOW, CATO INSTITUTE: That's fine, disagree with him, argue with him, tell him he's wrong. But do not try to penalize and discriminate against a company using the thuggish coercive power of government.

LAH (on camera): Is this an overreach of government in your opinion?

MITCHELL: It's a very dangerous overreach of government. When government gets involved with its monopoly on the use of force, you're talking about something much more serious and much more threatening.

LAH (voice-over): Chick-fil-A, sensing a local government revolt, sent out a state that says it does not discriminate based on sexual orientation and I quote, "Our intent is to leave the policy debate over same-sex marriage to the government and the political arena."

(on camera): But Chicago Alderman Moreno tells CNN this is the place for local government and he makes no apologies for killing a business deal over personal opinion.

Kyung Lah, CNN, New York.

(END VIDEOTAPE)

BURNETT: All right. Thanks to Kyung.

And joining me now, Chicago Alderman Joe Moreno.

And, Joe, thanks very much for taking the time. I appreciate it. So, why --

MORENO: Thank you for having me, Erin.

BURNETT: I mean, why so passionate about this? Obviously I understand you disagree. You think the values are wrong.

But do you think that that gives you the right to take this as far as banning Chick-fil-A from opening restaurants in Chicago?

MORENO: Sure. Well, let's be clear, Chick-fil-A has -- I've been working with them for eight or nine months. And we've made some progress. They can believe and pray or not pray or say whatever they'd like to say. That's not really the point.

The point is if those beliefs and those thoughts transfer into policies that are anti-discriminatory. That are discriminatory, I should say. Secondly, we do have some traffic issues that are not salient to this issue that we've been working with that they haven't met.

But the point is I've been working with Chick-fil-A to come up with an open policy in their employee handbook, posted in their mission statement. And we had made some progress until the comments of the president, the CEO last week.

I'm hopeful that we'll continue to make that progress so we have a policy that's transparent and open to all of the citizens of Chicago, regardless of sexual orientation, race, religion.

And Chick-fil-A can open. But we need to continue that process.

BURNETT: So this is an interesting question from -- about the role of government. People have passionate views on this.

Let's just take Starbucks, right? They were going to open up a Starbucks in a small town. The small town's blocking them because Starbucks has policies which support same-sex marriage. That town didn't like it, so they said get the heck out of here.

So isn't that really the same thing that you're doing on the other side?

MORENO: I think there's a difference. This is what the difference is. Same-sex marriage is legal in many states. Its civil unions are illegal in Illinois and will become legal.

This is equal rights issue. This is not just an opinion on where you feel on the political or religious spectrum. These are equal rights for individuals.

You can disagree. You have the right to disagree and believe what you want to believe. And that's protected. I would be the first one to protect that.

(CROSSTALK)

BURNETT: How do you define what's a civil rights issue and what's someone taking a stand on something where you disagree, and it's against your values but not against maybe somebody else's values?

MORENO: Sure. Because it's the equal rights of individuals to be able to have the same rights that I have as a heterosexual individual that a homosexual or LGBT community, they deserve the same rights as we do. If you're saying they don't, that's discriminatory. That's not -- we're not talking about their beliefs.

I'm OK, you know, they can believe what they want to believe and I'll protect that. We're talking about their actions and if those actions are discriminatory, that's a business -- we want responsible businesses in our ward in Chicago, in the First Ward. It's a great ward made up of great neighborhoods of diversity across the spectrum.

And we want responsible business owners. This is -- not being discriminatory. They need to be responsible.

Again, Erin, I'm confident we'll work Chick-fil-A further and we'll come to a conclusion and we'll be able to move forward.

BURNETT: All right. Well, thanks very much. Appreciate you taking the time, Alderman Moreno.

Now, let's bring in our senior legal analyst Jeffrey Toobin and John Avlon.

I'm curious, though, you know, what defines whether something as a civil rights issue.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, I mean, I don't -- I think the alderman was talking around the issue. This is very simple. What set of this controversy was the president saying he's against same-sex marriage.

BURNETT: Right.

TOOBIN: That's a position held by many people in this country, including the president of the United States, until about six weeks ago.

BURNETT: Right.

TOOBIN: That is not a basis for prohibiting a store from opening. And if, in fact, they do prohibit the store from opening, they are opening themselves up to a serious lawsuit and they could lose a great deal of money. If they want to criticize Chick-fil-A, that's fine. But they cannot ban them because of a political view.

BURNETT: And there are, John Avlon, many companies in this country which are working around this issue still. There are some who went out and said -- Goldman Sachs for a very long time has been very pro-same-sex marriage and benefits. But there are many companies that still don't have all those policies in place. They're not getting banned.

JOHN AVLON, CNN CONTRIBUTOR: That's right. This is an appropriate area for persuasion, education, but not legislation.

And here's where it becomes a really slippery slope. You made the point that if this was a business -- if there was a town that was trying to ban a business because it was too gay friendly or had a gay CEO, that alderman would be incredibly upset. That's the principle at stake. We're judged by our principles about whether or not the issue has integrity no matter what side it's on.

TOOBIN: What if you had a town that said we don't want any Democrats opening stores here or any Catholics or any black people? I mean, this is not the place of government. And they are in legal jeopardy if they do this.

That's why -- that's why Rahm Emanuel's press spokesperson walked this back, because the lawyers got involved and said, hey, you just can't do that.

BURNETT: Well, it seems to me too, which set of values, a lot people might say that's an open-minded way of looking at things from your point of view. Maybe on another issue, once you open the gate --

AVLON: That's right.

BURNETT: To an intolerant government, right, then you open the gate.

TOOBIN: Right, Mayor Menino did this a lot smarter. He said "we don't share your values. We hope you don't settle here." That's him expressing his opinion. He's not using the power of government to ban them. That's a whole separate -- that would be a separate situation.

And it's much better -- BURNETT: Mayor Bloomberg would say, hey, you serve bad food, it's making people fat, get the heck out of my town.

TOOBIN: I happen to like Chick-fil-A --

BURNETT: I like to Chick-fil-A too, but I don't try to argue it's good for my arteries.

AVLON: Yes, but look at how this escalates. It's a real danger. This decisive step of trying to ban a company whose policies of the CEO and president you don't agree with. You know, vote with your wallet, protest the chain if you don't agree. But when you try to block it using legislation and a local government, that is a dangerous precedent.

BURNETT: I'm curious, Jeffrey, what defines civil rights? How do you define what's a civil rights issue and what isn't?

TOOBIN: Well, if they actively discriminated, if they had a policy -- if they had a policy that said, you know, we don't have gay employees for example, that would be a violation of Illinois and Chicago law. That would be a legitimate --

BURNETT: Which they clearly don't have.

TOOBIN: That was what the statement said. What set off this furor was simply the president saying, "I don't support same-sex marriage." That is an ideological position on a political issue. Some people agree. Some people disagree.

But if you try to ban a store based on the political views of the president of the company, you're going to be in a lot of trouble.

BURNETT: Right, maybe, John Avlon -- right, maybe the point of view is if you're the CEO of a public company or very visible company you should keep controversial points of view to yourself.

AVLON: That is one principle. The other one is just as old as well, which I disagree with what you say but I'll defend to the death your right to say it.

TOOBIN: What is interesting, you know, how some CEOs, like Lloyd Blankfein at Goldman Sachs, as we mentioned, he's become very out front on the issue of being pro-same-sex marriage --

BURNETT: Good word choice, very out front.

TOOBIN: See, it's -- it's working in.

BURNETT: Getting into your brain.

TOOBIN: That is -- you know, his privilege. But he takes a risk.

BURNETT: Well, it's hard to if you're going to take it on one side, then criticizing someone who's taking it on the other. TOOBIN: Absolutely.

BURNETT: All right. Thanks to both of you. Appreciate you taking the time.

And next, my time at the Mali refugee camp was an emotional experience. And we heard a number of heart-wrenching stories. And we share it with you. OUTFRONT next, we're going to explain how you can help tonight.

(COMMERCIAL BREAK)

BURNETT: On Tuesday, we brought you the story of the crisis in Mali, al Qaeda and Mali's refugee children. It was an emotional experience for us. We saw children, you know, sit listlessly for much of the day. And during our visit, many of them told us they wanted soccer balls.

Instead, they were doing things like playing this game where they killed birds. It was a very horrible image to watch. So, yesterday, we went back to the camp to distribute the soccer balls we had bought for the kids. And they were overjoyed.

You can see there one of the more senior members of the camp was telling them they had to share, which they want to grab the balls and run away with them. But then they started playing as you can see. They set up some rocks. They set up goals. They got a little game going.

It made the kids happy. You know, it's really just a temporary distraction from their situation because the truth is what these children and their parents really need is food and medicine. We reported there's only enough food in the camps for one more month.

For refugee crisis twice the size of Syria's and growing, this is a serious problem. And people, they were telling us how hungry they were. Children are already starting in some cases to show the distended bellies of severe malnutrition.

Many of you had asked how you could help. So, we partnered with the nonprofit organization Save the Children to send food and medicine to the refugees. They really need your help.

And if you can, please visit our blog at CNN.com/outfront to donate to the cause. And if you want, there's also a link to send the kids more soccer balls via One World Futbol, which is a for-profit organization.

It's hard to explain how much the people at the camp need. There's no electricity and no running water. We had a generator for our program we used for the CNN show we gave to the chiefs of one of the camps. These are some pictures, because I had to have an adopter. So they were setting it up. They were so grateful.

It just shows how small things can make a big difference for these people who are suffering with no end in sight to their plight. We hope you'll visit our Web site. Thanks so much, as always, for joining us.

"A.C. 360" starts right now.