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Quest Means Business
Twitter Stock Soars; Twitter's Glitch-Free Debut; Twitter Profitability; Potential Risks; Traders' View; Twitter History; US Markets Down; Date Set for Yellen Confirmation Hearing; US GDP Growth; Max Mosely Versus Google; Spying Questions; Make, Create, Innovate: Iris Recognition
Aired November 07, 2013 - 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)
MAX FOSTER, HOST: That is the sound of a good day's work for Twitter. The closing bell rings on Wall Street as the microblogging site goes public. It's Thursday, November the 7th.
Tonight is the biggest IPO of the year. We'll have all the reaction from New York as Twitter wraps up day one.
And the man who took on Google and won. Max Mosely tells us about his fight for privacy.
And Mario Draghi's cutting edge. The ECB drops rates to a record new low.
I'm Max Foster. This is QUEST MEANS BUSINESS.
Hello to you. Twitter is flying high after a stellar market debut that saw its shares soar on their first day of trade. The stock price rose sharply from the public offering price at $26. The numbers are still settling, but the shares are set to end the session at around 73 percent up.
Twitter's IPO has dominated the headlines today and the event well and truly took over the New York Stock Exchange. Here's how the NYSE looked from the outset on the street.
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(NEW YORK STOCK EXCHANGE OPENING BELL)
(CROWD CHEERS)
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FOSTER: Twitter's founders and CEO had been expected to ring the opening bell. Instead, a few Twitter users boldly took on the challenge.
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(APPLAUSE)
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FOSTER: All right, that is British actor Patrick Stewart of "Star Trek" fame who is a prolific tweeter. In the middle is nine-year-old Vivienne Harr. She used Twitter to promote her lemonade stand to raise funds to help end child slavery.
And the lady on the left is Cheryl Fiandaca. She's a Boston Police bureau chief who kept citizens informed via Twitter during the city's Marathon attack in April.
Now, the firm will be relived that it avoided the technical problems that tarnished Facebook's IPO. Alison Kosik spoke to the CEO of NYSE Euronext about his company's preparations for Twitter's trading debut.
(BEGIN VIDEOTAPE)
DUNCAN NIEDERAUER, CEO, NYSE EURONEXT: And this was about the company, this was about investors, and this was about giving everyone in the world access to real-time information so they could make informed decisions about whether they wanted to own it or not. The way the stock's acting looks pretty good.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: So, a lot of comparisons being made to Facebook's IPO at the NASDAQ, being compared here to Twitter's IPO here at the New York Stock Exchange. Compare the two. Can you even?
NIEDERAUER: Yes, I don't like to do that, because I think it's unfair to Facebook. They've -- they're in the news too much about what happened with their IPO, and the fact is, much of that was not attributable to anything they did, and I think it's unfair to keep dragging them through the mud.
They're running a great company, they just had another great quarter. Their company's doing great. I think everyone should move on and just talk about Facebook's future, not their past. So, that's my own opinion on that.
As far as today, we basically did what we do here every day. The only thing we did differently was bring the cameras even more into the crowd than we normally do. But this is how we do things around here.
KOSIK: How did the whole process go today? And how effective was that dry run? Was that helpful as well?
NIEDERAUER: Yes, I thought for today, I think the dry run was as much to make all the market participants feel good, and it was just a good double-check for us, right? We felt pretty confident the systems were more than robust enough to handle it.
But I just said to the team, let's not take anything for granted. Let's make sure if people want to do weekend tests, if they want to get on industry calls, let's make ourselves available, let's volunteer, let's do that.
So, I think what the weekend test did was give all the market participants a sense that, hey guys, you can flood us with volume. We believe it's going to be OK, but let's do a test. And then I think everything worked exactly as we would have drawn it up this morning.
KOSIK: This IPO, how it seems to have gone pretty seamlessly, is a real feather in the cap for the New York Stock Exchange, isn't it?
NIEDERAUER: We're really proud of it, because as I said to my team at a town hall meeting a couple days ago, you don't have to go back that far to a time when we were winning one of two out of every ten technology IPOs. Now we're winning six or seven out of every ten technology IPOs, including a lot of the important ones.
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FOSTER: Twitter CEO Dick Costolo says he's learned a lot from this IPO process about how to make Twitter profitable for investors. Here's what he told CNBC.
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DICK COSTOLO, CEO, TWITTER: One of the things that's been most exciting for me on the road show is the propensity for some of these investors to come in and show me examples of how Twitter has been so powerful. So, that enthusiasm from investors and their own use of the product, both from a user basis and then from the potential of it as a monetization platform has been fantastic to see.
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FOSTER: Well, let us remember that Twitter isn't yet profitable. Earlier, I spoke to financial author and writer William Cohan about why investors are pouring into the stock.
(BEGIN VIDEOTAPE)
WILLIAM COHAN, FINANCIAL AUTHOR: We have a situation where investors are paying for profits that they hope will come in the future based on the amount of users that there are now and the eyeballs and the buzz all around Twitter.
Again, this is very similar to what happened with Facebook a couple of years ago. It's happened with many stocks, many IPOs over the years. This is a recurring -- a recurring theme on Wall Street.
FOSTER: If there is value in the business, how are they going to start making money to match the share price, do you think?
COHAN: Well, again, you do see an increase in revenue for the last few quarters, but you also probably noticed on your Twitter stream there's every third or so tweet there is a paid tweet, and this is again, this is how they're going to start introducing.
They look like tweets, but in fact they're a form of advertisement that they're going to continue to put into the Twitter stream as well as monetize it through other mechanisms to try to capitalize on all the people using this and all the buzz around it.
Which, of course, is quite real. Obviously, hundreds and millions of people are using this, and it's become a very important social network device. But nevertheless, there's no -- it strikes me that there's still no real business there that people are paying whatever it is, $30 billion, $40 billion for at the moment.
FOSTER: You've written in the past about how a lot of these social media sites are in a great position, arguably, because they're getting free content. People like you and me are writing on Twitter, giving them free content, which they're now very visibly today making money from. Do you think that's a system that can last, or do you just think it's a system that's fundamentally unfair?
COHAN: Well, I think it is unfair, because why should, say, Mark Zuckerberg be worth $25 billion or $30 billion or why should Evan Williams be worth $2 billion or $3 billion. Obviously, they created a business that people want to use.
But I think these companies would be a lot smarter and anticipate potential lack of stickiness in their business if they started paying their users for the data that they generate.
In other words, if they shared some of the profits or even some stock options or something with the users, that would make them much more sticky and much more less likely to leave the service if something new comes along.
And that's the problem, here, because we'll all remember MySpace, and everybody was talking about MySpace and News Corp bought it for something like $500 million, and now nobody talks about MySpace anymore because there's nothing to keep people there.
Same thing's basically happening with Facebook. More and more teens and young adults are not using Facebook anymore, they don't find it that interesting or useful, and it's a very -- it's a real flaw in the business plan of both Facebook and Twitter and other high-powered social media companies is that they do not keep their customers glued to them.
And they would if they would just share some of their revenue, some of their profits, some of their stock valuation, with their users. I think that would be a brilliant thing. And if the users -- and the company that's the first to do that is going to make a lot of money and keep a lot of users for the long-term.
(END VIDEOTAPE)
FOSTER: William Cohan. Now, while there's a lot of buzz surrounding Twitter's stock debut, the company admits there are big risks in the business. Let's look at some of the major pitfalls Twitter outlined in its IPO filing, no less.
There's its dependence on advertising revenue. In the first nine months of this year, ads accounted for 89 percent of its income. Any hit there could greatly affect the whole business.
And here's what Twitter is vulnerable -- what makes it vulnerable again, as well, because it -- to get that revenue, that ad revenue, Twitter needs its users. If users stop contributing or if their contributions are no longer seen as valuable, then people leave, and you get a spiral of declining popularity, what William was describing there with MySpace.
Twitter says this could happen if influential users, such as celebrities, leave the site or if it fails to innovate effectively or if another service takes its place.
Some more reasons why users might give up on Twitter: technical and security problems, such as protecting privacy, spam, trolling, and service glitches. It's been quite lucky there. And government action, such as censorship and regulation, as well, is something that it can't quite control.
Let's get the traders' view. Alison is live for us at the New York Stock Exchange. Up over 70 percent in the end, Alison. Were you expecting that?
KOSIK: Incredible. See it for yourself up here on the board, right where Twitter went public today, closing at -- closing 72 percent higher at $44.72. So, it did lose a little bit of steam at the end of the closing day.
I'm here with Ben Willis to get a little more perspective on what happened here with this stock. Closing at $44.72, the low the day, what do you make of this price?
BEN WILLIS, MANAGING DIRECTOR, ALBERT FRIED & CO.: Well, it is indicative of all the hype that went around it, so when you have a stock that trades, regardless of whether it's Twitter or any other stock, that trades larger than its float in any given day, you have a lot of active traders, not investors, moving in the stock.
So, these are people taking money off the table late in the day. They made their decision to buy earlier. They have bought it a little bit cheaper on the dip, and this is just money coming out saying I can't go home owning this stock because I'm a day trader rather than an investor, so they're selling their positions.
KOSIK: Everybody's talking about Twitter not making a profit yet. Should that really make a difference to investors?
WILLIS: Well, I have to be careful what I say because I'm not allowed to talk about individual stocks. However, it is certainly something I would need to look at if I were investing my money.
KOSIK: That's an interesting and short way to say it. Where do you see this stock really settling out over the next few weeks once all this IPO hype actually winds down?
WILLIS: Well, now, once -- you go through a traditional progression in a stock once you have this kind of -- the volume will get lighter and lighter as the days go on. Other research firms, will they be able to make comments where you have analysts that are allowed to talk about the stock that have prior not been able to.
So, you'll start to get more -- and that's usually 30 days from now. So, you'll start to see that in a month from now pick back up. So, there are traditional movements in stocks right from the day of the IPO through the first 90 days as people start to move around their projections. So, that's what you need to keep an eye on.
If you know and understand Twitter, as an old friend of mine, Peter Lynch, told me from Magellan and Fidelity, buy only what you know, but save some money to buy it when it gets cheaper.
(LAUGHTER)
KOSIK: OK. Well, I guess that's the investment advice of the day. Very quickly, it was a big get for the NYSE to trade this stock. Any pride in there for you?
WILLIS: A great deal of pride. As a matter of fact, I got a message from a -- one of the -- a chieftain at one of the largest brokerage firms in the world who said, "Flawless, congratulations. Facebook cost us tens of millions of dollars." So, if anybody were happy to have the cameras here to see what we do, if you want to see how professionals do an IPO, you're more than welcome to come back.
KOSIK: All right, thanks. Ben Willis, a great perspective on Twitter. We will be watching this very closely, Max.
FOSTER: Indeed we will. Thank you very much, Alison. Nick Bilton is author of "Hatching Twitter." He joins me now live from CNN New York. And Nick just remind us how this all started. It was less than ten years ago, wasn't it?
NICK BILTON, AUTHOR, "HATCHING TWITTER": It was seven years ago, and thank you for having me. It was a group of people that had started a company called ODIO, it was a podcasting company. And they were trying to reinvent radio, and overnight, Apple introduced podcasting and essentially eclipsed them.
And out of that grew this company called Twitter. And it was essentially just an accident out of a discussion in a car one night, drunk, with two founders that led to this thing that went public today and is now worth $25 billion.
FOSTER: It sort of fumbled along, didn't it, for a few years? People were aware of it, but it didn't really have that momentum. When do you think was the turning point when people realized this was a phenomenon?
BILTON: I think that the turning points were a lot of big news events. There was the Iranian Revolution, there was the plane crash in the Hudson, there were things like that that took place.
But I think there were also -- it was the moment when people realized that it put power into the hands of people, where they were able to talk about what they wanted to talk about that actually changed a lot of things.
There's a great moment in the book where there's an earthquake that takes place in 2006 and all of the founders up until then who had been using Twitter, they kind of just thought it was for talking about what sandwich you were eating or so on.
And when that earthquake happened, they all tweeted "Earthquake," and it was a moment where they all felt connected to each other and realized it was a much bigger service than they actually anticipated.
FOSTER: Describe those characters to me, because they seem all to be getting alone, and obviously, today's a great day for them all. But just describe the characters involved here, because there's some strong characters that people aren't aware of, right?
BILTON: Well, it's interesting you say that today it seems like they're all getting along. There was one that was missing, and that was Noah Glass. He's the forgotten founder of Twitter. He was the one that came up with the name, he helped come up with the idea for what it was, and he was pushed out of the company very early on.
And one of the people that helped push him out of the company was Jack Dorsey, who has made a huge name for himself as the quote-unquote "inventor of Twitter," and the point of the book is to show that there are several people involved in creating this.
There was Evan Williams. He was a guy who came from a really small town in Clarks, Nebraska. It's a little farm town with 260 people that live there. And then there was Biz Stone, who grew up on welfare in Boston. And they all moved out to San Francisco in search of the modern- day gold rush and helped build this thing.
FOSTER: What did today mean to you? You've obviously focused on the history of this company, its very short history, but --
BILTON: Yes.
FOSTER: -- was there something historic that happened today?
BILTON: Yes. I think really, reporting this book, I had -- I knew that this was an interesting story. I knew this was a company that's changed the world, it's changed the way we do media, business, religion even, with the pope on Twitter and so on.
But I had no idea the breadth of the chaos that had happened. As you said, the backstabbing, the infighting, and so on. And I think that that chaos, without it, we wouldn't have gotten to where we are today. There wouldn't be an IPO.
But at the same result, you had that chaos that kind of drove these four friends apart. And I think that it was really kind of a moment to see that sometimes this grit and this grind can be bad, but it can also lead to really good things.
FOSTER: Nick Bilton, really appreciate your time. Thank you very much, indeed.
BILTON: Thank you.
FOSTER: And we've got a final number on how Twitter shares closed their first trading day. The stock finishes the session more than 73 percent higher, actually just under, 72.7. Not bad at all.
Whilst Twitter surged, many US stocks dipped on Thursday, not that anyone noticed. The S&P 500 and NASDAQ closed down for the day. Twitter's social media rivals Facebook and Linkedin slipped. Whole Foods shares dropped around 11 percent on news it's cut its earnings and sales forecast.
Meanwhile, a date has been set for Janet Yellen's confirmation hearing. The Senate Banking Committee will consider Yellen's nomination for Federal Reserve chairman next Thursday, that's November the 14th.
The US economy actually heated up this summer. GDP grew at an annual rate of 2.8 percent in the third quarter. That's the fastest pace in a year and better than economists have expected. The boost came largely from a rise in consumer spending and progress in the housing market recovery.
We'll have much more on the Twitter IPO later in the program. Up next, though, you'll hear directly from the man who took on Google and won. Max Mosely on web privacy when we return.
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FOSTER: Search engines should block content deemed illegal in court. That was what Max Mosely told CNN's Jim Boulden today. As we told you last night, a French court has ordered Google to remove pictures of the former F1 president taking part in an orgy.
In 2008, Mosely won a breach of privacy lawsuit against "The News of the World," which published the secretly-filmed images. Now, Mosely wants the photos to be automatically blocked so they don't pop up on the web at all. Jim sat down with Mosely today and asked him why he's suing just Google.
(BEGIN VIDEOTAPE)
MAX MOSELY, FORMER FORMULA 1 CHIEF: Well, there's a fundamental thing there which is that you get a court decides that certain pictures are illegal and they've gone all over the web, so then the Google search engine finds these pictures, repeatedly, different sites.
And if you ask Google to take them down and not put them on their page, they'll do so. But of course, then another one appears, because there's always a site somewhere, really obscure sites, which nobody would normally look at.
So, I said to Google a long time ago, why don't you just stop finding these? And they go, oh no, we can't do that, we can't censor the net, we can't block things. And I'm saying that if there was a court decision, it was a specific picture, well then what's the difference, morally, between taking it down when you're asked to or stopping it appearing in the first place?
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: But obviously, the pictures are out there anyway, so you're not trying to really stop the pictures, because we've all seen them. You're trying to make a point. What is that point?
MOSELY: The point I'm making is that I don't want, when somebody Googles my name, to find these pictures on Google. You can't stop people putting them on some funny site somewhere, but nobody will find them unless a search engine takes the picture, puts it on its -- in its thumbnails.
BOULDEN: But there are other search engines as well. Are you going to pursue others?
MOSELY: Well, if it were necessary. But the thing is that Google has something like 90 percent of the market. And once you've established it with Google, the others will follow suit. In fact, informal contacts we've had with other search engines, they don't see a problem.
Because in the end, if somebody's going to -- there's a particular picture. If somebody's going to take it down when you ask them to, which Google do, well what on Earth is the difference between not putting it up in the first place? It's a specific picture.
BOULDEN: Why did you go through the French courts? Is it jurisdiction shopping?
MOSLEY: Well, no. First of all, I'm doing it in Germany as well, and then I've had various actions in England, and I didn't want it be entirely just the UK. This is also an EU thing, so the best way to do this in the EU is to go in France and Germany, which I'm doing. I'm expecting the German judgment in January.
BOULDEN: But you couldn't do this in the US, for instance?
MOSELY: Well, I don't know. I haven't looked at the US thing because I would imagine that if you went to a California court and said, here I have a judgment from an English high court that this particular picture is illegal, I ask you Californian court to stop Google showing this picture, I think they'd probably say yes.
In the end, it's the rule of law, and once a court has said a particular picture is illegal -- not just objectionable, illegal -- then you wouldn't expect to see it again.
BOULDEN: Of course, Google says it's troubling, that it will appeal, and it's not supposed to be censoring the internet. Are you comfortable -- beyond your own case, you're comfortable with the fact that this may start beginning -- the beginnings of censoring the internet?
MOSLEY: Well, no. Yes, I am comfortable, because I think Google are wrong there. Because we're not talking about a concept or words or anything like that. We're talking about specific pictures which they know exactly which pictures they are. And stopping those specific pictures. Not any picture or anything objectionable. Those specific pictures because the courts have said they're illegal.
BOULDEN: Do you wish this whole thing hadn't happened? Are you embarrassed by what happened? Do you regret what happened?
MOSELY: Everybody -- anybody would be embarrassed by that sort of thing. Anybody would be embarrassed by things about -- in their sex life being shown all over the web.
(END VIDEOTAPE)
FOSTER: We told Google about our interview and the company reissued the comment its lawyers put out on Wednesday after the court decision. Google says, "This is a troubling ruling with serious consequences for free expression, and we will appeal it. Even though we already provide a fast and effective way of removing defamatory material from our search index, the French courts have instructed us to build what amounts to a censorship machine."
Next, we'll meet the man who figured out how to map our personal bar codes. The inventor of iris recognition talks about his eye-opening breakthrough and how the technology is being used around the world.
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FOSTER: One of Britain's top spy chiefs says he doesn't snoop on innocent e-mails and phone calls. The head of GCHQ, the UK government's electronic eavesdropping service, says his agency acts within the law. The heads of all three of the UK security services have been facing unusual levels of scrutiny. Today, they appeared together for the first time in public before a parliamentary committee.
In today's Make, Create, Innovate, we put iris recognition technology under the microscope and meet one man who can tell you who you are just by looking into your eyes.
(BEGIN VIDEOTAPE)
JOHN DAUGMAN, INVENTOR, IRIS RECOGNITION: We in the West have a long tradition of thinking about the eye as the window to the soul. You can say that the eyes are who we are.
NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): John Daugman is an American professor at Cambridge University in the UK. In 2001, he made an eye-opening breakthrough.
DAUGMAN: I'm in the inventor of iris recognition that recognizes people very accurately and very reliably based on the random texture that's visible in the iris of their eye.
GLASS: Using the iris to confirm someone's identity is what's known as biometrics, another way, like fingerprints, of identifying us individually.
DAUGMAN: Scotland Yard has had -- recognized the legal status of fingerprints since 1901, so biometrics have a long history, especially in forensics and police work.
GLASS: It's something we are increasingly used to seeing at places like airports, anywhere where we are screened for security. But it's the absolutely reliability of iris identification that Daugman hit upon.
DAUGMAN: Facial structure has some uniqueness, but it's not overwhelming. Iris patterns have vastly more randomness. The features can be in all sorts of positions and with different shapes and sizes and relationships. That's what makes irises so much more unique than other biometric identifiers.
GLASS: This is the key to Daugman's invention. In his research, he developed an algorithm to map the iris and then use the random features to create a bar code like this, one unique to every single person on the planet.
A French company, Morpho, is the leader in the field of biometrics. Daugman is their chief scientist of iris recognition. Through work with companies like Morpho, Daugman's invention is now used all over the world.
DAUGMAN: The largest deployment of iris recognition today oddly enough is in India, where the entire national population of 1.2 billion people are being enrolled using their iris patterns and also fingerprints in a national welfare distribution and entitlement schemes. The problem in India is if you don't have a means of confirming your identity, you don't exist.
GLASS: As with any technology, there are limitations.
DAUGMAN: Well, the iris has faced man challenges in terms of user acceptance. First of all, people think it involves lasers. Of course, it doesn't. They think it's going to hurt their eyes. It's just a video camera. It's also challenging because it's a rather small target. The iris is only a bout a centimeter in diameter.
GLASS: But given the advances already made, Daugman is hopeful the use of iris recognition will continue to expand. Imagine a world where your phone, computer, or even the door to your apartment are unlocked by your iris.
DAUGMAN: I regard iris recognition as a kind of an academic triumph. It's the ability to apply a combination of fields of mathematics to solving what looks like an impossible problem, to recognize people just by looking at their eyes.
(END VIDEOTAPE)
FOSTER: Now, coming up, if you wondered why Patrick Stewart was ringing the opening bell on Wall Street, we'll explain next.
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FOSTER: Welcome back. I'm Max Foster. Here are the news headlines this hour.
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FOSTER (voice-over): The Pakistani Taliban have named a new leader, Mullah Fazlullah is a hardliner and linked to the failed assassination attempt on teen activist Malala Yousafzai. He succeeds Hakimullah Mehsud, who was killed last week in a U.S. drone strike.
Some scientists say they've found significantly higher than expected levels of radioactive poison polonium in Yasser Arafat's personal effects, but it can't say with certainty that poison killed the late Palestinian leader.
Shares in Twitter finished more than 70 percent higher on its public debut on Wall Street. There were no signs of the technical problems that plagued the last high-profile IPO; that was Facebook back in 2011. We'll have more on this story in just a moment.
And a massive supertyphoon is heading for the central Philippines. Thousands of people have been moved away from low-lying areas and hillsides that are vulnerable to landslides. The Philippine president warned of a possible calamity, but said the country stands ready to respond.
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FOSTER: Twitter's had a stunning market debut as its shares soared, closing more than 72 percent higher on their first day of trade. Here's how it performed. The stock price jumped in early trade from the public offering price of just $26. The social media firm had a glitch-free IPO, avoiding then technical problems that hit Facebook's trading debut.
Now it wasn't the CEO or founder of Twitter on the podium to help ring the opening bell on Wall Street today. Instead it was the actor, Patrick Stewart, underscoring the importance Twitter faces on having celebrities using the site.
One of the biggest potential risks which were identified is a drop-off in celebrity users, but Stewart remains committed.
(BEGIN VIDEO CLIP)
PATRICK STEWART, ACTOR: I've only been on Twitter for about 14-15 months, but it has changed my life, not only in the way that I'm able to campaign for and support causes and organizations I believe in, but I have been able to make significant alteration to the perception of who Patrick Stewart is, the roles that I play, my background, my knighthood and so on, give the people an impression of someone who is upright and solid and serious and very worthy and reliable and what I've been able to do with my Twitter account is show the silly child that has always existed in Patrick Stewart and to have fun with it.
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FOSTER: Piers Morgan hated Twitter when he started working here at CNN. Now he ranks just under one direction David Cameron in terms of Britain's most influential tweeters. Richard spoke to Piers about the power of Twitter.
(BEGIN VIDEOTAPE)
PIERS MORGAN, CNN HOST: I was always the anti-tweet. I couldn't understand what Twitter was. It seemed a ridiculous, vacuous waste of time. And then I remember being in this office and I think it was Steve Krakow, who was my digital producer, goes, you've got to get involved in this, before we went on air, he said, because if you do and it really takes off, you've got a huge follower account. And if you have that, that can drive ratings.
And there was a moment about two months later where I interviewed Charlie Sheen at the peak of his powers, and I sent one tweet about Charlie Sheen, saying in five minutes' time, change the schedule, Charlie Sheen live for the hour.
And we got the ratings back. The ratings leapt 500,000 in those five minutes. It could only have been on Twitter. It literally went (INAUDIBLE).
RICHARD QUEST, CNN HOST: But you don't like it particularly?
MORGAN: I like --
(CROSSTALK)
QUEST: You use it? You use Twitter?
MORGAN: I use it. I think it do like it. I wouldn't -- and I think to start with I was negative about it. Then I began to see it has many great assets to a news journalist. One, it's an unparalleled source of news as it happens, not just the information, but also the analysis from top people, the big business story breaks if I'm following you, I'll get your instant reaction. I'm going to wait for that some broadcast.
Secondly I've got bona fide evidence of where it drives ratings, which is great.
Thirdly, I've booked guests. I've booked probably 50 guests myself, from Alec Baldwin to Mike Tyson to Jessica Alba by directly tweeting them. And then instructing my army of followers to tweet them, to encourage them. It works. So you eliminate publicists, managers, lawyers and so on.
And fourthly, it's just (INAUDIBLE) fun. When I'm bored and I'm sitting there on a car journey or a plane journey, and I can start antagonizing you, Quest, or Lord Sugar or any number of people that I want to wind up, I can just --
(CROSSTALK)
QUEST: That's when I find it the most -- when I'm on a plane or in an airport, it's like you're traveling with a lot of people with --
MORGAN: It's a great (INAUDIBLE).
QUEST: It's a great (INAUDIBLE).
MORGAN: And if you're a huge sports fan like me, with cricket or football, you are basically watching the game -- in my case, with maybe 2 million or 3 million people.
(END VIDEOTAPE)
FOSTER: It's not only celebrities that are key to Twitter's success. This is how Twitter wants to grow a golden nest egg.
No surprises, advertising, that's (INAUDIBLE) promoted tweets accounts and trends, targeting users in their Twitter feeds. Another way it's a generate advertising dollars, it's a complement traditional media. The firm says that during big televised events, such as the U.S. Super Bowl, Twitter becomes a second screen for users, an opportunity for targeted ads.
When the data licensing is another major revenue stream for Twitter, the firm sells public data that companies can use to predict customer trends and develop marketing strategies. The challenge for our next guest is to emulate Twitter's strength. Wix is an Israeli Web design company that has just raised $127 million from its own IPO on the Nasdaq on Wednesday.
The CEO, Avishai Abrahami, joins me now from CNN New York.
Thank you very much indeed. Our guest today, at least, is encouraging for you because you know now that there are people out there willing to invest in companies like yours.
AVISHAI ABRAHAMI, CEO, WIX: Well, I think it's wonderful to see the excitement that Twitter has now. (INAUDIBLE) for them and it's really amazing to see that how quickly they've grown in the stock market.
FOSTER: And there was a phase, wasn't there, when people were concerned that investing in tech stocks still, that hangover from the bubble bursting, was risky because you're constantly asking investors to invest in the promise of your business as opposed to what you're generating right now.
Do you think we're going into a new phase of tech investment?
ABRAHAMI: Well, I think that there during the bubble day, there was a -- and today there's a big difference. I think the majority of the companies you see today actually have sustainable revenues and massive growth.
We've been growing over 80 percent in the last year. And if you see that the Twitter is growing fantastically well, and it gives you also the Facebook is doing well. And I think that it's very different than in compared to 2000, where most companies had a promise but no revenues to back it up.
FOSTER: How is your business going to grow? Because we were hearing earlier that Twitter's a very new business. And it developed very quickly and it's not always clear how you will develop and go to the market.
So how do you see your business developing?
ABRAHAMI: Well, today we're adding over 1 million users every month that can't wait to build websites. And then what we want to provide is a platform for people to build the website on their own and actually create a great-looking website with all the functionality they need and store more applications.
And I believe that they continue to invest in our product and making it a wonderful way for you to take everything they need and find it (INAUDIBLE) sustain your business will continue to grow.
FOSTER: And in terms of the tech community, when the Internet first arrived, there wasn't much collaboration on the Internet, was there, but now companies like yours are working with companies like Twitter to try to build a larger machine, but in which you will benefit.
Do you think the culture is a bit different from what it was 10 years ago?
ABRAHAMI: Well, I do believe so. I believe that for example you give Twitter as an example. So we've been working with them for a while. We've (INAUDIBLE) with them on many different things as we can do together, how we can enlarge more businesses using Wix to actually find what is a advertisement platform, (INAUDIBLE) business. We've been working a lot with Google and in order we're selling -- reselling Gmail in a lot of applications that it have. And we can see also working with a lot of small businesses. We've announced where a lot of them, most of the companies were being in their application to the Wix upstoring it, massive distribution from that.
So yes, there's a lot of cooperation, a lot of people out trying to look at charter. And I think that is something that is really unique to the modern high-tech society. There's a lot of support and a lot of people that will help you along the way.
FOSTER: OK. Well thank you very much and good luck with your financing.
ABRAHAMI: Thank you.
FOSTER: The euro plunged on the news of an ECB rate cut today. Investors seem to be surprised by the timing. After the break, I'll speak to the economist who said the move was expected, just not in November.
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FOSTER: The European Central Bank surprised the markets when it cut interest rates to record lows. The benchmark lending rate now stands at just 0.25 of 1 percent. The move came after inflation fell, leading to fears of a squeeze on profits in the Eurozone.
The euro dropped sharply against the dollar on the news. The single currency fell to its lowest level since mid-September. ECB president Mario Draghi said that was ready to -- that he was ready to act again if these efforts don't prevent Europe from sinking into prolonged stagnation.
Now only a few economists had predicted that the ECB would cuts rates this month. Earlier I spoke with global economist Bronwyn Curtis. I started by asking if she was surprised by the central bank's move.
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BRONWYN CURTIS, GLOBAL ECONOMIST: It was expected but it wasn't necessarily expected this month. But I think it goes along with what Mario Draghi said last year in that they'll do anything and everything to make sure that the Eurozone and the euro works. And it's all part of that. Inflation down last week, lower than expected, 0.7 percent and they started to worry about that, because that gets into deflation territory.
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FOSTER: It's all about inflation, deflation, isn't it? That's at the center of their minds.
CURTIS: Well it's about two things. It's about deflation and the recovery because the European Central Bank worries about the currency. The euro was getting stronger and stronger and of course the biggest engine in Europe is Germany. So you want to keep that export growth going.
And also if you get the euro down and that did happen today after the rate cut announcement, then you also get some imported inflation, too, so it pushes it up. It helps the growth and it also helps inflation.
FOSTER: In terms of the inflation figures, it's not so much their level, is it, it's the speed at which they're moving, because you can very quickly end up in a trap where it feels out of control.
Is that the concern?
CURTIS: Well, I think the concern is that it does keep ticking down, you know --
FOSTER: It is, though, isn't it?
CURTIS: Well, it has been ticking down. And of course one of the problems and one of the reasons it's ticking down is because of energy prices. And that's happening in the U.S. as well, of course, because energy is getting cheaper. So that might continue. But the trouble is, if you get into a deflationary scenario, then people start saving instead of spending.
FOSTER: Yes, (INAUDIBLE) the policymakers can't control it, and that's the concern.
CURTIS: That's the concern. And they actually said -- I mean, Mario Draghi was very specific about saying and we have more things in the toolbox to push more liquidity, cut rates further, cut the discount rate to negative.
FOSTER: Yes. They could have done something more aggressive today, though, couldn't they?
CURTIS: They could have. But I think they tend to do it in step by step. It's a feeble recovery; inflation's too low. The euro's too high. We'll do this, and it had the right effect.
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FOSTER: Bronwyn Curtis.
The rate cut and the strong GDP numbers from the U.S. told you -- we told you about earlier have helped to push gold prices lower. It continues this year's downward trend, despite the slump Randgold Resources announced better than expected earnings for the third quarter. Earlier I spoke to the chief executive, Mark Bristow, about the latest results.
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MARK BRISTOW, CEO, RANDGOLD RESOURCES: The key driver in Randgold Resources is profitability back when we started and you know, we've got Loulo-Gounkoto that we've been developing. It's a big open pit mind in Gounkoto, two underground mines, high-quality asset. And it's taken a bit of time to get into them, the heart of the oil body (ph), which is higher grade. And with the higher grade, we've been able to deliver lower cash cost. And that's what we've been saying all the time. We naturally hedged in the cost sense, because we got our process better and better grades. And that grade profile improves all the way out to 2018. So the nice problems to have.
FOSTER: Yes.
BRISTOW: And then we brought in Kibali, our new mine in DRC. It poured gold in September well ahead of schedule. It's now in commercial production and every time you bring in a new mine, it's just easier to manage. It's lower cost and that really didn't make any contribution for Q3, but it certainly got a left out quarter and in Q4 and help us get to our guidance by year end.
FOSTER: But production's up 19 percent, which -- is explained by what you're just describing there. But cost down 17 percent.
BRISTOW: Yes. It's a combination of just a better focus, but we've always focused on profitability to get $1,000. And then of course when you mine the same amount of ore but at higher grade, and though it's more ounces per ton of process --
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BRISTOW: (INAUDIBLE).
FOSTER: OK.
BRISTOW: And more efficient.
FOSTER: You've got this particular challenge. Your industry obviously benefited (INAUDIBLE) rising gold prices (INAUDIBLE) very long period of time. But they've come down, what, 20 percent since April?
BRISTOW: Sure.
FOSTER: How on Earth do you control a business when you've got fluctuating prices like that?
BRISTOW: Well, if you look at the -- you know, I think that the one thing about mining like any business is the revenue stream is something you can't always manage. The costs you can. And I think what's -- what we've seen is the gold industry has been undisciplined in managing what it brings to account of these higher gold prices, which we've never seen in the history of gold.
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FOSTER: (INAUDIBLE) Randgold (INAUDIBLE) earlier.
Now the Philippines is bracing for a direct hit from one of the strongest storms on record. We'll be tracking the supertyphoon right after this short break.
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FOSTER: We're getting you the latest on that typhoon heading towards the Philippines. It's very serious indeed. And Jenny is tracking it.
Hi, Jenny.
JENNY HARRISON, CNN METEOROLOGIST: Hello, Max. The latest coming through, about the strength and the position of this storm, is that we've now got sustained winds at 315 kph and that is actually in miles, it's 195 mph, tropical storm force winds, extending 240 kilometers from the center. But in actual fact, it has now officially made landfall on the first of the island chain.
This is it. It's Samar Island, and it's just made landfall, the eye on the southern tip there. But it will continue to do this. We have so many islands within the central Philippines that it is going to continue to sort of head across different areas of land in the coming hours.
So already it has been making its presence known for the last few hours. It's moving quickly to the west at about 40 kph. But this storm system, although it will lose a little bit of its power, it really is going to stay a significant and strong supertyphoon in the next 24 hours. We've had gusts at about 380 kph, but you can see the speed at which this storm is going to continue to travel off towards the west.
Now we're not really getting much in the way of current readings at wind speeds, but you can see all of this yellowish, showing you the tropical storm force winds and already many of these islands are actually feeling winds at around 120 kph and in some cases actually maybe stronger than that.
I want to show you this. This is Friday, 5:00 am local time in the Philippines. And this just shows you some of the different wind speeds that are going to be felt as the storm works its way across the different timeframe. Here we have 1300 hours. And you can see that it really is not (INAUDIBLE) until Friday, really until the early hours of Saturday, 5:00 am Saturday morning that the storm system really will have cleared away from the Philippines and even then we will still be feeling those tropical storm force winds across much of the country.
But look at this, the rain of course, we're going to see some torrential amounts of rain, again the storm thankfully is moving fairly rapidly. But the accumulations will continue to add up well over 200 millimeters and remember, this is a mountainous region, so mudslides, landslides, flash floods. These are all the concerns as well as the strength and the power of these winds that are coming through. But what about the storm surge? We talk about this a lot with big, powerful storms. But in particular one like this, the northern side of a storm is always where we see the strongest winds. But in this case as well, it will lead to the biggest storm surge. You have the speed of the actual storm moving in, the actual power of the winds, but also in the movement of the storm. So in this case, about 40 kph, you add that together and all of this is where you get most of the storm surge.
So the storm is heading in, we know already, it is beginning now to make landfall and this is the area that really is of concern. We could be seeing some storm surge here, 5.3 meters. That is actually 17 feet of water that could actually come inland. And then as it works its way further towards the west, you can see here, Tacloban City, 4.5 meters in terms of storm surge, even way up to the north in Manila. We could also hear it, but seeing storm surge of 1.4 meters. So already this storm is making landfall, Max, but it will continue to do so for the next 12-24 hours, maybe even 36 hours, really until early hours of Saturday morning.
FOSTER: OK, Jenny. We're going to see what it's like on the ground now because Andrew Stevens is in Tacloban in the Philippines. He joins us now live -- Andrew.
ANDREW STEVENS, CNN CONTRIBUTOR: Yes, Max, we're about 300 kilometers or so away from where the storm first made landfall high end. And it's very, very noticeable. In the last hour or so, the winds have picked up, the wind speed has picked up dramatically in the city.
So the city is now hunkered down; the central Philippines is now hunkered down to ride this one out. Certainly the numbers that Jenny was telling you about indicate this is a massive storm system, massively powerful storm system. Local media are calling it the storm of the century.
And of course, this is a country which is very used to big storms, extreme weather. So there has been a lot of publicity. There has been a lot of bulletins on the local radio networks, on television, about the impending storm, even the president Aquino spoke yesterday on national television, last night, Max, to warn people and also to reassure Filipinos living in the path of the storm that the government stood by, ready to send in relief and emergency supplies, whatever was needed as the storm recedes.
Just on the way down to this live shot position, Max, we're about a mile away from the actual waterfront here. But we passed the main shelter of the city of 200,000 people. But there were only about 5,000 people in there, most of them were women and children. They were expecting more to come in in the next couple of hours. But it does indicate that a lot of people are riding this storm out at home. And reports here locally are warning that there will be fatalities, even though the president himself said he wants a zero casualty event here.
FOSTER: OK, Andrew Stevens, thank you very much indeed for bringing us that.
Now as Twitter goes public, we look at what happened when some high- profile users accidentally went public on Twitter with things they meant to keep private.
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FOSTER: Returning to our top story tonight, shares in Twitter have soared on their market debut. The stock has finished the session more than 72 percent higher from its public offering price of just $26. Seemed high initially. The social media firm had a glitch-free IPO, avoiding the technical problems that hit Facebook's IPO.
On Twitter's big day going public, we thought we'd take a look back at some Twitter users who also went public -- but by mistake.
First up, New York Congressman Anthony Weiner. He accidentally posted a scandalous photo for all the world to see back in May 2011. He blamed the crotch photo on hackers until he admitted that he had taken and tweeted the picture himself. He later resigned from Congress.
Next, David Cameron accidentally gave some publicity to a Twitter account that was mocking his administration. The prime minister included Secretary Iain Duncan Smith in a tweet about reforms he sent out in July. But it turned out the secretary is not on Twitter. This account was fake and quite critical of the government, in fact.
And finally, U.K. shadow chancellor Ed Balls accidentally tweeted his own name when he was trying to search for himself online. The 2011 mistake turned into a Twitter sensation. It was retweeted thousands of times, some even honored the anniversary, Ed Balls Day, each year.
Now on this very public day for Twitter, these Twitter users probably wish they had stuck to a better balance between public and private. But it's so simple to use. It's one of the problems, isn't it?
That is QUEST MEANS BUSINESS. Thank you for watching. I'm Max Foster in London.
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