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Quest Means Business
HP Rejects Xerox's Takeover Bid; Priceless Jewels Stolen in Dresden Museum Heist; Defense Secretary Mark Esper Fires Navy Secretary Over White House Controversy. Aired 3-4p ET
Aired November 25, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:17]
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: An hour to go before the closing bell on Wall Street.
The markets. The Dow cleaned up throughout the course of the session. We are now at record highs for the Dow. The Dow, the NASDAQ and the S&P --
all the major markets are at record.
These are the reasons why.
A mega merger on Monday. LVMH and Tiffany get married while HP tells Xerox we're over. Xeros says not quite so fast.
London kicks Uber to the curb saying the company puts passengers at risk.
And Mike Bloomberg now in the presidential race. He is outspending all but one of his rivals.
We are live in the world's financial capital, New York City. Glorious, autumnal winter day. It is Monday. It is November the 25th. I'm Richard
Quest, and of course. I mean business.
Darling, I'd marry you for your money in a moment. Well, that was Holly Golightly and she said it in "Breakfast at Tiffany's." And tonight,
Tiffany's is marrying LVMH for $16 billion.
Now, many of you will be well-familiar with a distinctive look and feel of the LVMH bag. This is a couple of grands' worth. It makes these iconic
Louis Vuitton bags.
But of course, Tiffany sells their jewelry and baubles in these instantly recognizable blue boxes.
Now, can a marriage of blue box and luxurious bag -- can these capture the imagination of investors as they have individually for decades?
[VIDEO CLIP PLAYS]
QUEST: Don't you just love it Tiffany's? Why does LVMH want the turquoise box?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, it's jewelry and watches, Richard. So this is a segment that they are competing fiercely
with Richemont, which has the likes of Montblanc and Cartier. They want to beef up that division. That's only nine percent of their sales so far.
And of course, the history, the brand. This is one of the biggest and most kind of iconic jewelers in the world. It's got a big presence of course in
the United States, about 41 percent of their sales there.
LVMH, don't forget a French company. They want more access to the U.S. consumer.
QUEST: It's also got branches in just about airport.
SEBASTIAN: Right, right.
QUEST: Seemingly major airports in the world. All of the major cities, but how is it doing?
SEBASTIAN: Well, that's -- that is the key question because they have had a few issues in the last few years. They had to replace their CEO in 2017
because of flagging sales, and they have been really working to try to appeal to millennial customers, Richard. That has been the big challenge
for them.
They've had to -- they are kind of on a multi-year investment drive to revamp their stores and this is why it makes sense with LVMH because they
have a track record in you know, appealing to millennials.
Here are some of their 75 brands.
QUEST: How many?
SEBASTIAN: Seventy five brands they have all in all.
QUEST: Seventy five brands. All right. Excuse me while I go through this. All right, the Celine --
SEBASTIAN: Celine is a luxury French fashion house. You know something from there will probably set you back a couple of grand.
QUEST: Right.
SEBASTIAN: Fendi, another very expensive store. Bags in particular and shoes.
QUEST: What's the significance of Fendi for them?
SEBASTIAN: The Fendi has been under LVMH since 2001. One of their kind of key luxury brands there. This is Dior. This is significant. This is
their last big acquisition when they took full control in 2017 for $13 billion. We will put that down there.
So until now, this was the biggest acquisition to date, Dior.
QUEST: All right.
SEBASTIAN: Kenzo is interesting. That was the Japanese brand, still is, but it's under LVMH now. Slightly cheaper, so they don't -- it's not just
the $2,000.00 bags there.
QUEST: Yes.
SEBASTIAN: Givenchy, another iconic French brand.
QUEST: But does it make sense to have all of these things and put them -- yes.
SEBASTIAN: This is interesting because this is Fenty. This is Rihanna's beauty brand. This just shows how LVMH is trying to appeal to millennials
and doing it quite successfully. They acquired this earlier this year. Sephora has been under LVMH since 1997.
QUEST: Really?
SEBASTIAN: So it's a wide variety of different price ranges and different brands.
QUEST: But it's the bags.
SEBASTIAN: Those are the iconic bags.
QUEST: This one set us back, how much?
SEBASTIAN: A couple of grand.
QUEST: A couple of grand.
SEBASTIAN: Two thousand dollars.
QUEST: For a bag.
SEBASTIAN: Yes.
QUEST: Okay, so in all of this, clearly a behemoth of luxury, an extravaganza of excess. But does Tiffany fit well into it?
[15:05:06]
SEBASTIAN: Well, I think what you're seeing with these luxury brands, Richard is not so much them trying to consolidate and getting more of the
same, but them trying to diversify.
LVMH, don't forget was also -- it's not just got clothing and shoes and luxury kind of wearable items. It's also got, you know Moet and Hennessy
and it's just bought a hotel chain, Belmont Hospitality, so they are diversifying, and you're seeing the same thing from the other big luxury
companies.
QUEST: Well, I do have a little something for you for Christmas. But you'll have to wait. Thank you. Fascinating stuff.
All right. Now there is a real shopping spree going on in the market. Move out of Tiffany's and do join me in the QUEST MEANS BUSINESS Mall of
the Mergers where there's always a billion dollar bargain to be had in the basement.
Now, the LVMH deal that you can see in green here is not even the biggest of the day. Charles Schwab is buying TD Ameritrade and that's a deal
that's creating $26 billion worth of brokerage behemoth in its own right, and that's all to do with no fees brokeraging.
But if you go to the other floors, you'll see Stub, you also see Novartis. Now there you have Novartis, which has bought the Medicines Company.
That's about cholesterol drugs -- $9.7 billion.
eBay is selling StubHub to Switzerland's Viagogo. And StubHub dominates of course, the reselling of tickets in the United States, but here, it is the
international market.
And then in the ground floor though, oh dear, well, here is a transaction - - HP and Xerox that's not got even off the ground floor.
There is no way so far -- HP again rejected the Xerox offer worth $33 billion. Xerox threatening to go hostile. The mall as you can see it, so
many deals. Charles Schwab-TD Ameritrade.
With me is Matt Egan. We'll talk generally in a moment, let's focus on that particular deal and why it makes sense. If they're doing no fee
trades, how are they making their money?
MATT EGAN, CNN BUSINESS SENIOR WRITER: That's a good question. I think that the fact that there's been this fee war that has broken out as a
result of Robinhood and the popularity of their free trading app, it really spooked investors. Stocks all plunged. People were really worried about
this big hit to the revenue. So that's why we've seen now a shift to consolidation.
QUEST: But Charles Schwab and Ameritrade both overnight saying they are going no fee.
EGAN: That's right. They announced that I believe, it was last month.
QUEST: Yes.
EGAN: And they decided that in order to really thrive in this industry, they need to team up and join forces.
QUEST: So first of all, in terms of them, where will they make their money? Besides savings on back room stuff, where do they make money in the
future if they've gone no fee?
EGAN: I think that that's the challenge. They do have some of these more sophisticated products that they hope to sell to people, but their bread
and butter for the longest time was on selling a piece of these trades.
Now this is obviously great news for you and I, the retail investor. Now we can go online and buy shares of Tiffany or what have you and it doesn't
really cost us anything at all. That's why it's great for us, but investors have been worried about the long term future of this space.
And now it has set off some speculation about whether or not there might have to do more deals.
QUEST: Okay, so the other players in the business and by the way, it's worth saying, when you look at the fee costs elsewhere in the rest of the
world. The U.S. is clearly leading in terms of no fee. What about JPMorgan, big broker in its own right with a retail business? Morgan
Stanley, certainly?
EGAN: Goldman Sachs as well. I mean, there's been some speculation that maybe some of these Wall Street players could actually come in and swoop
and buy the likes of an E-Trade. Maybe Fidelity goes and buys an E-Trade because now these companies are all trying to gather scale.
I mean, you talked about a luxury goods behemoth with LVMH and Tiffany, this is a brokers' behemoth. We're talking about 24 million customer
accounts between Schwab and TD Ameritrade, $5 trillion in client assets. That gives them some real leverage in this space.
QUEST: Okay, but now talking about the day overall. Novartis, not today, but I mean, these deals. Tiffany's.
EGAN: Right. StubHub.
QUEST: StubHub.
EGAN: We've seen a flurry of deals which --
QUEST: Why?
EGAN: Well, I think that there's a couple of things at play. We've seen some surveys suggesting that CEOs are very depressed right now about the
outlook. Well, they're not really showing because they're actually going out and they're buying a whole bunch of companies.
Now, perhaps that's a reflection of the fact that we've seen U.S. stock prices at record highs. Now the record high stocks that gives people some
confidence. It also gives them some added currency because the TD Ameritrade-Schwab deal, that's a stock deal.
And then the other factor I think is low interest rates. I mean, we're talking about near zero borrowing costs. A lot of these companies are
figuring why not go out, borrow some money and get bigger.
QUEST: But isn't it -- isn't it a sort of the last refuge of the bankrupt mind to go and buy something rather than grow yourself organically? A
strategic -- a strategic deal such as, for example, the Tiffany-LVMH is in a different category?
[15:10:21]
EGAN: Well, you can argue that some of these are strategic deals. StubHub and Viagogo as well. But you're right that we have seen in the past. It
is a sign of confidence, but it can also be a sign of hubris.
Sometimes companies have so much money, they look at record high stock prices. They just want to get into it. And some of those had been failed
deals later on.
QUEST: Good to see you.
EGAN: Thank you, Richard.
QUEST: Thank you very much indeed. The beautiful sea of green on the U.S. markets records. Investors are reacting to renewed optimism that China and
the U.S. will reach a Phase 1 trade deal.
The Dow is up some 150 points, it's not at -- we've got records on the S&P and we've got a record on the NASDAQ as well.
Uber is fighting for survival. One of its biggest markets, saying it will appeal against the decision by London Transit officials to revoke its
license. It calls the decision extraordinary and wrong.
Uber shares are only off one percent. Hadas Gold with this report?
(BEGIN VIDEOTAPE)
HADAS GOLD, CNN BUSINESS REPORTER (voice over): Red buses, black cabs and Uber drivers, a familiar sight on London's roads, but that could soon come
to an end as the Regulator Transport for London says it will not renew Uber's license after an independent assessment found a pattern of
regulatory breaches.
GOLD (on camera): London authority say unauthorized Uber drivers were able to drive around using others accounts simply by uploading their own photos.
Others they say were able to create accounts even after they had been dismissed or suspended.
As a result, Transport for London says as many as 14,000 trips were uninsured.
(BEGIN VIDEO CLIP)
SADIQ KHAN, MAYOR OF LONDON: TFL's job as the regulator is to make sure operators and drivers are fit and proper and I stand by TFL because our
part has got to be the safety and security of Londoners is a must. It is clear to me is that's been compromised by the way Uber is operating.
(END VIDEO CLIP)
GOLD (voice over): It's been a year's long battle between the city and the ride hailing platform. In 2017, TFL revoked the license over safety
concerns, but granted the company a 15-month extension. Uber is important to the millions of passengers who rely on the service every year.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Definitely, it would be damaging if there was no Uber because it's such a great service, you know what I mean? Like all over the
world, you can use it and it is just like, a click of a button, you know, I mean, so that'd be terrible if they ceased to exist.
(END VIDEO CLIP)
GOLD (voice over): But in a city renowned for its black cabs, some are pleased with the crackdown.
(BEGIN VIDEO CLIP)
DOMINIC, TAXI DRIVER: I spent three years studying in London to become a taxi driver, to be able to wear this, to be a public service of
transportation for London. They've come in on the back of Uber and they pay 300 for a license, but I sat there and look at what they've done.
(END VIDEO CLIP)
GOLD (voice over): Losing London would cost the company. It's one of the top five revenue generating cities for Uber and the biggest outside of the
Americas.
Uber called Monday's decision extraordinary and wrong.
(BEGIN VIDEO CLIP)
JAMIE HEYWOOD, REGIONAL GENERAL MANAGER FOR NORTHERN AND EASTERN EUROPE, UBER: Uber has been on a process of change. We've changed very
fundamentally since Dara came in as CEO, as a company. And if I look at the way that we're prioritizing safety, the way that we're making our
processes and systems better, today's decision by TFL isn't taken on the basis of an Uber that I recognize.
(END VIDEO CLIP)
GOLD (voice over): London Transport says Uber has made some positive changes. The company now has 21 days to appeal the decision during which
they can operate as normal.
For now, it looks like Uber will have at least one more Christmas in London. Hadas Gold, CNN, London.
(END VIDEOTAPE)
QUEST: You had there Uber's General Manager in that report and there are many more questions that had be asked about how the company is changing
safety as a priority. He spoke to Hadas earlier.
(BEGIN VIDEO CLIP)
HEYWOOD: Today's news from TFL that they decided not to renew your license in London is both exceptional and wrong and it's -- it's a decision we
intend to appeal.
It's important to note that, as of today, nothing actually changes. So riders in London who use the app, and there are three and a half million
riders in London who do on a regular basis will continue to be able to use the service as normal. And drivers, there are over 40,000 drivers in
London will continue to be able to use the app to earn as well.
So Uber has been on a process of change. We've changed very fundamentally since Dara came in as CEO, as a company. And if I look at the way that
we're prioritizing safety, the way that we're making our processes and systems better, today's decision by TFL isn't taken on the basis of an Uber
that I recognize.
[15:15:05]
HEYWOOD: So we have 21 days to decide whether we appeal and we've taken that decision already, which is that we will appeal. And then after that,
it's up to the courts how long it takes.
When this happened previously, in 2017, it took a few months to actually go to hearing but the important thing to note is that during that period, we
can continue to operate as usual. So the service tomorrow, or in one month's time or in two months' time whilst this process is going on is
exactly as it was yesterday.
(END VIDEO CLIP)
QUEST: As we continue, China has offered the U.S. an olive branch in the trade war. It may help settle one of President Trump's biggest concerns.
And also, some companies came to agreements where others were unable to seal the deal. In a moment.
(COMMERCIAL BREAK)
QUEST: Now stocks are at record highs after China took a step forward in resolving the trade war. China unveiled new guidelines for protecting
intellectual property. It is the issue that's at the bottom of course of the concerns from the United States and the U.S. Trade Representative said
IP theft costs the U.S. between $225 billion and $600 billion each year in one form or another.
Kevin Hassett is the former Chair of the White House Council of Economic Advisers. He joins me now from Washington. Good to see you Kevin, as
always.
KEVIN HASSETT, FORMER CHAIR OF THE WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: Thanks, Richard.
QUEST: Lovely to have you with us. On this, I'm confused as to where we are on the trade -- not just a trade dispute, but that we're waiting for
Phase 1 to be concluded and signed. Is there any indication that's going to happen before the end of the year?
HASSETT: Yes, that would be my expectation. And I think that really, the news today, which has markets moving forward and recall, Richard, before I
left the White House I was in the middle of all this is that the Chinese agreed that they were going to ramp up penalties for people who did steal
IP.
That was a key conflict that we had with them what back in the spring where they really didn't want to take that extra step of committing on paper to
ramping up penalties and maybe even changing their laws in order to make sure that Chinese firms respected U.S. intellectual property.
So I think it's a quite a big move by the Chinese and I would expect that there are a lot of other things like us agreeing to rollback tariffs to
some extent, that will be cut out in the next few days. But clearly, we're very, very close to a deal again.
QUEST: Right, a Phase 1 deal.
HASSETT: A Phase 1 deal, that's right.
QUEST: I mean, Phase 2 and Phase 3, probably -- well, I mean are some way off?
HASSETT: Yes, that would be my expectation. You know, I think that if you look at it that there are a number of phases of tariffs, then I would guess
that the first couple will probably still be in effect by the next election, because the President's going to want to make sure that the
Chinese really behave.
[15:20:16]
HASSETT: You know, I think one of the things I was briefed on when I first came into the White House a while ago, was that President Obama had, you
know, exactly the same intentions as President Trump and they made a pretty firm deal with China that involved us taking a lot of steps and them taking
a lot of steps that it looked like when we got there when I was briefed on it, that we did everything. The U.S. did everything that President Obama
promised, but the Chinese did nothing whatsoever.
So I think Ambassador Lighthizer and Secretary Mnuchin and you know, President Trump's team, they've been trying to get the Chinese to commit in
a credible way to making the changes that we need them to make and it looks like they've made a lot of progress.
QUEST: Kevin, I'm looking at markets and I'm looking at the markets at the moment. The Dow is up in a record, S&P and the NASDAQ, and when one -- I
mean that the growth is okay. Growth is okay. Unemployment is down. Inflation is high, but relative -- relative -- but not yet a trend.
So what's your feeling? The underlying strength at the moment when many have been saying slowdown, not recession, but a serious slowdown.
HASSETT: Right. Well, definitely there's a global slowdown if you look at say German GDP, it's pretty very close to a recession level. And in the
U.S., I think we're looking at fourth quarter GDP growth right now that's going to be like in the one percent range, maybe a little bit more. So for
sure, the whole global economy has downshifted.
But the point is that it looks like there are a lot of signs that maybe we're about to upshift again. And so the job market in the U.S. has stayed
strong. Income growth in the U.S. is strong and Boeing is about to, you know, turn on their assembly line again. And that's a really big deal,
worth almost a percent of GDP into that.
QUEST: Yes, but we -- I'll put Boeing to one side, if I may, sir. Because that one percent of GDP gain is only predicated by a one percent plus loss.
So that's really -- that's not --
HASSETT: Which we already have, right?
QUEST: Right, that's what I am saying. But that's netting out in a sense. But what I don't understand --
HASSETT: Yes.
QUEST: For the most of the latter parts of the year, we've been talking about worries, problems. I mean, people even use the R word in other parts
of the world. But what's changed? What's changed? Corporate profitability hasn't changed. The U.S. deficit is humongous and getting
bigger. Interest rates have probably reached the low point in the cycle. So what's changed?
HASSETT: Well, you know, I think that the things that I see in the U.S. sector, the two big changes since last summer, is that first of all, income
growth has accelerated, especially at the bottom.
And second, the housing market in the U.S., perhaps in response to Fed policy is starting to pick up and don't forget that this is a really
unusual sort of boom time under, you know, past couple of years for President Trump, where the economy has been doing very, very well, but the
residential real estate sector has been totally in the tubes.
And so having that residential sector start to turn around means that this recovery could probably have some more legs.
QUEST: Which do you prefer? Life in the White House, life out of the White House?
HASSETT: You know, I had a blast. It was a great pleasure to serve the country and it's nice to have a chance to sleep in now and then as well.
QUEST: Kevin, we're always glad when you come on the program.
HASSETT: Thanks. It's great to be here, Richard.
QUEST: It is appreciated. Thank you very much. Micron is monitoring developments between U.S. and China. They are monitoring them closely.
The chip maker is being caught in the middle of the trade war we had just didn't talk about and the Chief Executive tell CNN's Kristie Lu Stout what
he is hoping for in a resolution.
(BEGIN VIDEOTAPE)
SANJAY MEHROTRA, CEO, MICRON TECHNOLOGY: We want overall, a free market based economy. We want respect for intellectual property. We want to be
able to absolutely engage with the customer ecosystem here in China across -- as well as all across the globe.
And we -- you know, continue to monitor the world trends today in terms of enabling a system that will allow us to do that and allow our semiconductor
industry to do that as well. It's important for the entire semiconductor industry to be able to engage with customers worldwide.
And I'm certainly hopeful that U.S. and China will be able to address their issues, their differences, and that we will have opportunity to be able to
do the business based on level playing field, fair market principles, as well as respect for intellectual property.
KRISTIE LU STOUT, CNN INTERNATIONAL CORRESPONDENT: Yes, and given the lack of a resolution for the trade war and a political environment that's
getting increasingly fraught, are you making adjustments in terms of your relationships with customers, in terms of your supply chain, in the event
that this is not going to be resolved anytime soon?
MEHROTRA: So we have, as I said, very well-diversified set of customers across the globe, exciting part for our businesses that memory and storage,
DRAM and flash are absolutely at the heart of all of the technology trends today. AI to IoT to autonomous.
We have a manufacturing supply chain that is well-diversified across the globe. We have manufacturing operations in 10 different countries, and so
we have a very diversified footprint that really enables us to be very resilient, very adaptive, very agile.
[15:25:04]
MEHROTRA: And of course, we remain extremely focused in this exciting time of more need for more memory and storage and continuing to keep our eye on
the ball with respect to technology innovation, product development, and engagement with customers to bring the full value of our portfolio to the
customer.
This is what we remain focused on, and this is what I think, you know, regardless of some of the ups and downs that may occur due to macroeconomic
conditions or geopolitical issues, I think, you know, technology has a way of powering through that and memory and storage will absolutely be key in
that regard in the future.
LU STOUT: The Chinese tech giant, Huawei has long been an important and a significant customer of yours. How are you managing that relationship
during the ongoing trade, war and tech war?
MEHROTRA: We have excellent relationship with customers across the globe, including our relationship with Huawei and we have publicly stated before
that we, of course will abide by all the laws and regulations in all countries where we do business.
So with the entity listing of Huawei, of course, we have been able to ship under lawful means certain products to Huawei and our relationship with
Huawei continues to be very good and we of course, you know, certainly hope that you know, that we will have opportunity to continue to do business in
a fashion to bring the full value of our innovation portfolio to all our customers worldwide, including Huawei here.
(END VIDEOTAPE)
QUEST: There is still more of QUEST MEANS BUSINESS on this Monday merger mania. Xerox tried to take over HP, failed or not at least hasn't
succeeded, and is now warning if it happens or goes again, it might not be friendly.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's a lot more QUEST MEANS BUSINESS in a moment. HP is printing off a rejection letter for Xerox. Now, Xerox
could try and copy by during a hostile takeover.
[15:30:10]
And thieves have stolen more than a billion dollars worth of jewels from a German museum. A jeweler expert tells me what do thieves do next. This is
CNN, and here, the facts always come first.
Priceless treasures have been stolen in an early morning heist at the Green Vault Museum in Dresden, Germany. Look at this surveillance footage, shows
thieves in action. They said they took the jewelry dating back to the 18th century including diamonds, pearls and rubies. A taskforce of 20
detectives are trying to break the case.
U.S. Defense Secretary Mark Esper says he fired the Navy Secretary Richard Spencer for going outside his chain of command and losing his trust.
Spencer in his resignation letter suggested U.S. president was undermining the key principle of good order and discipline of the U.S. military when he
intervened in the case of a controversial Navy SEAL.
There's still no response from Beijing to the landslide win by pro- democracy candidates in Hong Kong's local elections. China's Foreign Minister emphasized Hong Kong will always remain part of China's territory,
and warned that any attempt to destabilize the city will never succeed.
Israeli Prime Minister's Likud Party is to hold leadership primaries within the next six weeks. The news follows Benjamin Netanyahu hearing that he'll
be charged with bribery, fraud and breach of trust. And Netanyahu is unlikely to receive parliamentary immunity after the former Israeli Defense
Minister Avigdor Lieberman indicated his party would not support it.
And police investigating the death of K-pop star Goo Hara says they found a note in the living room. The 20-year-old -- 28-year-old South Korean
singer and actress was found dead on Sunday. Her death once again turns the spotlight onto a debate over the intense pressure of K-pop stardom.
Amid all the deal making of the day, one match was not made. HP rejected a takeover offer from Xerox, saying in a letter it significantly undervalues
the company. It was not the first offer that HP has rejected. Paul La Monica, guru La Monica is with me.
PAUL LA MONICA, CNN BUSINESS REPORTER: Thank you, sir.
QUEST: Now, when they rejected this, was this a sort of a -- this is not enough, but if you come back with more, we might be nicer or was this a go?
LA MONICA: This second rejection seems to be a go away and don't let the door hit you on the way out type of response because it was pretty hostile
from HP to note that they think in addition to Xerox's offer undervaluing HP, they pointed out that Xerox is a company that has routinely missed
revenue estimates for several quarters in the past few years, and whose stock and revenue has gone down as well.
So, it wasn't the type of response you'd expect from a company that just was basically saying we're willing, wink-wink, nod-nod, if you raise the
price because again, HP is worth nearly four times as much as Xerox, so if anything, HP could turn the tables around and say, hey, we're going to go
after you and buy you instead, but they don't seem to think that this deal makes sense.
QUEST: So, is it likely that Xerox will go hostile?
LA MONICA: It sounds as if Xerox is going to take this to shareholders of HP. So, I think, yes, Richard, they are going to go hostile, but even if
they do, the question remains how do they finance this deal when they are the smaller company they presumably would have to add some debt to get it
done and --
QUEST: No, you LBO it.
LA MONICA: You LBO it, but this doesn't strike me as the type of combination that would get people excited. It's too slow growth printing
companies that maybe would merge and have some economies at scale. Which unfortunately probably means layoffs. I just don't see how --
QUEST: Right --
LA MONICA: To struggle the company's --
QUEST: And also since HP is already halved itself from the solutions --
LA MONICA: And solutions --
QUEST: That's the word, thank you, and solutions, and Xerox has lost a bit, but it's not as if you can LBO and then pay down the debt with their
asset sales.
LA MONICA: Right. There really would not be any conceivable --
QUEST: Right --
LA MONICA: Asset sales that would come from this merger. I think cost- cutting would be the main appeal to get --
QUEST: So --
LA MONICA: Earnings back on track.
QUEST: So a look at the share price because that usually tells us a lot. Xerox is down, HP is up quite healthily at 1.3, what's the market telling
us about what they think is the next direction on this?
LA MONICA: Yes, I think the market doesn't really believe a deal is going to happen. Is that HP price right now --
QUEST: Right --
LA MONICA: Is at $20 a share, the offer from Xerox is 22, so you're still about 10 percent below that price, and also HP hit 24 earlier this year, so
I think that is another reason why they've been resistant.
That they don't want to do a deal that's going to really undervalue where they were not that long ago.
[15:35:00]
QUEST: Good to see you.
LA MONICA: Thank you.
QUEST: Thank you. The inventor of the World Wide Web is now warning about the dangers of disinformation. Tim Burton fears a digital dystopia may
soon be upon us, and Facebook, Google and Microsoft have all signed his new contract for the web.
I spoke to Adrian Lovett who is the president and CEO of the World Wide Web Foundation, and Adrian says this is more of companies who have signed on.
(BEGIN VIDEO CLIP)
ADRIAN LOVETT, PRESIDENT & CHIEF EXECUTIVE OFFICER, WORLD WIDE WEB FOUNDATION: It's also about governments who need to play their part, and
it's about all of us as citizens taking our share of responsibility for building the web we want. So, it involves those different stakeholders in
a concerted plan for the first time.
Secondly, this is about both the huge challenge of getting people online in the first place. Only half the world is online --
QUEST: Right --
LOVETT: As you know as well as fixing the problems we see with the web today, and it's a joined up approach to that. And then thirdly, it's about
combining both key principles that we've all agreed on. There's nine principles at the heart of this contract for the web with practical
commitments, real concrete steps that those governments, those companies and citizens can take to build the web we want.
QUEST: Is this fake information, this masquerading on the web, this government activism or is government-sponsored activity of fake news? Is
this as big a problem as the U.S. media would suggest?
LOVETT: It's a real problem, there's no doubt about that. And it's one of the key things that we want the contract for the web to address. And one
of the ways that we think that can be done is to ask those big tech companies to make human rights assessments of their products and their
thinking upstream in the process.
And that can sound a little abstract, but what that means is really testing their products before they come to market and as they go to market to see
exactly what the impact will be on people's fundamental rights. And that includes the right to information, clear, accurate information, and the
right to be protected from hate speech and harassment and violence online. So, I think that is one of the key things that needs to be addressed, it's
a big problem.
QUEST: So within that, briefly and finally, should you be optimistic that signing up to your contract actually does any good and why?
LOVETT: Well, we are optimistic, and I think the reason for that is, this is the first time that a single plan has been brought together involving
all those different stakeholder groups, companies, citizens and governments. And also because there's a huge amount of work that's gone
into this. We've had eight or nine months of about 80 experts from across different sectors putting their heads together, thrashing out options,
negotiating, compromising, having to give up on things as well as secure really important pieces.
And I think it all now comes down to delivery of course. You know, we're launching this today with 160 --
QUEST: Thank you --
LOVETT: Or more organizations on board, and we'll see whether people are willing to live up to it. We hope they are.
(END VIDEO CLIP)
QUEST: Now, Michael Bloomberg, former mayor of New York, multi-billionaire is well and truly into the race for the presidency. He's wasting no time
and he's spending plenty of money inside his campaign trail debut in just a moment. Cristina Alesci is with Mr. Bloomberg.
(COMMERCIAL BREAK)
[15:40:00]
QUEST: The former New York City Mayor and multi-billionaire many times over, Michael Bloomberg is now a candidate for race for the U.S. President.
He's wasting no time making his campaign trail debut. Today in Norfolk, Virginia, his spending already puts him near the top of the pile. Thirty
seven million dollars worth of campaign ads behind only fellow billionaire Tom Steyer and far ahead of the rest.
If you remove the staff from the mix, Bloomberg is spending more on advertising than every other Democrat in the field combined. He's
approaching this race in the same way he built his business, looking at the numbers.
(BEGIN VIDEO CLIP)
KEVIN SHEEKEY, CAMPAIGN MANAGER, BLOOMBERG 2020: And listen, you can say it's never been done before, but you also have to say no one's tried it
before. What we're going to do is launch a national political campaign where we're not going to talk to people in one state and then a second
state, and then a third state.
We're going to talk to everyone in the country at once, and we're particularly going to over talk to those people who need to vote in those
swing states, ultimately to vote against Donald Trump.
(END VIDEO CLIP)
QUEST: Cristina Alesci has just come from Bloomberg's first campaign stop in Norfolk, Virginia. She's with me now. First, give me a flavor of what
it was like?
CRISTINA ALESCI, CNN BUSINESS & POLITICS CORRESPONDENT: Well, he first met with a state delegate that he actually supported in the last election cycle
at a local coffee shop, which was basically a photo-op, and then he took hard questions from reporters at the hotel next door.
He was asked everything from about his apology on the police tactic called stop and frisk. He was asked about why he was running and why he's
qualified to do the job as president. He said look, I've taken on Donald Trump before and I've beat him. I'm probably one of the few people in the
race who's qualified and experienced enough to hit the ground running. Here's the rest of what Michael Bloomberg had to say.
(BEGIN VIDEO CLIP)
MICHAEL BLOOMBERG, CHIEF EXECUTIVE OFFICER, BLOOMBERG L.P: Yes, I know how to take on the powerful special interest that corrupt Washington. I know
how to win because I've done it time and again. We need a president who is ready to lead us where we need to go in a ways that we can be proud of.
Someone with the experience to hit the ground ready to go. I am that person, and that's why I'm running.
(END VIDEO CLIP)
QUEST: The question of course is, I mean, Michael Bloomberg is a prickly character who does not suffer fools gladly. He's being very successful in
New York where they perhaps will put up with that, but will middle America? Will the rest of the country where he needs delegates for the primary, will
they?
ALESCI: Well, I think he's trying to make himself more accessible for one in these campaign stops. And secondarily, he's going to run as sort of the
anti-Trump. You know, Trump is very emotional, plays on people's fears. Mike Bloomberg is data-driven, and he perhaps doesn't have the kind of
personal appeal that Donald Trump would.
But he would say, listen, that's who I am, take it or leave it, but I will run the country with a steady hand. That's his perspective. That's where
he's coming at it. Look, that said --
QUEST: Right --
ALESCI: He's going to face some serious challenges first on the technical side. It's just very late in the primary cycle at this point. No one has
ever been able to pull off the win of a nomination, getting into the race this late in modern U.S. history. So, that's going to be a huge --
QUEST: Right --
ALESCI: Challenge, and then he has substantive challenges as well.
QUEST: One final thought though, you've been following -- you and I spoke a few times earlier in the year that you were following Michael Bloomberg,
you are the designated correspondent who will be with him. But back in March or whenever it was, he said he wasn't running. So what happened then
to change his mind to now?
[15:45:00]
ALESCI: He's watched how the race has unfolded, and he was not happy with the way that it was unfolding. He didn't think that the Democrats had a
candidate strong enough to take on Donald Trump. And in large part, he was disappointed with Joe Biden's performance. He saw him, you know, fade in
some of the polls, obviously nationally, Joe Biden is still very strong.
But there were some instances where he didn't perform well in debates and Michael Bloomberg saw that as perhaps a risk of Donald -- of opening up the
possibility that Donald Trump may win again. So Michael Bloomberg saying - -
QUEST: Right --
ALESCI: He's got the -- he's got the money, he's got the --
QUEST: Right --
ALESCI: Time, and he is willing to put in the effort to try and beat Trump.
QUEST: But in a party like -- of the Democrats at the moment, that is trending I would venture to say -- I wouldn't say fully-left wing, but
certainly center-leaning left, about you know, a right wing, middle to road to right conservative candidate on the right of the Democratic Party is not
the flavor of the party du jour.
ALESCI: I agree, and I think that's a substantive challenge for him. You have progressive candidates like Bernie Sanders and Elizabeth Warren taking
shots at him ever since he announced the large ad buy that you referenced in your introduction. And they're going to continue to do that because
they know it plays well to their base. But again, Michael Bloomberg will try and move away from that --
QUEST: Right --
ALESCI: Specific topic by redirecting attention to the fact that he spent hundreds of millions of dollars, if not billions on liberal causes like gun
control, like climate change. So what he's going to say is, yes, I'm a billionaire, I made a lot of money, but I've used that money --
QUEST: Right --
ALESCI: For good, from the progressive end of the spectrum.
QUEST: Well, I guess you've got lots of grits fried chicken, scrambled eggs to eat on a campaign trail that's going to take you to large parts of
-- beautiful parts of America. Try and eat well, we'll follow your diet closely. Good to see you, Cristina Alesci --
ALESCI: All right, thank you --
QUEST: On the campaign trail. It's not just LVMH doing deals, someone else got their hands on invaluable jewels, only they didn't do it the legal
way. In a moment.
(COMMERCIAL BREAK)
[15:50:00]
QUEST: The "Pink Panther" just got its latest plot unfolding right now in Germany. Serious effort indeed, in fact. A manhunt is on after brazen
heist at Dresden Castle where thieves broke into the Green Vault on Monday morning. It's home to one of Europe's largest collection of treasuries and
making off with the jewels, including diamonds, pearls and rubies, possibly worth a billion dollars, probably absolutely priceless. Phil Black with
our report.
(BEGIN VIDEOTAPE)
PHIL BLACK, CNN CORRESPONDENT (voice-over): The target, one of Europe's most valuable collections of treasure suggest that technically complex,
professionally planned and executed movie-style heist. The reality, it was far less sophisticated. The thieves even triggered the alarm.
UNIDENTIFIED MALE: The culprits as you were able to see, evidently got in through a window facing the palace square. There, they cut through the
gratings and then smashed the glass of the case.
BLACK: The museum's interactive tour shows the contents of that case. They escaped with three sets of jewelry including finely crafted necklaces.
Together, the sets were made up of around 100 individual diamonds, pearls and rubies. The Green Vault is famous for its extraordinary priceless
collection from the early 1700s.
The incredibly ornate rooms were first built by local leader Augustus the Strong when he was keen to turn the region into a Florence-like hub of art
and culture. The collections survived World War II, but the Vault's rooms like much of Dresden were rebuilt. The museum says the value of the stolen
pieces can't be calculated accurately because they're too well-known to ever be sold on the open market.
But news of the Green Vault raid inspired shock among local officials who say the collection is invaluable as part of the region's culture, history
and identity.
UNIDENTIFIED MALE: It's not just about the material value, but also the immaterial value which is inestimable for the state of Saxon. As our state
Premier has said, overnight, the whole of Saxon was stolen from.
BLACK: Police don't know if the thieves had hoped to get away with more, but one extraordinary piece of treasure was well beyond their reach. The
famous 41 karat Dresden green diamond. It's currently on loan to the Met Museum in New York. Phil Black, CNN, London.
(END VIDEOTAPE)
QUEST: Kormind with me, is the online diamond jeweler, 77Diamonds.com and he's with me from London. The point here is of course, the real risk is
that they're not -- they don't try and sell the jewels as they are, they break them up. That's the sort of travesty, isn't it?
TOBIAS KORMIND, MANAGING DIRECTOR, 77DIAMONDS.COM: Yes, I know, unfortunately, that does look like what's going to happen. So, if we look
at history, with some of the great jewelry heists, a lot of them have never been found again. And so we're highly likely -- I mean, it's an absolute
travesty because obviously within the kind of the piece, ornate piece that's been created by some of the great craftsmen of history, they are
worth so much as a piece in their own rights, and also in terms of what they represent for the Saxon region, for Germany --
QUEST: Right --
KORMIND: As a whole, but the thieves are going to grab these, and they're going to strip them apart. They're going to re-cut them.
QUEST: Even if they re-cut them, and you've got some jewels there, haven't you? And you've got a couple of jewels --
KORMIND: I do --
QUEST: You're going to show me a million bucks worth. But even if they re-cut them, is there something likely to be part of them that you'd still
be able, potentially, to identify even if they're re-cut.
KORMIND: Yes, so let's separate it. So, if we look at the diamonds, they're absolutely untraceable. Once they've been re-cut, there's
absolutely no way of being able. So, they literally disappear into the market, that's why something like the 2013 Colton heist for the live gems
which was almost a 100 million pounds worth, none of those diamonds have ever been found anywhere.
They literally disappear into the -- you know, into thin air and that we caught they reappear as different stones. With gem stones like rubies and
sapphires and emeralds, there's some traceability in terms of leading them --
QUEST: Right --
KORMIND: Back to the mine, if they're left with certain types inclusions inside, then they could be traced, it has happened in the past, but once
they've been re-cut, if they cut out the inclusions, they again disappear completely.
QUEST: Come on, show me the jewels. Show me just one, what have you got? Hold it up!
KORMIND: You know, I can't compare to it, so what I've got here, I've got a 5 karat cushion, and obviously on the camera, it looks relatively small.
But you know the -- one of the -- the really interesting question is -- and this is about 200,000 pounds worth is, there's a 49 karat, the Dresden
white. Was that part of the heist? Was that part of the three sets, and also there's largest blue sapphire which the rumor are that it's between
571 karats and 648 --
QUEST: Right --
[15:55:00]
KORMIND: So, it's the largest blue sapphire in the world. Was that also part of the set? They went into one display case. They must really have
thought this through and considered which -- you know, what were they going to do --
QUEST: Right --
KORMIND: Because the police attended to the scene very quickly, but you know, they were gone --
QUEST: Tobias make sure, be very careful that when you leave it -- that you don't sort of leave anything behind, knowing my colleagues, they'll
have picked your pockets before you can say it. Thank you for joining us, thank you. Last few minutes of trading --
KORMIND: Thank you, thank you for having me --
QUEST: On Wall Street -- now, we're talking about the jewels there, it's a bit of a jewel in its own right. A record on the Dow, you have good gains
from United Health Group at the top, down at the bottom, you've got ExxonMobil. But frankly, I mean, you've got the turn of the day, the
losses are just minor, .73 compared to some good gains.
And those gains, those 1 percent-plus gains go right the way through pretty much half the Dow. Disney doing well of course on "Frozen II", results --
Boeing on the prospects of better trade talks coming along. You've got Cisco and encouraging -- all in all, this is a very strong session that
takes us to a record, and we'll have our profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, it was very profitable for those who - - Tiffany's, the share price rose sharply on the back doing the best it's done in a long time, up 30 odd percent over the last few months because
LVMH is now buying it. It tells us so much about the mood of the market that deals like this are being done.
LVMH strategically buying Tiffany's, Novartis and the medicine companies. You've got a range of deals, except of course, HP and Xerox. A range of
deals, people spotting opportunities and determined to take advantage of cheap loans and high value paper. But what's interesting is how many of
these deals make sense?
LVMH and Tiffany's, absolutely a strategic deal which puts a new part into LVMH's already bursting shopping bag. Make -- watch this one, it's going
to run for some time. And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York, whatever you're up to in the hours ahead, I hope
it is profitable. Record on the Dow, records on the Nasdaq, records on the S&P, we have got records around!
(BELL RINGING)
END
END
