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Quest Means Business
Twitter IPO Roadshow; Beyond Twitter; U.S. Stock Markets; "Maria" DNA Match; Migrants in Europe; Britain is Growing; Ready for the Holidays; Economy, Earnings and the Fed
Aired October 25, 2013 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAGGIE LAKE, CNN HOST: It's the closing bell on Wall street, and the end of a week full of earnings. It's Friday the 25th of October.
All atwitter about Twitter: a taste of their IPO Roadshow coming up.
UPS on the up: its CFO says Europe is the story of the quarter.
And, it's fast and it's challenging: not India's economy, but its Grand Prix.
I'm Maggie Lake. This is QUEST MEANS BUSINESS.
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Good evening. Twitter is making its big pitch for investors ahead of its much anticipated initial public offering. The company has released a video laying out its plans a day after setting its preliminary IPO price range of $17-20 per share. That would value the site at up to $11 billion.
Twitter executives will kick off a cross-country roadshow starting in New York on Monday, trying to win over investors.
In the video posted online today, CEO Dick Costolo makes the case for going public.
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DICK COSTOLO, CEO, TWITTER: There's an incredible leveling of the playing field that gives every voice the ability to echo around the world instantly. And that democratization of content creation and sharing facilitates these connections that we see every day around the world that we would've never seen before. The possibility and the opportunities afforded by the platform are limitless.
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LAKE: As Twitter gears up for its public debut, the comparisons with another social media IPO are of course inevitable. And you know I'm talking about Facebook.
Twitter is now working hard to avoid the problems that struck that company's market debut in May last year. The first issue technical problems, the New York Stock Exchange is holding a test run this weekend to avoid the glitches that hit Facebook's debut on the Nasdaq.
Secondly, the price range: Twitter is playing it safe, setting a modest target. It doesn't want a massive price drop similar to Facebook's. The social network shares only climbed back to their IPO level this summer.
And finally the roadshow: Twitter executives may be dressed to impress after Facebook's founder Mark Zuckerberg cops heat over wearing a hoodie to woo investors at an event in New York. We all remember that.
Julianne Pepitone from CNNMoney is here to walk us through it all.
And, Julianne, this is going to be a stressful time for these Twitter executives coming in. It's always a little bit of a clash of culture when you've got innovators from Silicon Valley coming into the bankers; the bankers have hard questions, they want to know how are you going to make money.
And honestly, a lot of them probably have that painful memory of Facebook and the complaints from clients who bought into it fresh in their minds.
JULIANNE PEPITONE, CNNMONEY.COM: Absolutely. Twitter coming after Facebook, there's definitely going to be a little bit more of -- a little look at some of that culture divide, that Wall Street totally looking at the future possibilities and Twitter signs from Silicon Valley, where wearing hoodies is maybe OK.
But what Twitter's really going to be focusing on is that future potential. There is a lot (inaudible) profitable, but there is a lot that's good about them. They -- their user base is relatively small, but it's growing at a very rapid clip. They really figured out how to monetize mobile already, which we know is a big problem for Facebook.
And they are really early days in their ads. They -- their ads are doing very well but they're much earlier in (inaudible).
(CROSSTALK)
LAKE: (Inaudible). They're very young. We forget that because we know the rich they have, but this is a young company.
PEPITONE: Absolutely. And the on speaking to analysts about this, that's what they keep stressing. Obviously people want to compare it to Facebook. It's very easy to say. There are two different social networks. And when you're on Wall Street, you want to say, OK, this company --
LAKE: Fits in this box.
PEPITONE: -- exactly. But I don't compete you can make that comparison with Twitter. It didn't just earlier and have the whole life cycle of a business. They're still figuring it out. They still have a lot more room to run, I would say, than Facebook does, mobile on the stress dot for sure.
LAKE: Right. That's the hope. But because there's no easy comparison, it makes it -- you have to think, how did they come up with this price range?
I know a lot of people were saying, well, that sounds a little low.
PEPITONE: That's true. A lot -- we have to remember this is just a preliminary price range. They're going to kind of go on this roadshow and figure out is there a lot of demand for this? Could be raise the price range. That is what Facebook did for the lot of companies have done.
LAKE: So we should probably expect it to creep up a little bit.
What about Dick Costolo? What about these executives? We're joking around about the hoodie and stuff, but being a part of a startup is very different from being a steward of a public company.
Do we think that Dick Costolo has the gravitas to do this?
PEPITONE: You're absolutely right. I mean, once you have a duty to shareholders, you know, it's not --
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LAKE: (Inaudible) shareholders, by the way.
PEPITONE: -- absolutely. So Costolo's an interesting character. He famously used to do standup comic and he definitely kind of brings that sort of sense to his role as CEO. (Inaudible) Twitter is a good chance he'll tweet back.
He said people complained to him, he'll complain right back at you. But when it comes down to the business part of it, people do say he might be kind of fun and games and very charismatic in his presentations or when he's speaking to people at Twitter. When it comes down to the business side of it, he is no buttoned up and can speak intelligently about this.
The other thing about Dick is that he's not one of the founders. He came in really to run the business. It's not his baby. He came in to -- he's the grownup business side guy. And he came in to grow the business. That's what he's going to do.
LAKE: He's going to need a sense of humor when he's dealing with some of these bankers.
What do you think is going to be the most important test here? I mean we want to have that first day executed and be fairly smooth.
What kind of timeframe before we really start to see them need to deliver on results? It's sort of a tough question; I don't know if we know the answer. But you always get a little bit of a honeymoon when you're an IPO. But I imagine there's going to be an awful lot of pressure on them to move quickly.
PEPITONE: You know, it's true, I think especially, again, we don't want to keep comparing them to Facebook. But Facebook really did change the game, really changed the environment. And with Facebook, we saw there was that big mobile problem. People focused on that right away. They still had a hell of a time trying to bring its stock back up when it hadn't figured out mobile yet.
So I think what Twitter has to hope, there hasn't been anything so far that people kind of zero in on and say this is a big problem for them . So that would be something that they would really hope to avoid.
I think Facebook itself, it did kind of figure it out after a year or so. So I think you have to kind of give it a couple of months to see what happens.
But if they can kind of focus on what is the story of Twitter, the fact that they -- their user base is growing, mobile is strong. They need to really kind of keep that narrative going, that there isn't any single problem that people can really focus on. That will definitely be a positive (inaudible).
(CROSSTALK)
LAKE: And certainly it's going to help them because they're going to probably need to link up and partner. We're going to hear a lot more about that. I know they've got their eye on TV so that's going to be important.
Julianne, it's going to be a busy week next week, Julianne Pepitone from CNNMoney.
Well, even if Twitter's IPO price is at the low end of its range, it's set to make the founders super rich, at least on paper. They could easily retire. But instead one of the founders, Jack Dorsey, has set his sights on revolutionizing a whole new industry. I caught up with him in Toronto to talk about his vision for his mobile commerce company, Square.
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LAKE: Because of your involvement with Twitter, I think the bar, the expectations are really high. Does that make it easier for you with this venture, or does it make it harder?
JACK DORSEY, CEO, SQUARE: You know, it's not something I really think about that much. This is an entirely new canvas. Twitter's focused around communication. This is around commerce. But I think they're both fundamental to humanity. I think both are extremely complex and both companies are trying to make each simple.
But they're very, very different problem sets and they require different solutions to each one. So we're just focused on making commerce easy and so everyone can participate and everyone can grow at the speed they want to grow.
LAKE (voice-over): That was just a snippet of my sit-down with Jack Dorsey, the cofounder of Twitter and CEO of Square. We'll have that full interview out on Monday on "WORLD BUSINESS TODAY" and QUEST MEANS BUSINESS. Some fascinating stuff there.
(END VIDEOTAPE)
And this is how the Dow Jones finished the session, if we take a look, up 61 points.
Let's get out to Zain Asher, who is live for us at the New York Stock Exchange.
Zain, it was a little bit of slow going in the early day, a lot of earnings to digest.
What have you been hearing?
ZAIN ASHER, CNN CORRESPONDENT: Absolutely. However, it was actually a record close for the S&P, Maggie. I think the big focus today was really on the tech sector. We saw big gains in Microsoft and Amazon, both those companies actually posted better than expected results at the close yesterday.
Amazon, end of the day, up by around 9 percent; Microsoft was up by about 6 percent.
When you talk to traders downstairs, though, they're saying that even though roughly around 70 percent of the earnings have been expectations, part of the problem is the expectations have been so low. And a lot of companies are doing well largely because of cost-cutting strategies plus nearly 80 percent of the companies that have provided guidance, the next quarter have issued negative guidance.
So there is some concern about consumer spending especially as we approach the holiday season, Maggie. Obviously, the shutdown, the debt ceiling debacle is certainly having an impact on consumer sentiment.
But markets are going to react positively to all that, nonetheless, because it does point the fact that the Fed probably isn't going anywhere anytime soon.
Maggie?
LAKE: All right, Zain Asher for us at the New York Stock Exchange, thank you, Zain. Have a great weekend.
The mystery behind the identity of this little girl has been solved. "Maria's" birth mother said that she gave her away because she couldn't afford to feed her. We'll discuss the plight of the Roma community in Europe when we come back.
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LAKE: The biological parents of a girl known as "Maria" have been identified through a DNA test.
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LAKE (voice-over): The girl's Bulgarian mother says she left her daughter with a family she had been working for in Greece because she had no food to give her.
Sasha Ruseva said she didn't take any money when she gave her daughter away in 2009.
Last week, Greek authorities seized "Maria" from a Roma couple on suspicion that the blonde-haired, blue-eyed girl was not their child.
Roma, who descend from Indian nomads, still face widespread discrimination in Europe. The case also illustrates the extreme hardships faced by workers moving around the European Union.
Karl Penhaul is in Bulgaria where he has spent time at the family home of "Maria's" birth parents. He joins me now from Tsarigrad (ph).
Karl, thanks so much for joining us. You've been there where the family is from.
What are they saying about this? What's their reaction?
KARL PENHAUL, CNN CORRESPONDENT: Well, certainly the arguments that the birth mother is making is that they went across the border into Greece to pick oranges and olives. She was heavily pregnant at the time and gave birth in Greece. And she simply said, "I cannot raise my child. I am destitute. I haven't got enough money."
And so she passed the child off, according to her, to a Greek Roma family who was slightly better off.
Now that's where the problems start, because that Greek Roma family are now under arrest on charges of abduction of a child and their criminal investigation has been opened against the birth mother here in Bulgaria of charges that she may have sold her child for a profit.
So, yes, we do have a high level of destitution, really rampant poverty here among the Roma community. But the authorities are suggesting that here in this case, a criminal activity may also have gone on, Maggie.
LAKE: And Karl, I guess it's going to complicate matters because of course for all of us watching this story, we're wondering what will happen to this little girl.
Will she be returned to her birth mother in Bulgaria?
Do we know what happens next?
PENHAUL: Right now she's being looked after by a Greek charity, the Smile of a Child, and that's a reputable charity and we're all glad to know that.
We have also heard this afternoon that "Maria's" birth mother has said that she wants to have the child back here in Bulgaria. The Child Protection Services is stepping in and saying, hey, hold a minute. We've got to check out and see whether you really are a worthy mother to look after her, to see if you're able to look after her and also to check out really the level of these criminal investigations to make sure that the mother really was not at fault beyond her poverty here, Maggie.
LAKE: Karl, I'm wondering, now that this story has come to light, what's been the reaction in the broader community beyond the Roma community that you've been talking to?
Has it created sympathy for the economic plight, the destitution, as you say, of these people?
Or is it working to reinforce stereotypes that already exist?
PENHAUL: Very much the latter, Maggie. You've put your finger on it really, both the media and wider society have fallen back on these old stereotypes. A lot of them fueled to be brutal by old wives' tales that have often portrayed what we used to call the Gypsies as thieves, as robbers and in this case child snatchers.
Lots of mums in Europe used to tell their kids 20 years ago, behave or the Gypsies will take you away.
There really is no basis according to European human rights bodies for accusing the Roma of being any more criminal than any other group in society.
But what you do when you get away from those stereotypes and look really at the fundamentals here, you see Roma groups that are marginalized from society; they're virtual outcasts of society. You look at rampant levels of unemployment.
So if you're looking, countries like Greece, for example, 30 percent unemployment more or less among the general population and unemployment amongst the Roma can be as high as 60 percent. And here in Bulgaria, they reckon that unemployment among the Roma could be as high as 90 percent.
That means, then, that the Roma have to move around to pick up jobs. That could be recycling scrap metal, it could looking for farm work.
And what we heard in Greece, interestingly, was that the Roma there have been pushed out of farm work in Greece by Bulgarian Roma who are coming across the border and are prepared to work for around $13 a day, 10 euros a day is what you can employ a Bulgarian Roma for here in Europe, absolutely tragic, Maggie.
LAKE: Yes, it's staggering. All right, Karl, with the view on the ground in Bulgaria, Karl Penhaul for us.
We're going to stay with this and talk a little bit more about some of these complications in Bulgaria, where "Maria's" biological parents are from.
Many people head abroad for work, and that's an important part of the whole economy. The country's current account deficit would be 158 percent higher without the pay that Bulgarian workers send home.
"Maria" was living in a Roma community in Greece, an estimated 12 million Roma are spread throughout Europe. Nearly 90 percent survive below the poverty line.
Jezerca Tigani is deputy director of Amnesty International, Europe and Central Asia programs. She joins me now from CNN's London bureau.
Thank you so much for being with us today.
Some of the numbers that Karl just went over are incredibly staggering. The situation seems very desperate.
What's the biggest challenge in terms of addressing this?
JEZERCA TIGANI, AMNESTY INTERNATIONAL: Yes, thank you, Maggie, for inviting me tonight. I'd like very much Paul's story earlier and the way how we can address this very big problem is first of all we need to fight this discrimination, which is a widespread discrimination and racism that Roma are facing every day in Europe.
We're talking about 12 million Roma is the largest ethnic minority currently in Europe, which has to go through the meaningless ways of living who are facing forced evictions from their homes, who are chased away whenever they migrate to another European Union state, when they're trying to get a better living for their children who are capable to actually send their children to school, but also who are not able to face the society. And they want to be part of the society.
LAKE: Jezerca, who's best positioned to address that? I mean, you're talking about a group, it doesn't appear that there is an advocate, a cohesive advocate speaking for them. They're spread across many countries that have different rules, different laws.
Who's best positioned? Where should this be addressed?
TIGANI: I think the main actor right now has to be the European Union. The European Union, it's time for the institutions of (inaudible), the member states as well as the European Union, to take on and to face the reality that this ethnic minority is facing.
They need now to use the sanctions that they have put, infringement (ph) procedures which they have put in place and they have agreed whenever every country within the European Union is actually using discrimination as a tool.
LAKE: Is this a problem that is primarily a European one? We're addressing this case which is unfolding in Europe.
Is it primarily a European problem or is this happening on other continents?
TIGANI: Well, Roma are based in Europe. So it is primarily a European problem. However there are Roma who have as well moved to the U.S., as we know, as asylum seekers as well, to Canada as well or other continents as well.
But the main reason for their migration has always been their difficult socioeconomical situation in their home countries.
LAKE: Jezerca Tigani from Amnesty International, thank you for joining us and shedding some light on this very important problem.
Well, the period between Thanksgiving and Christmas is an all- important one for retailers and delivery companies. Up next, UPS tells CNN they're ready for an unusual holiday season. We'll hear from its CFO after the break.
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LAKE: The British economy is growing at its fastest pace in three years. That's music to finance minister George Osborne's ears. GDP grew by 0.8 percent in the third quarter. That makes three straight quarters of expansion following a 0.3 percent decline in the fourth quarter of last year.
Looks like a solid recovery, but there is a catch: inflation is rising faster than wages and people will have less money in their pockets.
Nonetheless, George Osborne is certain that the U.K. is on the path to prosperity.
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GEORGE OSBORNE, CHANCELLOR OF THE EXCHEQUER: Britain is poorer because of the crash that happened five years ago. This government is turning that around and thanks to hard work of the British people, there is now an economic recovery. People are feeling it as they get jobs and those jobs get better for people.
But of course we've got to stick with this plan, because the alternative is to go back to high unemployment, to businesses going bust, to borrowing going up and taxes with it, that's the alternative. And we've got to avoid that.
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LAKE: UPS is ready for the holidays. The company is confident it will deliver this festive season. It reported revenue of $13.5 billion in the third quarter driven by U.S. e-commerce shipments and European export growth.
It's considered a bellwether because it touches so many parts of the U.S. economy, the global economy, really. I asked UPS chief financial officer Kurt Kuehn how he would describe the economy right now.
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KURT KUEHN, CFO, UPS: The economy is recovering, it is growing. It's just not quite as fast as we'd like. But that was reflected partially in our results. We had good results in the third quarter, in the domestic business.
Part of that is this modest improvement in the economy and then another catalyst that's really helping UPS is this continual expansion of e-commerce and just the continued strong growth of shipments directly to homes and other offices.
LAKE: One area where it seems like you saw some strength, that at long last was Europe. Tell me what you see happening there.
KUEHN: Yes, that's been a great story for this quarter is that we showed 10 percent growth in our shipments moving across borders in Europe. And so we think that was certainly a sign that the economy is stabilized a bit in Europe and certainly we think it's turning moderately positive.
On top of that, though, we really think it is UPS gaining momentum and taking advantage of the broad pan-European capabilities we have.
One of the great pull points from that is that two of our fastest growth markets were kind of on the edge of the main European continent, Poland and Turkey, which are two areas that we've done acquisitions and grown in the last few years. Both those two countries showed 20 percent growth rates.
So we were thrilled to see our operations and our customers use of our services in Europe this quarter.
LAKE: And what about that holiday season? I already see some of those decorations creeping out and hitting the store shelves. I can't believe it. What are you expecting?
KUEHN: There's a couple of big trends that will make this a very busy holiday for UPS. Number one is we've seen each year more and more retail migrating to e-commerce and Internet and so we're very busy working with numerous retailers to help them plan their e-commerce fulfillment plans.
And then the other thing that's unique in the U.S., at least, is there's a Thanksgiving that really marks the shopping -- beginning of the shopping season -- is very late in November this year. So there's actually six less shopping days between Thanksgiving and Christmas.
And so we think what that will do is that people will concentrate their shopping in a tighter period, which will make for very elevated numbers on a per day basis. Good example are on Monday, when -- right after Black Friday, we are expecting to see a 10 percent increase. And so that will be a very busy day.
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LAKE: Well, we've had it all this week, economic data, earnings and record highs for the S&P 500 once again.
Let's talk about how this plays into the Fed meeting next week, tapering still very much on the agenda.
Lewis Alexander is U.S. chief economist at Nomura.
Thank you very much for joining us today.
Tapering on the agenda, but nobody thinks it's going to happen next week, do they?
LEWIS ALEXANDER, U.S. CHIEF ECONOMIST, NOMURA: No. I think the data we've gotten has frankly not been all that strong. Moreover, we're still dealing with data lags. So we don't have the amount of information the FOMC would normally have.
Plus this is one of those meetings where there's no press conference; it just doesn't feel like they're ready.
LAKE: What -- the data that's coming in, presumably the Fed has a lot more data points than we do. But it's all going to be muddy because of the U.S. shutdown. We're not really going to have a clean read, as they say, on the economy.
Where do you think we are in terms of the economy? It looked like they've sort of been slowing down a bit over the summer.
What are you expecting?
ALEXANDER: We think the economy continues to grow at around 2 percent. We've been in that kind of --
LAKE: Ho-hum (ph)?
ALEXANDER: -- we've been in that zip code for three years. And the question is really when are we going to accelerate?
I think there's a little evidence in the data we have that that's happening. And I think that makes it very hard for the Fed to taper.
LAKE: What's going to get us out of this? We seem to be in -- what do you call it -- stall speed? We're just sort of stuck here. Could be worse, but it's not getting better.
Why not?
ALEXANDER: Well, for the last several years, we've had big fiscal drag, in 2011, 2012, 2013. We had significant fiscal drag. 2014 is going to be the first year when we don't have that, and we think that is going to contribute to growth.
We've got to get out of the way of the economy, though. And these last round of fiscal (ph) negotiations of (inaudible) --
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LAKE: (Inaudible) you mean Washington?
ALEXANDER: Yes. That's going to be a -- throw a chink (ph) into the fourth quarter. We've got another round of negotiations coming up that could delay it. And so we're really looking to see how those go.
LAKE: Yes, and none of us are looking forward to that.
So what are we looking at in terms of the Federal Reserve?
When do we think -- we've got corporations seem to be doing well. I know they're concerned about the fact that they're still -- have their (inaudible). A lot of people say they'd love to get out if they could.
So when do you think they're going to be able to exit?
ALEXANDER: We think it's going to be the first quarter, and that's a combination of when the data actually has a chance to get a little better, plus as the unemployment rate continues to come down as labor markets continue to tighten, I think the Fed is going to feel forced by the need to eventually begin the process of normalizing policy.
We think March is probably the most likely month. We've got to get beyond those next round of fiscal negotiations.
LAKE: And you're going to -- and you know the conversation's going to be do the benefit and the progress that we see on the corporate balance sheets, when does that finally trickle down to Main Street? That's sort of the missing link so far.
ALEXANDER: Yes, and I think it's -- businesses have to be more confident about the outlook. And I think if they are, then they can put some of that money to work in terms of --
LAKE: Which brings us back to Washington getting out of the way.
Lewis Alexander, good to have you in (inaudible). Have a great weekend.
ALEXANDER: Thank you.
LAKE: The Indian Grand Prix gets the green light. The race is back on after a legal hearing is postponed. That story next.
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MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: Welcome back, I'm Maggie Lake. Here's some of the top news stories we're following this hour. E.U. leaders say the allegations of widespread spying on world leaders by the U.S. may lead to a lack of trust and even hinder cooperation on intelligence-gathering. That's according to the joint statement issued at the end of their summit in Brussels. At least 30 people died when a car bomb went off outside mosque near the Syrian capital say opposition activists. More than 100 people are said to be wounded. Video posted online shows what is described as a makeshift hospital where the victims were treated. DNA testing has confirmed that a Bulgarian Roma woman is the biological child of a blonde-haired child seized by Greek authorities last week. She told Bulgarian media she left Maria in the care of another couple in Greece because she couldn't afford to care for her. Italy's coast guard says it has rescued nearly 700 people off the island of Lampedusa. Five separate vessels packed with migrants needed assistance. The number of asylum- seekers arriving in Italy has soared this year. Toyota has agreed to pay the driver and the family of a passenger to resolve an unintended acceleration lawsuit here in the U.S. It comes a day after a jury in Oklahoma City found the Japanese carmaker liable and ordered it to pay $3 million in punitive damages. The driver says the Toyota Camry accelerated on its own causing the crash which killed the passenger. The automaker denies that. Earlier this month Toyota won a similar case in California and called it a bellwether judgment. Peter Valdes-Dapena from CNN Money has been following the story and joins us now. And this is a story that flips back and forth. Peter, last time Toyota said it was a bellwether. I imagine they're not saying it this time.
PETER VALDES-DAPENA, CNNMONEY.COM: Well, yes. I'm sure they don't want to see this as a bellwether. These cases were similar in one way only in that they both involved unintended acceleration. But both cases alleged different things and they're very different cases. The other case alleged that Toyota should have installed something called break override. That's a system that if you step on the brakes, no matter what the gas pedal is doing, the power is shut off to the engine. The jury in that case found that, no, Toyota did not have to put that in the cars at that time, and it wasn't a cause of the crash in that case. This case involves something different. This case involves a plaintiff alleging that there was a software problem with the electronic throttle control - it's a computer that sends a signal from the gas pedal to the engine. Toyota has always said there's never been a problem with that, there's no problem with that. A study by NASA scientists found that there was not a problem with that. The jury in this case disagreed and found against Toyota. So this is very different.
LAKE: Yes, it - can we draw any conclusions from this? It strikes that me that these are trial - they're a jury trial, different men and women, different lawyers, different ways of arguing.
VALDES-DAPENA: Right.
LAKE: Can we sort of draw any larger conclusion from this, or are we likely to see some wins and some losses for both sides?
VALDES-DAPENA: Really. One thing I am not is a lawyer, but I'll tell you, from right now I think we are going to see definitely some wins, some losses. You can't draw huge conclusions. Toyota has hundreds of unintended acceleration cases, but they allege many different things. Not all the same thing. This probably will have some influence on some future cases but not all of them. I'm sure Toyota's not very happy today, but we can't see a broad pattern from this. This is going to take years to play out.
LAKE: Right, which of course I'm sure Toyota doesn't want it and may influence whether they try to settle some of these and maybe take them out of the court system. Certainly a chapter they want to put behind them. Peter, thank you so much for that. Well the Indian Grand Prix will go ahead this weekend as planned after a court hearing into alleged tax irregularities was delayed until next week. The Supreme Court was scheduled to meet today to consider the matter. The country won't host the Grand Prix next year, and the future of the event is in doubt. Ben Wyatt met with a Formula One team boss hoping it returns and the Indian fans who are just as nervous.
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Male: A fun race, Pebble Street, the Formula has to be here.
Male: Pebble Street been showing the races for last one decade or so.
Male: Look around. Any true blood and fun follower will come back.
Male: People have stopped (inaudible)ing the merchandise and identifying themselves with (inaudible) 13.
Male: Obviously, that is the most popular.
Male: I can sit next to a Ferrari fan - and incidentally I don't like Ferrari - and we can spend the whole afternoon, you know, drinking, talking and me cursing Ferrari and he cursing Mercedes, and we can still get along.
Male: We are a very select group of people who would follow Formula One.
Male: A lot of people did not understand up front (inaudible) needs support. With the Indian GP happening, a lot of people have got interested.
Male: We would have loved it if the race was here again next year, but I'm sure there are reasons that the Formula One team management has in place. Something that a fan really cannot have a say in.
BEN WYATT, DIGITAL SPORT EDITOR AT CNN: While the passion for Formula One clearly resides in Pebble Street, New Delhi, arguably India's biggest power broker lives here in Central London.
VIJAY MALLYA, FORCE INDIA, TEAM PRINCIPAL: Over the last 20 years while I always dreamt of hosting a Formula One race, economically it seemed like Mount Everest in front of me. And so when a Formula One race in India became a reality, I mean it was almost miraculous. It was like a life-long dream come true.
WYATT: There's been a few circuits in Grand Prix history that have come on to the calendar, gone off the calendar and never returned. Are you confident about India's future on the F1 diary?
MALLYA: Absolutely, and you know that manifests itself in the number of fans that we have. From what I understand, we're going to give 2014 a skip because of scheduling issues. There are three new Grand Prix scheduled for next year, and I'm hoping that we will be back with an Indian Grand Prix in 2015. You know, Bernie Ecclestone is a good friend of mine, and I have tried to persuade him that India is a market that should not be ignored. If you were to look at India today, McLaren is advertising hugely through their title sponsor Vodafone, who operate in India, and like that, there are several teams with sponsors who have large interests in India and who would also like to exploit the opportunities. India it's large - yes, it has its problems and some frustrations that go with it, but the market is just too big and far too important for the (inaudible) to ignore.
Male: Our population is our biggest asset and our biggest liability. F1 needs India.
(END VIDEOCLIP)
LAKE: Time to take a look at the weather. Jenny Harrison is at the CNN International Weather Center. She joins us now. Jenny, chilly - I'm putting on the fire tonight. But last time we spoke, things are getting very dodgy, aren't they, in Europe?
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: They really are, you know what, Maggie. As we head into the weekend, not a bad start to the weekend, but my goodness, Sunday into Monday things are going to go rapidly downhill. The last few hours we've seen a huge stream of clouds, this massive sway coming in from an area of low pressure. It's fairly mild (inaudible) in Europe and as we said, we've got a good southwesterly airflow. You can see the rain and the funnel storms, so it's been wet as well as these very, very strong winds bringing in this next system. This is the system coming in, so already some very strong winds but nothing like what we're about to see. This is the system is waiting in the wings out there in the Atlantic Sunday into Monday -- it's on its way. And this is route we're expecting it to take and we're looking to see these hurricane force winds. Now I mentioned them yesterday, and of course when we talk about hurricane force winds, you know the sort of strength we mean. But we've been looking in a different possible track, and at the moment it looks as if the highest probability it's going to take this system right the way across central regions of the U.K. And that means we could be seeing some gusts up to about 130 kilometers an hour as well as some very heavy rain that's going to come in with this system. So have a look at these winds, literally hour by hour there is the time. And I've just paused it at this particular timeframe so actually it's from 1 o'clock in the afternoon Monday - this is local time onwards. Look at these wind speeds. These are gusts by the way, so 112 kilometers there in Plymouth, 117 in Portsmouth and London, 133 kilometers an hour. But these winds stretching all the way up in to central England, 94 in Birmingham, some very strong winds on the coast of Cork. Look at that - over 90 kilometers an hour. And this, as I say, is going to just really gain in strength. The closer the storm system gets as we get through Sunday into Monday, and it really will wreak pretty much of a path of - well it could be some pretty bad destruction across central regions of the U.K., but also of course it's going to cause lots of travel problems across the channel, northern France, the low countries, on into Denmark. If this storm comes through, that particular track and also with winds that strong. So the rains coming through ahead of that. Not a bad start for the weekend as I say, but Sunday into Monday it really is going to go downhill. And because the leaves are still on the trees at this time of year, we can expect to see plenty of trees come down, certainly limbs come down off trees, power lines expected to come down, widespread travel destruction. You can imagine with winds over 100 kilometers an hour, planes will also be grounded - how long for? Uncertain at this stage. Now meanwhile, Friday into Saturday, we've got these to contend with. Heavy rain, large hail, severe winds, isolated tornados. This particularly through central Spain and across into central and southern areas of Portugal. One or two delays at the airports on Saturday. Nothing too bad, and mostly because of the cloud - low cloud there in Copenhagen, Stockholm, both of the airports in Moscow, but maybe 45 minute delays. But I tell you what, as we get Sunday into Monday, we're going to see lots and lots of red boxes hopping up and of course quite possible that all of those planes will actually be grounded for a time. But look at the temperatures in (inaudible) - it mild - 18 in Paris, 16 in London and 24 in Rome. I'll be talking more about those winds though as we head into the weekend. Maggie.
LAKE: Have a good one.
HARRISON: Have a nice weekend, Maggie. It should be cold for you but at least it should be (inaudible).
LAKE: It's nothing compared to what you just described and very important I think for a lot the travelers maybe to get an early jump -
HARRISON: Yes.
LAKE: -- and see if they can get out and go where they need to go. Jenny Harrison, have a great weekend. Thank you so much. Well, let's take one more look at U.S. stock. This is how the Dow Jones finished this session. Up 61 points - up a total of 1 percent for the week. The S&P 500 finished at yet again, a closing high. Now, the next time you tuck into a McDonalds burger and order some fries with it, you might notice something different. The ketchup will not be from Heinz. This very comforting sight may not appear. McDonald's is ending a 40-year relationship with its ketchup supplier. The reason? Heinz CEO Bernardo Hees used to be in charge of Burger King. Cannot do that. Well, that is "Quest Means Business," I'm Maggie Lake in New York. "Marketplace Africa" continues on CNN.
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ROBYN CURNOW, ANCHOR AND INTERNATIONAL CORRESPONDENT FOR CNN IN JOHANNESBURG, SOUTH AFRICA: A skyline built from past wealth. An inner city hardened by decades of decay. But Johannesburg has remained. A population set to hit 4 million in 2015 is now reinvesting in itself. Property values are now outperforming New York and London. This week on "Marketplace Africa," we meet the pioneer developers giving a new shine to the City of Gold.
CURNOW: It was the place to live in Johannesburg, and then it was known was the place to stay away. This inner court of Ponte is legendary because all sorts of stuff apparently has been over the decades thrown down here. So much so, that I understand five stories, just about up to there, were filled with trash - with rubbish.
EDWARD COTTERELL, KEMPSTON GROUP: Absolutely correct.
CURNOW: (Inaudible) cleaned up.
COTTERELL: What what happened was that - I suppose over the years of neglect, and the previous owners, no one was maintaining this building, and the rubbish was just being thrown and then just carried on piling and no one was removing it. So, about two years ago, once we had finished most of the upper renovations, we decided to remove a lot of this. And we didn't even realize the extent of the damage. If you look around the edges, you can see where the rubbish was at one level.
CURNOW: So just over there -
COTTERELL: (Inaudible), just that big.
CURNOW: -- to that high.
COTTERELL: And so what we did -
CURNOW: How did you get it all out?
COTTERELL: -- well, what we did is we removed that lower area, broke down the walls going out into the main area - the main foyer over the street, and we brought in large conveyer belts with large teams of cranes and earthmoving equipment and just started moving it out.
CURNOW: What did you find down there?
COTTERELL: We found a variety of items. We found everything from toilets that were once part of the building through to - we found a fridge there, they caught a large fridge. So we found a number of very interesting items down there.
CURNOW: Ponte Towers, since its construction in the 1970s, it's dominated Johannesburg's skyline. But through the 80s and 90s, it became a symbol of inner-city decay. A 54- story den of drugs, prostitution and illegal tenants. You can see the remnants of the trash - this building is still a work in progress. But it was so bad. Why invest more money in it? Why see it as potential?
COTTERELL: I think for us, we're a family business, we always have been. We've always maintained a level of excellence in everything we do. And I just think it was refusing to accept defeat. And we were determined not to let something like this tarnish our reputation as a business, and lastly, not to allow something like this to tarnish the reputation of the inner city of Johannesburg.
CURNOW: So it was worth it?
COTTERELL: From a dollars and cents point of view - 100 percent. I think it's very difficult to try and quantify capital investment in a building of this kind - the structure or this stature. This is not a run-of-the mill building. It's an icon, and so when we look at the (inaudible) -- you know, how do you calculate that? We've reinvested back into Johannesburg and into the skyline of South Africa.
CURNOW: Edward Cotterell of Kempston Group invested tens of millions of U.S. dollars into the iconic building since taking ownership in 2001. They finished renovating the residential floors two months ago. At first, they focused on improving security.
COTTERELL: People often ask me are we creating a prison. We aren't creating a prison. What we're creating is an environment where people feel safe, people mother can come inside here and they know they can bring their children here and let the children run around inside safely. So, I think it's a big change from where it was 15 years ago. And I think the whole of Joberg has started to change and they started to redirect themselves as well. We just feel fortunate to be part of it.
CURNOW: For residents who've heard stories of the Ponte of the past, the new security measures are welcome.
Female: I don't even lock my doors. I feel safe.
Male: To be honest, I didn't want to come here. Looking for what I was hearing from people, I didn't want to come be here. But now I've heard that they've taken care of that, so since I've stayed here, I've never see the police come anymore. They usually drive by, I don't think (inaudible)
CURNOW: The once written-off icon has been reborn. On the top floor, Cotterell takes me to a newly-renovated apartment. (Inaudible). On the top floor, Cotterell takes me to a newly-renovated apartment.
COTTERELL: We currently have 500 apartments in Ponte and every single apartment is occupied. We have, again, like I said, waiting list of people coming. So within a day - the same day that someone leaves, it's already occupied, which is unheard of. If you speak to anyone who owns buildings and residentials, they always talk about 98s and 90-somethings, but as of today, where we stand right now, we have not one available apartment.
CURNOW: All over Johannesburg, signs of renewal. The regenerating the inner city is not about glitzy, shiny new stuff around. I mean, this for example here -- old shipping containers - you've worked with this environment.
JONATHAN LIEBMANN, CEO OF PROPERTUITY: Yes, I mean, I think the history of the area is very much industrial, so I've decided to try and retain that aesthetic in giving the area a clear identity.
CURNOW: And initially there was you and a few people who supported you, in a sort of first wave coming in here as pioneers. But it's developed beyond that now, hasn't it?
LIEBMANN: Yes, I mean, I think I've had a huge amount of people that have really supported the vision, and the community is now almost 1,000 people. So, it's really growing every day, and we see it going to 3,000 people within the next two years. That's residents, office workers, retailers and there's a lot of people that have kind of committed to the growth of the neighborhood.
CURNOW: Next we head to a pioneering precinct, and a tour of Maboneng with developer Jonathan Liebmann.
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LIEBMANN: This area made a lot of sense in terms of redevelopment in that it's close to the highway, close to the airports, it's really easy to access and it was a blank canvas - there were many, many buildings so we could achieve critical mass in terms of rejuvenating an entire neighborhood.
CURNOW: It's still a risk.
LIEBMANN: Huge risk, but at the same time, there's huge rewards where there's huge risks, so it paid off for us.
CURNOW: Has it paid off?
LIEBMANN: Yes, (inaudible) -
CURNOW: Financially.
LIEBMANN: -- it's paid off financially, although it will pay off financially far more in the medium and long term, but the potential is definitely there.
CURNOW: This was once a no-go area in the eastern side of Johannesburg. Now, Maboneng Precinct is a mixed-zone neighborhood, full of shops, restaurants and residences that come alive on the weekend.
LIEBMANN: We own 35 buildings, and we started developing in 2008, and since then we've completed 10 of those developments. And the area has really transformed from being a previously rundown industrial area into being a new live and work space for people looking for something alternative.
CURNOW: Developer Jonathan Liebmann said he took a chance when he began purchasing property in the area. But the risk also came with a reward. Liebmann saw potential to buy and buy big.
LIEBMANN: When we first came into the area, people were buying buildings for 500 rand (R500) a square meter. Prices are up now close to 3,000 rand (R3,000) a square meter. And in terms of our prices where we sell to end users, prices have gone from 8,000 rand (R8,000) a square meter up to 14,000 rand (R14,000) a square meter.
CURNOW: Growth rates that have given Liebmann's Propertuity Group the freedom to keep investing. In the next two years, he'll break grown on five new developments he says. But South Africa is the continent's largest and most mature property market. And many wonder if the downtown Johannesburg property boom is already running out of steam. But a lot of property developers came in here quite early when a lot of these buildings were run down and they were literally being sold for a song.
LIEBMANN: Yes.
CURNOW: Can you still get those kind of cheap prices?
LIEBMANN: So, initially buildings were being bought for 100 euros a square meter. I think prices have probably tripled, but that still makes it very competitive when you compare it to the prices in the suburbs, so there's certainly still very good deals to be enjoyed.
CURNOW: Liebmann says as more properties are redeveloped, more neighborhoods will be open to the potential.
LIEBMANN: There's always a (inaudible) effect. On the south we've created a new joint venture with a business partner of mine. We'll be starting to upgrade that area too. And then on the west, as you go towards some of the big corporate headquarters, there's (inaudible) too. And then of course Ponte being uplifted recently in the north side, so it's all kind of coming together now into total regeneration.
CURNOW: Over the years as Johannesburg is slowly being regenerated, most of it is being pushed by private individuals like yourself. So there've been pockets of regeneration across the city. Are these pockets getting bigger, and is this going to one day involve the whole city?
LIEBMANN: I think very much so. Johannesburg is really becoming regenerated by the day. There's new buildings going up all the time, we're being refurbished and there's at least 20 developers that are making significant improvements to the city. So as their individual precincts and neighborhoods grow, they'll start coming closer together, and eventually I think we'll have a fully upgraded city.
CURNOW: Back at Ponte, 100 percent occupancy has given the Kempston Group hope in a once condemned landmark building. So, when you bought this building, it didn't cost very much - there wasn't a lot of value in it. In fact, in many of these areas in downtown Johannesburg, 15, 20 years ago, people just sort said look, we're not going to make money there, we're going to stay away. Has the value of property increased?
COTTERELL: It has increased very much. If we looked at what we were paying for properties within the inner city Joburg, again, most of the properties were condemned. Many of the properties were illegally occupied, and it's quite a legal process in which to evict people legally and humanely. So, people weren't investing into the area. So, obviously you know the capital and requirements for investment was much lower. Since then, though, the properties have grown exponentially with value, so has our building here.
CURNOW: In a city with a future once written off, is now a new opportunity for property owners to look at a long term.
END
