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Quest Means Business
Microsoft Buys Minecraft for $2.5 Billion; 4 Million in Pre-Orders for New iPhone; Backlash Over Free U2 iTunes Albums; Alibaba Prepares for Record IPO; Man Behind Alibaba; GM Death Toll Rises; Economy and Climate; Hurricane Causes Damage in Mexico
Aired September 15, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
POPPY HARLOW, HOST: Small gains kick off a big week for US markets. We are back over 17,000. It is Monday, September the 15th.
A game-changer for Microsoft with a $2.5 billion price tag.
GM will pay the price. The death toll rises in the faulty ignition switch scandal.
And a painful divorce. Britain's prime minister begs Scotland to stay in the family.
I'm Poppy Harlow and this is QUEST MEANS BUSINESS.
Good evening, thank you for joining us tonight. Buying big and selling big, the tech world is focused on these three men. Microsoft's
Satya Nadella isn't playing games, he is buying them for a hefty price tag. Tim Cook proves Apple can still innovate and get consumers to pay. And
Jack Ma enters the final stretch ahead of Alibaba's record IPO.
We begin, of course, with the blockbuster deal breaking today. The company that's known for Windows and word processors will pay $2.5 billion
for Swedish game developer Mojang. That is the company behind the wildly successful, ever-popular Minecraft game.
Samuel Burke is here at the super screen to explain. When you think about this, it was a pretty stunning deal. It was rumored a little bit,
but this price tag?
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Yes, $2.5 billion. But this is a company that's already making money, and what we're really seeing
is a shift in the game at Microsoft. Nadella is not a new player in this game, but he's now the person who's in control of this game.
And it looks like he's throwing out a lot of Steve Ballmer's old strategies, devices, and services. Nadella, for his part, it seems like
he's all about products and platforms. This is really a platform, Minecraft, when you think about it.
So, now he has more of a focus, it looks like. It's coming -- it's becoming clearer, his strategy -- a focus on Cloud computing, for example.
But he also seems to have a big focus on old key core products, like Microsoft Office, turning that into Microsoft Office 365 and pushing out
these really well-known Microsoft platforms on iPads and mobile devices. But then we have Nokia.
HARLOW: Sure.
BURKE: That was Steve Ballmer. He got that company, and as soon as Nadella was taking the reins of the company, he laid off thousands of
people at that company. So now it looks like he's got that out of his way, and now he's maybe kicking off the rumors that they might --
(CROSSTALK)
HARLOW: So, what happened?
BURKE: -- with -- yes, with Xbox. There have been a lot of rumors that he might spin off Xbox into its own company because it had been so
successful, but with the purchase of Minecraft, that's maybe not looking like what we thought. Minecraft is its own platform, $126 million in
profit last year on $300 million in revenue, Poppy.
HARLOW: And what's so interesting is this is a fairly simple game.
BURKE: Yes.
HARLOW: But people are obsessed with it. It doesn't take a lot to run it. It certainly wasn't designed thinking it was going to be the
blockbuster, huge profit machine --
BURKE: It looks like Legos, doesn't it?
HARLOW: -- that it was. It looks like Legos, but it is a world of its own and has all of these followers. Bigger question that this begs,
what does this tell us about Satya Nadella's mobile strategy going forward? Because Ballmer was hammered over Microsoft --
BURKE: Yes.
HARLOW: -- lagging in mobile for years. He has to fix that.
BURKE: Well, it certainly doesn't answer the question today, because the stock has been down about 1 percent all day long, so it looks like
investors aren't clear. But Nadella is saying that this is part of his mobile strategy, that this isn't necessarily part of an Xbox strategy.
He's saying that this is a game that has been very successful both --
HARLOW: On your phone.
BURKE: -- online, on computers, and on your phone. So, we could see him going this way. Now, a lot of people acquire apps that don't make much
money. This is an app, a platform, a game, that is making money. So, what we see here is he's saying I'm going to go after mobile products that are
making money.
HARLOW: What do you think this tells us about employment levels in the future at Microsoft. As you mentioned. All the layoffs we've seen,
then you see a big spend on technology and this acquisition, but what does that mean? Are we going to see more acquisitions like this and more
layoffs?
BURKE: It's a really interesting question, because as we know, many apps and small games like Minecraft, it takes very few people to make them.
I think that says it all.
HARLOW: And very quickly before we go, I know the developer of the game has something fascinating to say.
BURKE: Yes, he basically said in a blog post, he said, look, I'm not doing this for the money. I'm actually doing this for my sanity. He said
he felt like Microsoft were the big boy hands to take over this game, but that he just wanted to get out because the game had become bigger than him.
It's actually the second time that I've seen a game developer say this of late --
HARLOW: Wow.
BURKE: -- that it's just too much pressure, too many fans writing, tweeting, Facebook messaging, e-mailing. And they just wanted to get out
for some peace of mind, but he'll have a lot of peace of mind with that big paycheck.
HARLOW: That is a nice paycheck to go with that peace of mind. Samuel Burke, appreciate it.
BURKE: Thanks, Poppy.
HARLOW: Thank you for coming on, we appreciate it. And even as Microsoft shrinks its Nokia division, as Samuel just told us, Apple is
showing its i-devices are still in huge demand. The company reported receiving 4 million pre-orders for the new iPhone in just one day.
Part of the success of the new model is, of course, that larger screen that helps it compete head-to-head with arch-rival Samsung. The larger
iPhone 6-Plus sold out within hours of hitting the market.
Customers have reacted less positively, though, to a gift Apple is giving away for free. You might have heard of this, the new album from U2.
Apple had added that album to some 500 million iTunes account automatically following last Tuesday's product unveiling.
That prompted some confusion among some, some anger, actually, among some iTunes customers. This user tweeted -- I think we'll have to pull it
up on the screen to show you --
(LAUGHTER)
HARLOW: -- if we can. "Who da hell is U2 and why are they in my music library?" I'm not sure exactly who would tweet that, but there you
go. Apple has launched a website that allows costumers to remove the album from their iTunes libraries.
Investor demand Alibaba shares is so high the company may raise its price. Alibaba had announced that its shares would be price somewhere
between $60 and $66 when they made their debut. The IPO would raise more than $25 billion, by far a record. And it would give the company cash to
put into research and more acquisitions.
Alison Kosik joins me now from the New York Stock Exchange. This has been fascinating to watch. And I think what's so interesting, Alison, is
that so many people, frankly, say Ali what?
(LAUGHTER)
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: They do, but if you're an investor in this market, you know who Alibaba is. And Alibaba is expected
to be the biggest IPO ever, so we are seeing hype building here on Wall Street. And as you said, so much so the word is that that range is going
to from $63 to $66 a share to $70 a share, reportedly.
Words like "overwhelming" are being tossed around here about this IPO. So, Alibaba may reportedly increase the size of its debut because of that
demand. And if it's true, Alibaba could pull in at least $24 billion for the IPO. Now, there are skeptics out there as to whether that kind of
demand is really there.
Meantime, we are seeing reaction at the close in the NASDAQ, the NASDAQ getting hit today as investors are selling a lot of their social
media stock to raise money for Alibaba. We saw Facebook shares fall 3.75 percent. Twitter shares down more than 5 percent. Linkedin shares down
more than 7.5 percent.
So, we're seeing investors, Poppy, pulling money out of these stocks or funds that hold the social media stocks, at least the social media
stocks that are more competitive, to move that money and get it ready and positioned for when Alibaba goes public, Poppy.
HARLOW: It's going to be fascinating to watch, though. A lot of people cheering this on. As analysts have said, if you bet on Alibaba,
you're betting on China and the rising middle class there of the 1.3 billion people.
Other people, though, say there's a lot of questions about the corporate structure, how much power in the company Jack Ma has, and also
the amount of fake goods there's a concern over being sold on Alibaba. So, it's not all roses, but it's going to be interesting to watch.
KOSIK: Right.
HARLOW: There's a lot of demand. Alison Kosik, thank you, appreciate it.
KOSIK: You got it.
HARLOW: We have seen the strategies laid out by Satya Nadella and Tim Cook, but as I was just talking about, Alibaba's Jack Ma is not really a
household name. At least not yet. He certainly will be. Jim Boulden takes a look at the visionary business man who built the world's largest e-
commerce site.
(BEGIN VIDEOTAPE)
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Jack Ma says he tested his vision for his internet site 15 years ago on the streets
of San Francisco when he asked strangers if they knew the word "Alibaba." He got the answer he wanted: Alibaba and Open Sesame, the ability to gain
access to all kinds of treasure.
Today, Alibaba is China's Amazon, eBay, and PayPal all in one, all started by this one-time English teacher.
JACK MA, EXECUTIVE CHAIRMAN, ALIBABA GROUP: I am 100 percent made in China.
BOULDEN: Jack Ma has not been under the radar. In 2005, the World Economic Forum named him a young global leader. "Business Week" named him
Business Person of the Year in 2007. He was one of "Time" Magazine's top 100 influential people in 2009.
Ma may only be 49, but he's already done a Bill Gates and retired as CEO of the company he helped found, taking on the role of executive
chairman.
PATRICK SHERIDAN, CNN MONEY CORRESPONDENT: The thing about Jack Ma and the thing about Alibaba is they're not -- he's not particularly an
inventor. What he's done is he's come in, used existing technologies, and beat some people at their own game. So, that's really what his genius is.
BOULDEN: Estimates of his wealth vary widely. One ranks Ma as China's 29th-richest man at $4 billion. "Forbes" says number 6 at nearly
$9 billion. "Bloomberg" has him 3rd in China at nearly $13 billion. No matter, his ranking could greatly change by the price of the shares and
options over the long run.
MA: You have to work very hard.
BOULDEN: He's also noted for his charitable endeavors. Ma has already established a charitable trust fund worth an estimated 2 percent of
his share options of Alibaba, which could fund the trust north of $3 billion. With the rest of the money he and Alibaba raise from this IPO,
expansion of the company is certainly on the cards.
Jim Boulden, CNN, London.
(END VIDEOTAPE)
HARLOW: Jim Boulden, thank you for that report. Coming up next on QUEST MEANS BUSINESS, more deaths from General Motors' faulty ignition
switches were announced on Monday. Next on the show, the attorney for the compensation fund tells me that death toll will continue to rise.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
CHERIE SHARKEY, MOTHER OF GM CRASH VICTIM: It all comes down to GM's bottom line. They want the money. They're just -- they don't care about
our lives. I'm an angry mother. My family's hurt. I'll never forget that 4:30 in the morning knock at the door from two troopers.
(CRYING)
SHARKEY: I just -- I want justice.
(END VIDEO CLIP)
HARLOW: That was Cherie Sharkey speaking to me last April in Washington. Her son, Michael, died in a Chevy Cobalt crash in 2006. Now,
a report confirms there are more victims of the faulty ignition switches in General Motors vehicles than previously claimed.
Nineteen deaths have now been linked to that ignition switch flaw, six more than GM originally said. The report found several more people
suffered severe injuries.
The compensation fund has received 445 claims so far. It has found 31 of those claims to be eligible for compensation for both death and injury.
They are still reviewing more of those claims. And a GM spokesman wrote to us here at CNN saying, quote, "What is most important is that we are doing
the right thing for those who lost loved ones and for those who suffered physical injury."
Ken Feinberg is the independent attorney hired by GM to oversee a compensation fund for victims of those faulty vehicles. He has been
accepting those claims for the past five weeks from people who say they were injured or lost loved ones as a result of the defective switches.
Earlier today, I asked Ken Feinberg if he expected the death toll to rise.
(BEGIN VIDEO CLIP)
KEN FEINBERG, ATTORNEY, GM COMPENSATION FUND: Of course. There's 19 claims, death claims, found eligible in the first five weeks. As you point
out, we've got like 400 claims we're still looking at. And individuals have until the end of the year to submit a claim. So, there'll be
additional eligible death and injury claims. I just don't want to speculate as to how many.
HARLOW: The names of the victims and those injured and those who died are being kept private. You're never going to release those. But I'm
wondering if you can tell us a bit about the victims. Are these people from all walks of life? One thing that we do know is that with these
smaller GM cars, some of them were less expensive, so they tended to be owned by younger individuals.
FEINBERG: That's right. I think what we expected we are seeing. The bulk of the claims -- not all of them -- involve young drivers, teenagers,
early 20s, first automobile that they've owned. Cobalt or eligible Saturn or Ion. And there are a few interspersed that are older drivers, some
retirees even.
But beyond that, what's essential to this program is that we maintain total confidentiality. People don't want to know other people's business.
And so we have a confidentiality rule that we plan to stick with.
HARLOW: If people agree to this victim compensation program and take the money, they give up their right to sue General Motors in court in the
future. Have you encountered families, victims, that are averse to that, that aren't sure if they want to give up that right.
FEINBERG: No. I haven't yet come across a claimant, either an individual family member or his or her lawyer who at this early stage is
willing to forego even filing with this program and suing. We'll see. The test will be when the dollars are offered, will those dollars be
acceptable.
Because only then does the family member or the claimant or her lawyer have to either accept the money and sign a release to sue, or decide to opt
out of the program and litigate. We shall see, but I'm confident the great majority of the claimants will accept the compensation that is offered by
this program.
HARLOW: Can I ask you, finally, Ken, on a personal level, you have become the point person for dealing with how to compensate victims and
their families after tragedy, whether it is 9/11, the BP oil spill and that explosion, the Boston Marathon bombing, now this.
How does it impact you personally? And how do you look at it objectively when you read all of these cases, meet these family members,
meet these victims?
FEINBERG: It's very difficult to stay objective. You have to, you have a job to do. I must say the substance of what I do is not rocket
science. There are plenty, maybe thousands of Americans could do what I do in terms of calculating eligibility and damages.
The really difficult part is just what you imply: the emotion. When you meet with individual family members, mothers and fathers who lost a 16-
year-old or an 18-year-old, and listen to their efforts, very emotional in trying to validate the memory of a lost loved one. That takes its toll,
and it is not easy to stay objective.
But I'm only human, I do the best I can. And I think we try. And I think for the most part, we manage to succeed in looking at each claim in
an objective fashion.
(END VIDEOTAPE)
HARLOW: Our thanks to Ken Feinberg for that. We of course will keep you posted on the GM developments as they come in. When we come back, here
on QUEST MEANS BUSINESS, I'll be joined by Felipe Calderon, the former president of Mexico. He says healthy economies and a healthy planet can
coexist. That's next.
(COMMERCIAL BREAK)
HARLOW: Economic growth and fighting climate change can go together. That is the conclusion of the Global Commission on the Economy and Climate.
The report is coming out ahead of the United Nations Climate Summit next week. It says that governments and organizations need to do more, they
must do more.
The authors have announced a ten-point plan to tackle climate change. Among those points, this: integrating climate into the core economic
decision-making process, creating an international climate agreement, scaling up innovation.
In a moment, I will speak to one of the members of the inter- governmental panel on climate change, Felipe Calderon. First, though, we want to give you a sense of how this issue has been growing in importance
even just in the last few months.
(BEGIN VIDEO CLIP)
HENRY PAULSON, FORMER US TREASURY SECRETARY: But I think increasingly, people are understanding that climate is not only a very
significant long-term risk, but there's some immediate impacts from climate, and the American people are seeing that more and more. This is
the big risk of our times.
DALAI LAMA: Because of climate change due to global warming, more major disasters will come.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And as a parent, I refuse to condemn our children to a planet that's beyond fixing. The shift
to a cleaner energy economy won't happen overnight, and it will require tough choices along the way. But a low-carbon clean energy economy can be
an engine of growth for decades to come.
(END VIDEO CLIP)
HARLOW: A lot of big names, there, talking about climate change. Felipe Calderon is the former president of Mexico. He's also leading this
commission to tackle climate change. He joins me now. Thank you for being here.
FELIPE CALDERON, FORMER PRESIDENT OF MEXICO: Thank you.
HARLOW: We appreciate it. I read through this report and you pose a key question near the front of it and you say, is it possible to tackle
long-term climate change while promoting economic growth and development? This has been talked about so much, but so little progress has been made.
Is it possible?
CALDERON: Indeed. And the answer is yes, it is possible. We have been working the last year in a commission integrated by former heads of
state and businessmen, people from the economic sector. So, our conclusions are related exactly with that. It is possible to have economic
growth and at the same time tackle climate change.
HARLOW: One of the things that stood out to me in the report is you all concluded there is a misperception that investment in this space is
high risk, that that is a misperception and that is holding money back.
CALDERON: Well, the one part of that isn't that way. There are a lot of investments that you can do in order to put the economy in the right
way, to the low-carbon emission path. But in order to do that, what we need is the governments could put in place very clear public policies and
send the right messages to the investor --
HARLOW: But here --
CALDERON: -- which will foster economy.
HARLOW: But here in the United States, that takes getting through Congress, and you know how difficult that is. You need the US onboard, you
need China onboard. How do you do it?
CALDERON: Well, we need to work a lot, but the first step we are taking is providing alternatives for policy takers.
In a sense that if we can demonstrate that this old perception that tackling climate change implies huge economic cuts, and we can demonstrate
that you can get economic growth, you can create jobs, and at the same time be responsible with the environment, I'm very sure that a lot of
congressmen and a lot of presidents will take action.
Because this -- they are afraid about hurting economic growth, and now they have alternatives on the economic side.
HARLOW: So, you think the best way to convince them is to say, look, this is going to damage your country's GDP going forward if you don't do
something.
CALDERON: Yes, that's another way to say it, but what we are saying is instead to talk a lot about catastrophes.
HARLOW: Right.
CALDERON: Instead of talking a lot of carbon emissions, but we are talking about is about profits, about economic growth, about jobs that
these new economies, new climate economies could provide.
And in that sense, we need to change three big systems: energy, cities, land use. But it is possible. It's going to take time, and we
need some structural changes, but it is possible.
HARLOW: But you say in the next 15 years, that is the critical time. We've been talking about this for a long time
CALDERON: I know.
HARLOW: And again, you've seen how it has gotten blocked here in the United States and there's so many other nations that need to be onboard.
What do you think can be accomplished in 15 years?
CALDERON: That's the window of opportunity that we have in order to change.
HARLOW: Right.
CALDERON: Look, we are estimating, for instance, that we are going to invest one way or another $90 trillion in the next 15 years. So, if we are
going to spend such amount of money, let's do it in the right way to do that.
And the right way is with low-carbon infrastructure in the world, either in energy or building new cities or whatever. One billion people
will live in cities, new people, in the next 15 years.
HARLOW: That's an astonishing number.
CALDERON: So we need to change the way, because if we provide better means of transportation for people, if we are able to establish bigger
density in the cities, if we are more focused on human size of the cities, we can be more productive, more competitive, and we can increase the
competitiveness of natural resources.
And at the same time, as long as we are reducing carbon emissions, we can promote economic growth. It is clear for us that economy is passing by
a very difficult moment, so people are looking how to improve the performance of the economy. It is possible to do that with the measures we
are suggesting.
HARLOW: I think we all hope that we do see the focus on this issue that it deserves and the action, not just here in the United States, but
globally, absolutely. Felipe Calderon, thank you for coming in.
CALDERON: Thank you very much.
HARLOW: We appreciate it. Good to see you.
Well, Mexico, by the way, is in the grip right now of a vicious storm. Hurricane Odile made landfall near Cabo San Lucas late Sunday as a category
3 storm, shattering windows and creating all kinds of structural damage. Forecasters are warning of -- really destructive waves and life-threatening
floods.
Our Nick Parker is on the line for us from Cabo San Lucas. Nick, I know that you rode out the storm. Give us a sense of the impact that it
has had on the people where you are.
NICK PARKER, CNN INTERNATIONAL CORRESPONDENT (via telephone): Well, Poppy, right now, there's a real scene of destruction in downtown Cabo San
Lucas. Normally a place of colorful bars and rowdy restaurants. At the moment, many of the shop fronts have been smashed, cars overturned --
picked up and overturned -- by this hurricane. And palm trees suddenly just snapped like twigs.
It really gives you a sense of the 200-kilometer winds that this hurricane is packing. There is very little electricity in the city right
now, and phone lines are down right across the peninsula.
I have been driving with an official just now from CONAGUA, which is the national commission for water and one of the major relief agencies
that's coordinating things. This official described the situation right now as a "total disaster." Something that it is impossible to put a number
on how much this is going to be costing the peninsula.
HARLOW: Yes.
PARKER: And the city of Cabo San Lucas. He thinks that the -- some of the communities in low-lying areas here, that they're lower-income
families that are going to be most affected, could be without power for ten days.
As we've been driving from west to east along the peninsula, we saw some looting that was taking place, scenes that could only have been
looting in among the grocery stores. Desperation, this feeling of void, I think, for many in these low-income areas.
And for the tourists, there's something like 15,000 foreign tourists still in this peninsula. Many had their flights canceled yesterday and
today, and they can't get out before Thursday or Friday. So, they're also here.
They're not on holiday, of course. They're doing their best to try and make the best out of the situation. But certainly they're having some
discomfort as well. The hotel that I was staying in did have a generator, but all of the rooms were still without electricity, Poppy.
HARLOW: Right. Nick Parker, reporting for us from Cabo San Lucas, absolute devastation there, as we can see in the images. Nick, thank you,
we appreciate it.
Coming up next on the program, it is the equivalent of a nasty, bitter divorce. That is what Britain's prime minister thinks of Scotland's
potential secession from the UK. We will hear David Cameron's impassioned plea next.
(COMMERCIAL BREAK)
HARLOW: Welcome back, I'm Poppy Harlow. This is CNN. Time now to update you on the latest news headlines. Dozens of nations are promising
to fight ISIS by any means necessary, including military force. They made that commitment at an international conference today in Paris. France has
already begun reconnaissance flights over Iraq, saying there is quote, "No time to lose" in confronting the threat.
American forces are now on the ground in Ukraine for military drills. They are training with Ukrainian troops. NATO forces are also taking part.
The drills are kicking off ten days after a fragile cease-fire between and Russia came into effect.
Meantime, hundreds are feared dead after a migrant ship sank off the coast of Libya. The boat went down off Tajoura just a short drive from the
capital of Tripoli. There were 250 African migrants on board hoping to reach Europe. Just a few dozen have been rescued from the waters off Libya
so far.
And Microsoft has bought the maker of the hit video game Minecraft for 2 and 1/2 billion dollars. The game made by Swedish startup Mojang is one
of the most popular in history. It has been downloaded more than 100 million times since it was launched in 2009.
And Air France was forced to cancel about half of its scheduled flights Monday after the company's French pilots went on strike. The
pilots are protesting Air France's plan to shift operations to its low-cost carrier where crews would be paid less. The strike and its effects are
expected to worsen on Tuesday.
Britain's Prime Minister David Cameron has made an impassioned plea for voters in Scotland to stay with the U.K. Ahead of Thursday's
referendum, Cameron spelled out what he sees as the painful implications of a yes vote.
(BEGIN VIDEOCLIP)
DAVID CAMERON, BRITISH PRIME MINISTER: Independence would not be a trial separation. It would be a painful divorce. And as prime minister, I
have to tell you what that would mean. It would mean we no longer share the same currency, it would mean the armed forces we built up together over
centuries being split up forever. It would mean our pension funds being sliced up at some cost. It would mean the borders we have would become
international and may no longer be so easily crossed.
(END VIDEOCLIP)
HARLOW: More than 200 business leaders disagree with the prime minister. They signed a letter published in Glasgow's "Herald" newspaper,
supporting Scotland's exit from the U.K. One of those signatories was Sir Brian Souter, chairman of Souter Investments. He is also chairman of
Stagecoach, the public transportation provider. He joins me now from London. Thank you for being with us, sir, we appreciate it.
Hi, good evening.
HARLOW: Let me - Good evening. Let me begin with your reaction to what was clearly an impassioned plea just days ahead of this referendum
from Prime Minister David Cameron. What do you make of what he said?
SIR BRIAN SOUTER, CHAIRMAN, SOUTER INVESTMENTS: Well it did have kind of a sound of desperation about it in all honesty. People are asking the
question why did he not come to Scotland before this? It does seem to be that the tightness of the polls has attracted the Westminster politicians
to come to Scotland. I think from Scotland's point of view, we're looking at this union quite differently. We entered into it in 1707, and for the
years of empire, it worked very well for Scotland. And the last 100 years, it hasn't worked for us. And the last 35 years we've pumped our oil
revenues to Westminster, and in return, we've had poll tax, bedroom tax. We've still 200,000 children in poverty in Scotland and we also have a
nuclear arsenal 30 miles from our largest city. So we don't feel that the deal is very good for us at the moment.
HARLOW: Let me ask you, sir, as a business man there are a lot of questions about what the financial implications of this could be for
Scotland and the Scottish people. When you look at this, it's unknown what the currency will be, it's unknown whether a currency union could be
negotiated if the - if indeed we did see a separation. Are you at all concerned about the unknowns here? It's also unknown what percentage of
total debt Scotland would take on.
SOUTER: I think the issue over currency is an interesting one. One of the reasons why I think there's been some pressure on sterling over the
last week or so is the realization that if the unionists stay by their pledge not to enter into a currency union, it would really be an act of
spite which would be very damaging to Scotland and to the rest of the U.K. because Scotland's oil, gas and whiskey exports, over $44 billion to
sterling, and the balance of payments for sterling is already on a knife edge.
So I think some of this is actually posturing because we have a vote on Thursday, and we call it 'Project Fear' that the unionists are trying to
terrify everyone. We have a very positive view of the prospects for Scotland. We think we can create a dynamic high-growth entrepreneurial
economy and we also think we can deal with the social justice issues, because we just feel our values are not reflected. Westminster politicians
just - you know, Westminster - in England there's a big rise in the U camp (ph) vote, and it's because people are very disillusioned with Westminster
and the Westminster system. And I think if we get a yes vote in Scotland, it will have an enormous impact on politics and a catalytic effect to
actually bring democracy closer to the people. And that's what's really driving this now.
HARLOW: It's interesting you bring up the word 'values.' That's a word we heard emphasized from David Cameron today. He said this isn't just
any old country, this is the United Kingdom. He went on to say what makes us great is our values. What we have also seen in recent days is that the
major Westminster parties have promised to give more powers to Scotland if indeed it chooses to stay within the United Kingdom. Do you believe that -
if indeed your side does not win out in this?
SOUTER: Well, I have to say the track record on delivering is very, very poor from the past. And the three parties can't even agree what these
extra powers are going to be. So people in Scotland are looking at this and saying, well, you know, why would we take the crumbs from the
Westminster table when we can take the levers and control our economy and actually build the kind of Scotland we want to live in.
And actually it's amazing in Scotland just now. I would encourage someone to come and see it because this is now a people movement. It's not
just the SNP or Alex Salmond, it's actually a people movement where people have decided we want to rise up and take responsibility for our own future.
And independence is the opposite of dependence, and up to now in Scotland, we've had a culture of dependence. And what we're now seeing is people
having the courage. So if we win on Thursday, it will really be a triumph of hope over fear.
HARLOW: We will all continue to be watching incredibly closely as the latest polls show us it is truly neck and neck. Sir Brian Souter, thank
you for joining us this evening from London. We appreciate it. One of the biggest questions hanging over Scotland's referendum - what currency would
be used as you heard us just discuss? As we enter the final days of campaigning, the pound has recovered slightly after falling at the start of
last week, but the U.K. has said the pound won't be an option if Scotland decides to go it alone. Nina dos Santos looks at one of the big campaign
battlegrounds.
(BEGIN VIDEOCLIP)
NINA DOS SANTOS, NEWS ANCHOR AND CORRESPONDENT BASED IN LONDON FOR CNN INTERNATIONAL: With days to go before Scotland's crucial vote, it's not
just the people who are undecided. The politicians are too, especially when it comes to what currency an independent Scotland would actually use.
ALISTAIR DARLING, CHAIRMAN, "BETTER TOGETHER" CAMPAIGN: (CROSS TALK WITH AUDIENCE MEMBER).
ALEX SALMOND, SCOTTISH FIRST MINISTER: We believe that the best option for Scotland -- what I'm seeking a mandate for -- is to have the
pound sterling. So say we pay our messengers (ph), we pay our mortgage, we get our wages in the pound. I'm seeking the best option for Scotland.
ALISTAIR DARLING, CHAIRMAN, "BETTER TOGETHER" CAMPAIGN: Any eight- year-old can tell you the flag of the country, the capital of the country and its currency. Now I presume the flags are Saltire, I assume our
capital will still be Edinburgh, but you can't tell us what currency we'll have. What's an eight-year-old going to make of that?
DOS SANTOS: Scotland surrendered its coinage 307 years ago when it became part of the United Kingdom. Now with the chance to reclaim its own
sovereignty, there's one part of the U.K. that independence advocators are loath to bid goodbye to - the pound. Scotland has four broad options for
its currency. Pro-independence campaigners have said that they wish to keep the pound with the U.K.'s blessing. But that idea has been staunchly
rejected by both the British government and the Bank of England.
MARK CARNEY, GOVERNOR, BANK OF ENGLAND: A currency union is incompatible with sovereignty.
DOS SANTOS: Scotland could keep the pound without the U.K.'s consent - much in the way that Panama uses the U.S. dollar. But that would give
the country no say (ph) in the billowing (ph) costs and could even spur inflation.
KIT JUCKES, HEAD OF FOREX RESEARCH, SOCIETE GENERALE: This is what we've seen in the past with, for example, Ireland using the pound or
pegging its currency to the pound and sort of taking potluck on what that means with interest rates. Economic literature is full of examples of why
this doesn't work.
DOS SANTOS: If Scotland can't keep its place in its existing monetary union, it could opt to join another one - like for instance the Eurozone.
But Brussels has made it very clear that it would have to sign up for the E.U. first, and that could take years.
JUCKES: There is a danger of Scotland being like Greece, for example, and then running into major problems in the future were it to join the
Euro. Then that depends on the strikes (ph) of the euro. The whole euro system, let's not forget, it needs fixing to prevent a rerun of the Greek
crisis and of the whole southern European crisis.
DOS SANTOS: Minting its own currency like these (northcop) coins here could give an independent Scotland the financial flexibility that it might
need. But it wouldn't come cheap and with almost $200 billion worth of debt, well, investors would have to be confident about its market value.
Which means Scotland's referendum on independence may just come down to money after all - namely which money a separate Scotland would actually
use. Nina dos Santos, CNN London.
(END VIDEOCLIP)
HARLOW: Our thanks to Nina dos Santos for that. In Europe today, markets closed, little changed. Investors taking really a wait-and-see
approach ahead of that Scottish referendum and the Fed meeting. Meantime, SABMiller surged after "The Wall Street Journal" said AB InBev was trying
to line up financing to buy SABMiller. Shares of Heineken also rallied after it said it rejected a takeover offer from SABMiller, and analysts say
it may have been a defensive move by SABMiller in an effort to ward off an unwanted advance from InBev. The beer wars continue.
Meantime, Japan's prime minister renews his pledge to promote women in the workplace. In a moment - the success and the pitfalls of "womenomics."
(COMMERCIAL BREAK)
HARLOW: Japan's first lady is addressing a crisis facing her country. Millions of educated Japanese women are not working, held back by a
corporate culture that critics say heavily favors men. Prime Minister Shinzo Abe knows that if this continues, the stagnant economy will dip even
lower. He and his wife Akie Abe are pushing "womenomics" The goal is to have 30 percent of leadership roles occupied by women in that country by
2020 when the Olympics come to Tokyo.
(BEGIN VIDEOCLIP)
AKIE ABE, JAPANESE FIRST LADY, VIA INTERPRETER: I don't know if the target of 30 percent can be achieved completely. You never know until you
try, but I think it's very meaningful to set a target.
(END VIDEOCLIP)
HARLOW: Promoting women into leading positions is only half of the battle. The other half is keeping them in the workforce. As Will Ripley
reports, some women say they are forced to sacrifice their career if they want to have children.
(BEGIN VIDEOCLIP)
WILL RIPLEY, TOKYO-BASED CNN CORRESPONDENT: Behind Tokyo's futuristic facade, a workplace culture critics say is stuck in the past, where success
means brutally long days in the office and networking into the wee hours. A system built for salary men with little flexibility for working moms.
Saraka Osakabe (ph) was pregnant putting in 15-hour days.
SARAKA OSAKABE (PH), WOMAN FORCED TO QUIT WORK TO BECOME A MOTHER, TRANSLATED BG RIPLEY: I was working 'til almost midnight she says. I felt
a growing pain in my belly, then I had a miscarriage.
RIPLEY: During her second pregnancy, Osakabe (ph) says her request for reduced hours was denied.
OSAKABE (PH): I wanted to keep my job, she says. I kept pushing myself. One week later, I had another miscarriage.
RIPLEY: Feeling forced to choose between family and career, she quit. Thousands are joining her online petition asking lawmakers to protect
working mothers. Japan needs more women to have children. The fertility rate's low, the population is getting older and shrinking. But this
stagnant economy also needs more workers. A double crisis facing lawmakers. Like the corporate world, Japan's political world is dominated
by men. The few women elected into office can still face sexism.
This summer, Tokyo city lawmakers shouted chauvinist insults about marriage and children as Ayaka Shiomura gave a speech about parenting.
Only one later bowed to public pressure and apologized.
AYAKA SHIOMURA, TOKYO ASSEMBLYWOMAN, INTERPRETED BY RIPLEY: "It finally showed that sexual harassment is unacceptable," she says.
RIPLEY: Prime Minister Shinzo Abe is calling for his country to embrace "womenonics" to bring women into the workforce. He's more than
doubled his female cabinet ministers and he's pushing for more women in leadership roles. So many educated Japanese women are in part-time jobs,
temporary jobs - how is that affecting your country?
SHIOMURA, INTERPRETED BY RIPLEY: "It's hurting Japan's economic growth," she says. "This is part of why our economy is stagnant."
RIPLEY: Japanese mothers are leaving their careers and staying away at a far higher rate than women in other rich countries. "I want to have
a baby Osakabe (ph) says, but I also want to work," - a balance that continues to elude millions of women - even in modern Japan. Will Ripley,
CNN Tokyo.
(END VIDEOCLIP)
HARLOW: Fascinating report there from our Will Ripley. Will, thank you for that. We appreciate it. All right now let's take a look at the
weather a little bit more on that hurricane barreling down on Mexico. Derek Van Dam is at the CNN International Weather Center. How bad is it?
I mean, the images we saw earlier in the show are devastating.
DEREK VAN DAM, METEOROLOGIST: Yes, it is. It's very devastating coming from the Baja Peninsula. I know a lot of the viewers who tune in to
this particular show are business travelers, well - Cabo San Lucas is a popular tourist destination, and unfortunately they were ground zero for
this major hurricane that impacted the region overnight.
We have pulled up a webcam from the Baja Peninsula. This is a town, a resort town, called Loreto, and you can see the wind just whipping around -
- not only the camera but also the palm trees on this particular resort. This is where the storm is currently located at the moment. Loreto is
right about there, the center of circulation actually over the Baja Peninsula. So it's actually lost its moisture source from the Gulf of
California and the Pacific Ocean, so we're going to see this gradual weakening trend which is good news, but this is going to be a major rain-
maker into the Pacific - the Northwest - excuse me - the Southwest of the United States over the next coming days.
Take a look at these visuals from the storm when it made impact overnight in Cabo San Lucas. There was quite a bit of destruction across
this area - big waves obviously. There was about 26,000 foreign tourists and 4,000 citizens in the region. Emergency workers, military personnel
evacuated thousands of people from the risk of flooding. This is leading up to Tuesday's Independence Day for Mexico, so a lot of the beaches were
very populated across Mexico. But fortunately people heard the warnings and knew that the storm was coming so they did heed those warnings
fortunately and got out just in time.
This is what it looked like when the storm made its way through Cabo San Lucas overnight - 9:45 local time, these are some of the first images
that are coming out of that region -- cars overturned, there's light poles on its side. Obviously very strong winds that have made their way through
this area. We've had flooding across this region as well.
You can see some of our forecast rain totals in excess of 100 millimeters. I mentioned that this storm could bring the possibility of
monsoonal rains in an already drenched area from a couple of weeks ago - Hurricane Norbert that brought the rainfall to Phoenix. High surf off the
southern California coast. That's also a big talking point as well. We're also keeping a close eye on Typhoon Kalmaegi as it bears down on Haikou in
the island of Hainan, the southern province of China. That is our next major weather maker to impact this region. Poppy, back to you.
HARLOW: I appreciate it, Derek, and our best to all of the people there that are dealing with that severe weather. Thank you so much.
Coming up next on the program, he has been called the father of social impact investment, and Ronald Cohen aims to go further with the idea that
social change done right should also be quite profitable. He joins me next.
(COMMERCIAL BREAK)
HARLOW: Welcome back to "Quest Means Business." The research body that tracks the world's economy is dialing back its growth forecast for
some major players. The Organization for Economic Cooperation and Development is less optimistic about the Eurozone and the United States.
The group now expects the Eurozone economy to grow at .8 percent in 2014, well done on its May forecast. The OECD also says the United States should
grow at 2.1 percent this year. Again, much lower than predicted back in May. And for the United Kingdom, the group now expects a 3.1 percent
growth rate, down slightly on the previous determination back in May. The OECD said the biggest risk for the U.K. is of course what we've been
talking about - the possible breakaway of Scotland.
With growth so fragile, governments don't have a lot of spare cash and it may be up to private firms - private investors - to fill the gaps left
in social spending. This is impact investment, and a taskforce set up by the G8 is calling for governments to take notice of it. Sir Ronald Cohen
has been at the forefront of social impact investing. Throughout his venture capital company, Apax Partners, he presented the report today at
Downing Street. Simply put, social change should and can be profitable for everyone concerned including investors. Sir Ronald Cohen joins me now from
London. Thank you for being here, sir. We appreciate it.
RONALD COHEN, CHAIRMAN, SOCIAL IMPACT INVESTMENT TASKFORCE: Delighted. Delighted to be with you.
HARLOW: Reading through this report from the Social Impact Investment Taskforce, you say the governments around the world need to do more to
encourage private sector investors, that linking financial returns to social investment is the right thing to do/the profitable thing to do. But
many people say 'give us the examples -- where is the core evidence?' Can you share some with us?
COHEN: Yes, of course. So, there's been a big change, Poppy, in last few years, which is that we've begun to measure the social performance
that's achieved by organizations or by businesses - social sector organizations or businesses, and if you tie that to a financial return,
then you can do good as you do well. And so, if you look today at issues like homelessness, there are social impact bonds in different places. In
London there's a social impact bond. If you look at dropout rates from school, there's a social impact bond in Rajasthan in India. If you look at
the problems that youth face with employment, there are several social impact bonds in the U.K. on that. And we're seeing a whole series of
social issues being tackled in this way.
The most celebrated examples have to do with young prisoners reoffending. So there are two of these bonds in the United States and
there's one in the U.K. But they're just examples of the fact that if you begin to measure the social performance achieved, you can give social
entrepreneurs the same opportunity to raise capital as we've been able to give business entrepreneurs. And this applies to those who are leading
not-for-profits just as it applies to those who are leading businesses that have espoused social objectives and measure their achievement.
HARLOW: And it's important to note these impact investments only pay out if measurable benefits have been achieved. But in the report you talk
about this growing pool of what you deem impact entrepreneurs worldwide. Who are we talking about?
COHEN: So, we're talking about people in Silicon Valley who attended the SOCAP Conference that I addressed just a few days ago who are trying to
create software firms that provide software for the blind or firms that filter water in more effective ways to provide drinking water in poorer
areas or providing different types of products and services to help the disabled get in to work, changing the homes of the elderly so they continue
to live with them. We're talking about anybody who believes that they want to devote their life to doing more than just making money. And this
applies to the millennial generation, it applies to people of my generation or the generation in between who would like to try and help others or
improve the planet in one way or another.
Now we say we're on the brink of a revolution in the way that we address social issues because I think in the 19th century when we spoke
about - or when they spoke about - investments, they meant financial return. In the 20th century, we talked about risk and return, --
HARLOW: Yes.
COHEN: -- in the 21st century we're going to talk about impact risk and return. And we're going to find I believe over the next several years
entrepreneurs who espouse social objectives being funded in different ways by foundations or their endowments, by pension funds from pension fund
money, by wealthy individuals and by the general public through crowd funding platforms.
HARLOW: Yes. I agree with you, I also truly believe that the millennial generation is asking for more from their businesses and their
business leaders than just - than just - returns. So we appreciate your time. Thank you for coming in, Sir. Ronald Cohen. Thank you.
COHEN: Pleasure.
HARLOW: We're going to go straight to break. We'll be right back in just a moment.
(COMMERCIAL BREAK)
HARLOW: This just in to CNN - Alibaba raising its IPO price range from $60 to $66 a share, now to $66 to $68 a share. This follows huge
investor demand for the stock which will debut at the New York Stock Exchange this week. It could well raise over $24 billion - a record public
offering giving the company a lot of cash to put towards research and acquisitions. We will keep you posted on the latest on Alibaba throughout
the week here on the program. That is "Quest Means Business" for today. I'm Poppy Harlow in New York. Thanks so much for joining me. I'll see you
here tomorrow.
END
