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QUEST MEANS BUSINESS
Explosion Outside JPMorgan Chase Office in Athens, Greece; Interview With CEO of Skype
Aired February 16, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: As we go to air tonight, breaking news from Greece where a bomb has gone off outside a major bank's office. More on that in a moment.
Also tonight, from bust, Barclays red hot results show that all is not gloom for the bank that's now doing very well.
And time to walk the walk, Greece gets one month to provide its austerity plan is working. We'll talk about that.
And talking of talking, Skype (inaudible) the chief exec tells me why he's friends with one of his rivals. It's going to be a busy hour. I'm Richard Quest. I mean business.
Good evening. We begin tonight breaking news from Greece, from Athens where there's reports of an explosion outside the offices of JPMorgan Chase in the Greek capital. The police there say a time bomb damaged the door and shattered some windows. Apparently a warning was phoned in to a local newspaper. Let's get more details. CNN journalist Alinda (INAUDIBLE) is in Athens. Alinda joins me now on the line. I understand it's not -- facts are few and far between Alinda, but tell me what you know.
UNIDENTIFIED CORRESPONDENT: Well (INAUDIBLE) only a little while ago. A bomb did explode outside the JPMorgan offices in Athens. As you said, it did cause minor damage to the building, mainly the door, some windows. So far, there have been no reports of any injuries. What happened is, the people who put the bomb have called the police or a local newspaper was aware. They had a warning that this was going to take place. The police have cordoned off the area.
This (INAUDIBLE) a very central location in Athens in the area of (INAUDIBLE) which is (INAUDIBLE) it's very (INAUDIBLE) commercial area of town. At the moment, there are police cars and ambulances blocked off the street around (INAUDIBLE) So police are handling the situation. Things are fairly calm. It was a time bomb not something major from what we can understand so far.
QUEST: Right now, it raises of course lots of questions and probably at this stage more questions than answers, essentially of course the linkage between this bomb and the banking and financial crisis. The bankers getting the blame for much of the economic situation facing Greece at the moment Alinda.
UNIDENTIFIED CORRESPONDENT: Well that's right. I mean we have a similar bomb go off (INAUDIBLE) similar outside Citibank before. This is not the first time that this takes place in Greece. We've had time bombs explode (INAUDIBLE) by various groups then claiming responsibility. I mean at this point, nobody else claimed responsibility for this attack either. We've had a lot of unrest. We've had a lot of people being very dissatisfied with the financial situation in Greece, major strikes, major protests, demonstrations. So this seems to be yet another example of the dissatisfaction in Greece at the moment.
QUEST: If you were to gauge for me the mood, you talk about dissatisfaction. We know there have been some strikes already. There's more general strikes and yet the government of Greece continues to say austerity measures are the only way to get the country back on track. This disconnect now adding a new element of obviously a time bomb suggests that the gap is very large indeed.
UNIDENTIFIED CORRESPONDENT: Well, the gap is not so large from what the opinion polls suggests. I mean yes people are dissatisfied. Yes they do not want the austerity measures. But at the same time, they appear to be realizing that these measures seem to be necessary. This all according to polls published in the Sunday press with about 65 percent of the people backing the government concerning the austerity measures. Of course that does not apply to everyone and it means a lot of people are going to find themselves in a very difficult situation. Concerning the various strikes, yes we have (INAUDIBLE) We have another one coming up on Wednesday, a general strike on Wednesday so we're likely to see obviously more outbursts of dissatisfaction if you want to use that word in Greece. But overall, people realize that something needs to be done.
QUEST: Alinda, please come back to us when there's more to report on the events taking place in Athens tonight. Alinda joins me there on the line from Athens.
We turn our attention back to the business of more traditional banking. A year ago, people were writing off the entire sector. Well, they didn't accept that as Barclays and today's results, excuse me, show that Barclays at least got it right. Bankers may be deeply unloved. You don't have to like them. They've got a job to do and they are getting on with it. So how good a year was it for Barclays? Comfortably better than the market watchers were expecting. It's not often that a chief executive can say profits doubled but that's what Barclays managed in 2009.
And I want you to actually look at this, because take the bonus, well the bonus. We'll get to bonuses in a minute. This is the top line number, $14.8 billion in profit, a significant change. The reason of course was BGI Asset Management. BGI Asset Management was sold to Blackrock and that was a thumping great big $11 billion or so of this top line number. But even if you strip the BGI, you get a vision of a bank, two banks, a weaker bank in the UK and an extremely powerful high performing investment bank, Barclays Capital on both sides of the Atlantic.
The earning power as you were saying, the profits on the sale of BGI, it accounts for most of it, but even stripping out everything, excuse me, they were still better, the (INAUDIBLE) was still better than in 2008. What it tells us is that Barclays seems to have been vindicated in its position not to accept either UK taxpayers' money as a bailout or equity in transfer, the injection or indeed taking part in the asset protection scheme.
As a result, the top management who probably could have justified thumping great big payouts and bonuses this year, now the chief executives are (INAUDIBLE) group president Bob Diamond that all turning down their cash bonuses, all the senior management, the executive board will have to defer bonuses by at least three years. Much of the bonuses will be paid in cash and across the bank, the total bonus pool for (INAUDIBLE) is reduced to some 38 percent of revenues. That's a significant amount nonetheless, but it's less than has been seen before.
My colleague Charles Hodson spoke to the president of Barclays, Bob Diamond. I've got all these facts straight in a moment (ph).
(BEGIN VIDEO CLIP)
BOB DIAMOND, GROUP PRESIDENT, BARCLAYS: Our revenues of 31 billion pounds were up 34 percent year over year, up 34 percent from the best year in our history. So clearly we're doing more business with more clients in more economies and geographies than we've done in our 320 years of history.
CHARLES HODSON, CNN CORRESPONDENT: What was your reaction to President Obama's speech, what a month back or so in which essentially he outlined these (INAUDIBLE) ideas of essentially limiting the amount to which you and other banks could trade on your own account. Does that worry you?
DIAMOND: A couple things, the -- from Barclays point of view, we're not involved in any ownership of hedge funds. We have a very small stake in private equity which we're in the process of unwinding now. So from our point of view, it doesn't have much of an impact. I think what concerns us and what concerns me is that national, isolated approaches such as this, rather than a coordinated approach to the capital necessary through financial regulation, coordinated through the G-20 and through the financial stability forum, we find would be preferable. Most banks are already moving in the direction of more equity, less leverage, higher levels of liquidity and I think as this plays out over the next year or so, then it's vitally important that we have a level playing field and that means coordinating these efforts through the G-20.
HODSON: Well, you have declined your bonus for a second year. That is clearly in response to the -- that's the theme which I think I'm sure you recognize around the globe actually on banker bonuses. Would you encourage other bank bosses and indeed other people within the top floors, the top stories if you like of the banks to do the same?
DIAMOND: That's not for me to say. I think for John Barley (ph) and Bob Diamond this was a decision where we appreciated, we appreciated very much what the board recommended and we felt this was the right decision for us. We do recognize as you say that it's a very, very difficult environment around compensation and that this provides an opportunity for us not to be a distraction for 150,000 of our employees around the world, but most importantly, not to be a distraction for our clients and customers and staff.
HODSON: Do you understand the perception, the widespread perception in countries like the United States and also in Europe that banks have simply gone back to their old ways, that you may very well making an example of yourself, but more (INAUDIBLE) the banking industry is back to the old ways of self indulgent bonuses.
DIAMOND: I've heard a lot of talk. I think banks have changed and I think banks have heard the message. If I think about Barclays for a second and go through some of the numbers that you saw today, we're not waiting for the final rules and regulations around capital and around liquidity. We're already moving in that direction. And Barclays is not alone. I think what we're doing is representative of other banks like ourselves.
(END VIDEO CLIP)
QUEST: Bob Diamond talking to Charles Hodson. To put some perspective on these results, I spoke to market commentator David Buik who's always good value when he speaks, he's worth listening. What did he think of the Barclays results?
(BEGIN VIDEO CLIP)
DAVID BUIK, BGC PARTNERS: Well they are outstanding but they always were going to be outstanding Richard because if you look at it, the retail banking is still weak. The corporate banking is strong but it was the contribution that Barclays Capital made. The purchase of Lehman Brothers at the absolute bottom of the market was a coup personified. It was brilliant for two reasons. It attracted business that probably would have bypassed Barclays and also, some of the trash positions were bound to recover. And when the past we've expected 40 percent of Barclays bank profits to come from Barclays Capital, it's 50 now and I suspect in 2010 it'll be 60 percent.
QUEST: Barclays (INAUDIBLE) it didn't take government money. It went for an expensive deal to Gulf investors and it bought (INAUDIBLE) But -- and they seem to have got this bonus question at least better than most.
BUIK: They've got the bonus question right, but I think the other thing that we ought to mention is that they stayed out of the asset protection scheme and this would have been very, very costly. So what they did was they sold Barclays global assets to Blackrock, which was a very shrewd deal for $13 billion. And the reason why some of the banking system hasn't really cracked on in terms of retail banking is that there's so much uncertainty over regulation, so much uncertainty about taxation in the future, that the focus has been on Barclays Capital.
QUEST: But they are paying 220 million in the bonus levy to the tax man. That's a lot of money to be paying across.
BUIK: It is a lot, but of course they've got 2.5 billion that are going to 23,000 staff associated with (INAUDIBLE) and that is out of a total staff of 150,000. Now the (INAUDIBLE) will be there, but they've got to get over it.
BUIK: Because we need this contribution because the economy is so weak Richard that if we relied on (INAUDIBLE) bank Plc, we'd be waiting for Godot and we haven't got time. So if we get the contribution from Barclays Capital into Barclays bank, that gives a cushion for the business to be able to get back on its feet and for the economy to get back on its feet and people must understand this and the price of getting that is paying quality staff what is required.
QUEST: It does have a stench of the sewer about it.
BUIK: You can say that if you like, but it's where there's a will, there's a way. What's been achieved has been a miracle and I think no amount of praise is too much for (INAUDIBLE) is the chairman, John Barley and also for Bob Diamond. They're drawing nothing, well done to them, but they have to pay this money out and it is right because the contributions to double your profits from the best part of six billion pounds to 11.6 billion pounds is amazing (INAUDIBLE)
QUEST: If you had to take Barclays' results red, amber or green.
BUIK: I'm not going to hesitate, green, straight away.
QUEST: If we had to take the banking sector overall, red, amber or green?
QUEST: Where would you like to leave the light?
(END VIDEO CLIP)
QUEST: So there you have it, the flashing amber from David Buik on the banking sector. We'll have more of that in a moment.
Now if you've got shares in Barclays, you're feeling rather smug. I show know about it. You'll remember I bought 1,000 shares at 63 pence each back at the end of last -- beginning of last year. This is how they've fared since then. They've closed up today just shy of 2.94. I would have a profit of 2,000 pounds, more than $3,500. Of course if I'd sold them back in October, I'd have made a great deal more money, more than 600 percent. Now that's what you call a profit, 40 (ph) percent I beg your pardon, that's what you call a profit and a bit (ph).
Barclays shares were the outstanding performers on the FTSE in London. They shot up nearly 7 percent, more money for the banks. Banking stocks in general got a bit of a reflected glory from what was coming back into favor. At the close, the FTSE was up 1.5 percent, (INAUDIBLE) rising above seven sessions reflecting a strong banking sector, all the other major indices on the major (INAUDIBLE) were also strong as well.
The news headlines now to bring you up to date (INAUDIBLE) the CNN news desk, Good evening.
UNIDENTIFIED CORRESPONDENT: Hello Richard. Iran's president is warning the U.S. and other members of the UN Security Council against additional sanctions over Iran's nuclear program. Mahmoud Ahmadinejad says he wants the international community to cooperate. He said other nations will get themselves into trouble if they pursue sanctions. U.S., French and Russian diplomats say Iran's decision to enrich uranium to higher levels is unnecessary.
Tight security in Karachi, Pakistan where authorities say the number two figure in the Afghan Taliban was captured several days ago. The White House calls the arrest the most important in the war against the Taliban since the September 11th attack. The Taliban are denying Barazar (ph) has been arrested.
Dubai has issued an international arrest warrant in connection with the killing of a top Hamas official. Mahmoud al-Malbul (ph) was a founding member of Hamas' military wing and was killed last month in (INAUDIBLE) The Emirate is seeking 11 suspects it says quote, committed a premeditated murder on Dubai soil.
And there's more on those stories in just over an hour's time on world one (ph). Plus, he is Britain's best known street artist. Now Banksy has gone on to make a film. It's been on show in Berlin but where is he? We go on a mission to find (INAUDIBLE) street artist. In the meantime, back to you Richard in the studio.
QUEST: And if you find any of his art, I assure you we're doing a lot better than my Barclays shares.
UNIDENTIFIED CORRESPONDENT: I think you have a point.
QUEST: Many thanks (INAUDIBLE) European finance ministers have been discussing what to do about Greece (INAUDIBLE) promises of help. Instead they got more hard-nosed pressure in a moment.
QUEST: Welcome back. Got to remind you of our top story tonight, a bomb at the offices of JPMorgan Chase in Athens, no casualties or injuries. Windows have been smashed. No one as yet has claimed responsibility.
Greece, staying with the country, has a month to show it is turning its economy around, even if that means more pain. Eurozone finance ministers are heaping pressure on the country. They've given it until the ides of March to prove that it's on track to slash its budget deficit. Greece needs to shrink by 4 percent of GDP from the 12.7 percent. It's going down to 8.7. That means even deeper cuts in spending than the government has promised until now. That at least is what some say. Ministers also told Greece to make radical, permanent reforms to the economy, chopping everything from wages, pensions, health care to public life (ph) and business.
In the financial markets, many observers were hoping to hear what (INAUDIBLE) Eurozone was putting together (INAUDIBLE) bailout. There's none of that. Instead they've got more stern finger wagging. Here's George Papaconstantinou, the EU enlargement (ph) commissioner saying, telling Greece it needs to get its house in order.
Greece said it is already well on the way to slimming down its budget deficit and is prepared to make adjustments to keep it on track.
(BEGIN VIDEO CLIP)
GEORGE PAPACONSTANTINOU, GREEK FINANCE MINISTER: We have a program. It's being implemented. It is a program which is very ambitious. It is a program that has significant revenue increases and expenditure reductions. There are risks in this program. Some of these risks have to deal with low birth rates. Some have to do with higher cost of financing. We will be assessing those risks in the next few weeks and we'll be making the adjustments to the extent that (INAUDIBLE).
(END VIDEO CLIP)
QUEST: The finance minister, even now Eurozone ministers are holding back from saying what steps they could take if Greece doesn't do what it needs to do. Uncertainty in the market is really what is happening and that can be seen across a variety of markets. Greece may only be 2.5 percent of the EU or Eurozone GDP, but the risk of contagion is what's worrying. In Athens, the Athex composite down 1.7 percent. It's the third day of losses in a row. The market has been falling quite sharply and shares in the (INAUDIBLE) were all down quite strongly. The issue is not only what Greece's government is doing now, but what further measures may be required by the European Commission.
And this I'm afraid to say is the reason why the EU perhaps is taking such a hard line. The way in which the euro itself has been so battered by the weakness in Greece. The euro today rallied just marginally, 1.3758. It's back above 1.37, back from the nine month lows that the currency has been experiencing. There is a feeling as so goes the weaker countries, so goes the euro and as the European Commission minister, as the ministers said quite clearly in their statement, they will do whatever is needed to protect the Eurozone as a whole.
Gold surged, $1,121 for gold. Worries about long-term health, I mean you could pretty much pay any (INAUDIBLE) of any reasons, gold surging quite strongly on the worries of what's happening within the union.
Wall Street is having a strong session, with the Dow up more than 100 points at the moment. Alison Kosik is in New York, good afternoon to you Alison. We're not going to -- we're going to put off being on one thing, why is Wall Street up? If you have to choose one reason today why Wall Street is up and not down?
ALISON KOSIK, CNN CORRESPONDENT: I would say earnings Richard. I'll get to you more on earnings later. We have a few other things in play that are definitely moving the markets while you're seeing that rally today on Wall Street and that including commodity shares. Those are climbing across the board. Oil prices right now up more than 3 percent, sitting at around $77 a barrel. Investors are keeping that news from Greece on the radar that you were talking about Richard. They're still feeling a little bit jittery about the debt concerns there as well as that bank reserve tightening that's happening in China. Wall Street had been worried about those issues overseas that those issues could spill over and slow down the recovery process right here in the U.S. No signs of that today though.
As I said, stocks are rallying today and that's mostly because of some earnings that we've gotten. Merck posted a huge jump in profits and revenue in the fourth quarter and that's largely because of the drug maker's purchase of long-time partner Schering-Plough. Much of the increase in sales was actually due to strength in Schering products like the allergy medicine Mazanex (ph).
Meantime, Kraft Foods also had a strong fourth quarter Richard. Its profit more than triple, mostly due to the strength in developing markets like Latin America and the Asia Pacific region where Kraft, Tang and Philadelphia cream cheese products have been hugely popular. The company is still struggling with its U.S. sales as shoppers trade down to generic brands. Everybody always looking for those cheaper products, Richard.
QUEST: I hope you're not suggesting (INAUDIBLE) chocolate has just spent $11 billion or so trying to buy Cadbury's which of course now will reflect in future earnings.
Back from a Presidents' Day holiday, would you say the mood -- never mind the numbers -- the mood is at least encouraging?
KOSIK: It is encouraging. I think there's a lot of relief now that the crisis overseas seems to have sort of a solution down the road. I think now investors are turning to the U.S., to U.S. matters, to the economy, to data coming out of the economy. We've got a slew of data coming out this week and I think the focus is now turning to that and turning to earnings Richard.
QUEST: Many thanks indeed Alison, many thanks, joining us from New York. And just one other point (ph) to bring you, one U.S. Treasury official is quoted as saying that the United States has total confidence in the European Union in being able to deal with its own crisis of Greece. Nice to know.
When we come back in just a moment, football fans have long memories here in Britain. You'll find people talking about world cup final, well, they won't. And it was 40 years ago, no wonder advertisers will pay just about anything to get their names plastered on the big matches. 2010 (INAUDIBLE) we look at the economics.
QUEST: Welcome back. Football lovers aren't the only ones getting just a little excited. South Africa world cup gets ever closer. Half a million of them are expected to fly south for a tournament. Sponsors are desperate to get their names over any bit of it. (INAUDIBLE) parting with so much cash is worth it.
UNIDENTIFIED CORRESPONDENT: Being part of the biggest football event on the sports calendar doesn't come cheap. Big companies pay big bucks to get their brands tied the football (ph) world cup. South Africa's first national bank paid more than $30 million to become a sponsor.
MICHAEL JORDAAN, CEO, FIRST NATIONAL BANK: That only buys you the rights to be associated. You have to spend more money telling people that you're associated with it.
UNIDENTIFIED CORRESPONDENT: While American sports gear giant Nike is not an official sponsor, the company's president believes they'll still get as much exposure as competitor Adidas which is an official sponsor.
CHARLIE DENSON, PRESIDENT, NIKE: Some of the best football is in the world that will be stars in the world cup will be performing in Nike product, both footwear and apparel. So we're every bit as much in the world cup as any other brand that there is out on the pitch.
UNIDENTIFIED CORRESPONDENT: Nike sponsors nine of the 32 teams that will be playing at the world cup, including five time winners (INAUDIBLE) and players like Charles (INAUDIBLE) and (INAUDIBLE) endorse Nike products. But Adidas argues that it will get real returns from sponsoring the tournament. The German sporting goods company says it sold more than three million team jersey and nearly 15 million balls during the 2006 world cup.
HERBET HAINER, CEO, ADIDAS: (INAUDIBLE) and on the other hand we have so many millions and millions of spectators, TV viewers, who are seeing the (INAUDIBLE) and then going off to their (INAUDIBLE) and buying your brand. Of course this we cannot measure and count.
UNIDENTIFIED CORRESPONDENT: What Adidas is able to measure and count is how much it's paying for the sponsorship, but it has declined to divulge that figure. Adidas and Nike agree on one thing, that the world cup in South Africa will help them tap into a market they have yet to fully exploit.
HAINER: Africa is still compared to the overall (INAUDIBLE) a small part of our business but I'm absolutely convinced that Africa really (INAUDIBLE) that we definitely believe that there is a bigger business here in the future to come.
UNIDENTIFIED CORRESPONDENT: The first world cup on African soil will give this continent an opportunity to prove that it's not only ready to play on the world stage, but ready also to do business. (INAUDIBLE) CNN, Johannesburg.
QUEST: When we come back in a moment, Jack Dorsey (ph) helped to change the face of social networking four years ago. As one of the founders of Twitter, he isn't resting on his laurels. He's got something new up his sleeve. He's been showing it to CNN's (INAUDIBLE), his next creation. I promise you you'll want to see it in a minute.
QUEST: Good evening.
I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN.
Taiwan's HTC unveiled new mobile handsets aimed at taking on the big boys of the market, including Google's recently launched, Nexus One and Apple's ubiquitous iPhone. At the Mobile World Conference in Barcelona, the world's fourth largest maker of Smartphones rolls out what it's calling Desire and Legend.
Hmmm, both are powered by Google's Android software and have many of the same features. This version has two big advantages -- its so-called brighter and crisper screens than the usual Smartphones and it has potentially lower price tags thanks to subsidies from the operators.
The devices will be available to specific markets starting next month.
Also at the Mobile World, Sonum Technologies has been showing off its latest rugged mobile phone. The latest model is slimmer and more user- friendly than ever. Sonum says it's so tough, you can pound nails with the screens.
CNN's Jim Boulden takes it for a spin in Spain.
JIM BOULDEN, CNN CORRESPONDENT: So it costs between, what, four -- $450 for a phone.
Who uses a nearly indestructible phone?
What's your market?
BOB PLASCHKE, CEO, SONUM: This is focused on the 8 to 13 percent of the world's population that works outdoors, people who, if a phone breaks, it's not a hassle, it's actually a problem. They'll lose a day's worth of work or, in some cases, could be in harm's way.
So we focus on those folks who the industry was actually built around during the -- back in the '70s, those folks who spend their time outdoors.
BOULDEN: Well, most phones that are made today, you could argue, aren't nearly indestructible. In fact, they break all the time.
PLASCHKE: Well, they absolutely do. And 15 percent of the phones that are sold every year, which is about 150 million phones, are sold because people break their phones. So, as an industry, it's important that the phone you have in your pocket, it's important if that breaks. Every...
BOULDEN: Well, this one is pretty reliable. I like the old-fashioned Nokia because I'm -- it's pretty good for me. If I drop it, it doesn't break. It might fall apart, but I can put it back together again.
PLASCHKE: And for people in your -- in you -- for people like us, who work inside, that makes sense. But for folks who work outdoors, they need a -- a different type of phone. They need a phone with keys you can use with a glove. They need a phone that has a glare-resistant screen, a speaker that's twice as loud and a battery that gives you twice now talk time, because when you're outdoors, you can't plug it in.
BOULDEN: Now, you guarantee to replace it if it breaks.
How many have come back broken?
PLASCHKE: There's tens of thousands of phones that have come back.
PLASCHKE: But that's a -- that's very typical with the industry average.
PLASCHKE: But what's great about our phones is that we learn -- every time someone gives us a phone back, we learn on why it breaks and we give them a brand new -- we give them a phone unconditionally without a question. So one of the innovations we made this year was to deal with one of the major reasons that phones break. I think most of your viewers would say they break because the lens breaks.
BOULDEN: Yes, the screens. Correct.
PLASCHKE: The screen. So we've made what's called a gorilla glass, in conjunction with Corning. It took us about a year-and-a-half to do this. It's basically a virtually unbreakable screen.
BOULDEN: I've got my trusty Blackberry with me, as well. So we'll give that a shot.
Oh, no, no, no, no. Oh, no, no, no, no. No, no, no.
PLASCHKE: Oh, OK.
BOULDEN: No. No. I was kidding.
PLASCHKE: Oh, OK.
(END VIDEO TAPE)
QUEST: Yes, I -- I did actually hope and wonder with that report whether we were going to see the actual bashing of the phone.
Do you realize it's less than four years since the first Tweet was sent on Twitter?
Jack Dorsey was the man who sent it and now he's trying to change the way we buy and sell everyday goods.
Maggie Lake is in New York.
Maggie joins me now -- Maggie, Twitter is a free service. Twitter does -- hasn't made a penny, necessarily, so it was inevitable that eventually they would try and do something else.
MAGGIE LAKE, CNN CORRESPONDENT: Well, true. But, Richard, it hasn't made a penny yet. That doesn't mean it's not worth anything.
LAKE: But you're right, I mean you could have thought that he would have sort of sat back and waited for the big pay day. But he's not. Jack Dorsey has already set his sights on another huge market, credit cards.
And I caught up with him at a coffee shop to have him tell me about his latest venture, called Square.
Check it out.
(BEGIN VIDEO CLIP)
JACK DORSEY, CEO, SQUARE: The thing we know through Square is that everyone is paying with a plastic card these days. So people are carrying less and less cash. They're not carrying checkbooks anymore. And they're out and they're spending with these things everywhere.
But receiving them is very difficult. So to receive a credit card payment from someone, you have to go through a -- a merchant account process for just four weeks and you have to go through two banks and it's just -- it's just a mess.
So what we're doing with Square is we're allowing anyone, in under 10 seconds, to sign up to receive credit cards.
And why not do it from anywhere?
Because we're -- we're all holding these little tiny computers around and they can process these payments and they can go straight into my -- into my bank account from anywhere I am.
LAKE: So it takes a situation where you go from a customer having an experience with a merchant and it -- it sort of makes us all merchants, I guess?
LAKE: Is that right?
DORSEY: Exactly. So if you're selling your couch on Craigslist, for instance, for $50, you can now accept a plastic card -- a credit card, a prepaid card, a debit card. If you're -- if you're being repaid for someone you bought dinner for, you can also accept it over a credit card.
And we can swipe it and it's going to (INAUDIBLE)...
LAKE: Just like at the supermarket, right?
LAKE: The bigger things that we see attached to the...
DORSEY: Yes. Yes. So now it's going to see if there's $3 on this card. And you're approved. So now you just -- you can submit your (INAUDIBLE).
LAKE: So I'm paying for this interview?
DORSEY: So you sign with your finger.
LAKE: And then you sign, right?
LAKE: Oh, with my finger?
LAKE: I don't even need a stylus?
DORSEY: It seems so simple, but why hasn't it happened yet?
LAKE: We're in a really good time right now, because the financial world is kind of reinventing itself after the crisis.
LAKE: And opening the doors to more innovation and to rethinking a lot of our old models. So Square has been taking advantage of the -- of the timing.
The interesting thing about this is like Twitter, you -- you want to focus on building your utility, not -- not a product, but the utility that different industries can come to and invent and make their own. So we see this as being used in, you know, in Craigslist transactions, in retail, all the way up to like a Marc Jacobs store, a Diane von Furstenberg store, where they're going around and doing mobile retail just like -- just like the Apple Store.
So this device, this concept scales to all of that usage.
(END VIDEO CLIP)
LAKE: Such an impressive guy.
Now, you saw me doing it on the iPhone. That's what they're beta testing right now. But they hope to officially launch in the summer. And it is going to be available more widely for Blackberrys, Android laptops, whatever sort of mobile device you're operating off of -- Richard.
QUEST: Maggie, those are the sort of stories I love having on this program, because these are the entrepreneurs who truly...
QUEST: -- will revolutionize the way we -- you and I can't even think these things. They actually put it into practice.
LAKE: Yes. And I have to tell you, Richard, he was very patient with my complete sort of lack of sophistication in all things technology. An awfully nice guy.
QUEST: All right, Maggie.
When you make a million, come and spend it.
Thank you very much.
Maggie Lake in New York.
We're going to stay in telecoms after the break. Skype's chief executive, Josh Silverman, tell us what he's done to make his Internet phone service more mobile, in a minute.
QUEST: A telephone network, a free online Internet service -- those two companies, until now, have been direct rivals, each stealing each other's customers and business. Now, Verizon Wireless, one of the largest U.S. operators, says it will allow Skype users to make free calls using their data plans on Smartphones.
Why on Earth would Verizon let Skype in through the front door?
I spoke to Josh Silverman, the chief executive of Skype, who joined me.
And I asked him about broadband -- what makes this deal special?
QUEST: The deal that you've just announced with Verizon, the devil is always in the detail of these things. Until now, Skype has been shut out by wireless you -- wireless operating companies, because, effectively, you're taking their money and you're taking the bread out of their mouths.
So what makes this one so special?
JOSH SILVERMAN, CEO, SKYPE: This deal is very easy to understand. We've worked with Verizon to develop software exclusive available on Verizon for their most popular versions of Black -- of the BlackBerry devices and several other devices.
When you buy those devices, if you have a data plan, you can get Skype free and unlimited and deeply integrated into those devices. So it's always on, always integrated, free and unlimited. And it's going to provide a fantastic, seamless...
SILVERMAN: -- type calling in high traffic areas.
QUEST: I suppose I should really ask this to Verizon, not yourself. I know what's in it for you.
But what's in it for them, because people are just going to bypass their roaming charges or their -- their call charges?
SILVERMAN: So that's not what we found when we did a similar partnership with 3 -- the 3 Mobile Network in the U.K. What they found is a lot of people switched to their network in order to get Skype and that those customers were more valuable, on average, than customers that didn't use Skype.
So let me -- let me say that again. For customers on 3 who used Skype, 3 made 20 percent more profit than customers that don't use Skype. And the reason is that Skype customers are valuable. They communicate a lot. They do a lot of Skype calling and a lot of Skype chatting, but they also do a lot of regular old calling and they send a lot of text messages.
So all of that meant they're very valuable customers for 3, that they acquired cheaply and had very low charge. We are expecting very similar results with Verizon.
QUEST: Now, you've gone -- you've done a deal with Verizon, but I suspect you'd like to do a deal with everybody else.
Are you agnostic about who you're going with or are you going to be promiscuous and try and get into bed with everyone?
SILVERMAN: I love the way you frame things. So what our customers want is an untethered Skype experience, where they can put Skype in their pocket and take it everywhere. And we're happy to work with operators around the world who want to provide a great experience, together with us. We think by partnering with great operators like Verizon, we can provide a -- a really terrific experience.
QUEST: As you look at other developments, clearly, integrating Skype with Smartphones is the -- is a major development for you.
But do you ever worry that eventually other competitors will move in and, let's face it, the free call and the free video call will not just be the prerogative of Skype before long?
SILVERMAN: Well, Skype has had competition since the day it was founded and, you know, we've focused on providing great quality, great reliability, the best experience. And today, we have over 500 million registered users. We're adding more than 300,000 new users every day.
TeleGeography said just a couple of weeks ago that we are now 12 percent of the world's international calling volume.
QUEST: Let me ask...
SILVERMAN: So we think we've done pretty well in the first 12 years and we're going to -- in the first six years. And we're going to keep focusing on having the best experience and keep winning.
QUEST: Let me finally ask you, does that add certain responsibilities onto you?
I mean it's one thing to be a little upstart company that does telecoms, but when you start actually becoming a mainstream telecoms provider -- now, I know you can't get emergency calls on Skype and you warn of that.
But it does change the ethos of the way you have to look at yourself, doesn't it?
SILVERMAN: Well, you know, we're very proud of what we've been able to do. For -- for decades, video calling was considered in the realm of science fiction. Today, over a third of all calls on Skype are video calls. And to put that in prospective, that means 4 percent of the world's international calling volume is now Skype video calls.
We've truly made that a mainstream application. And we think that's just the start of the kind of things that we can do as we become, you know, a household name used by virtually everyone around the world.
(END VIDEO TAPE)
QUEST: Josh Silverman of Skype joining me earlier. And you don't need to guess how he joined me.
The weather forecast where you're traveling.
Jenny Harrison is at the World Weather Center -- and, Jenny, and we've got some serious weather over here, and, I suspect, across large parts of Europe.
JENNY HARRISON, CNN METEOROLOGIST: You're not wrong, actually, Richard.
Yes, more snow in the forecast. Also, some very heavy rains have led to a very nasty situation in Italy. I'll come to that in just a moment.
Look at the current temperatures, beginning to really fall back now, minus 17 in Moscow. We've got minus 6 in Munich. The wind, of course, making it feel quite a bit colder in most places.
London just feeling like 2 degrees above freezing. Paris feels to be about freezing. And still some very unsettled weather. And you can see all of it in particular coming across the Mediterranean. So we've got this one particular area of low pressure working its way into more central areas. We've got showers and, of course, snow across the mountaintops.
And you can see that there's more of the same in the forecast. But have a look at these (INAUDIBLE). In Southern Italy, really quite terrifying. This is a massive, massive landslide. This is the region of Calabria. And, in fact, there were many, many people who had to be evacuated. There were actually -- all the local residents and, in fact, whilst this was taking place, there were 100 smaller landslides in the same region. The officials in the region are actually saying that they think this is down to the recent very heavy amounts of rain.
But just look at that -- huge amounts of land literally just moving a long way. It must be absolutely terrifying.
So, as I say, there's more of that in the forecast. You can see it's a very unsettled picture. Central Europe, on Wednesday, probably seeing the only sort of real sunshine. And then on Thursday, we should see a little bit of a break across into Italy when it comes to the snow. It's accumulating, not as heavy as it was, but notice this -- more snow in parts of the U.K.
Now, it's time for a short break here on QUEST MEANS BUSINESS.
He is coming back very shortly.
QUEST: Welcome back.
Kraft Foods says its profits rose strongly in the fourth quarter and its manufacturing costs fell and profit margins widened.
We've been following the company closely in the past few months, specifically because of its successful take over of the British chocolate maker, Cadbury's, for nearly $20 billion.
The take over ended nearly 180 years of independence for the British company. John Cadbury got the business going in 1824. He opened up a shop that sold coffee, tea and drinking chocolate. He was very much against alcohol.
Fifty years later, John Cadbury's sons established that factory that became a model of human working conditions. The factory was at Bonneville and that was the name of the chocolate.
Cadbury's best known product today is Cadbury's Dairy Milk Chocolate Bar. It's a regular staple on my desk. It has a 100 year history of its own.
Since then, Cadbury's has had a century of expansion. It merged with the drinks maker, Schweppes, in the '60s, then separated from them 40 odd years later.
Earlier, I spoke to Felicity Loudon.
She's the great granddaughter of the company founder, John Cadbury.
Felicity was vehemently opposed to the merger from the start. She told me Kraft and Cadbury's were bad matches for one another.
FELICITY LOUDON, GRANDDAUGHTER OF CADBURY FOUNDER: There is no -- there is nothing in common with either company to make that match, in my belief, a success -- a success story. It can only be successful for Kraft, who needs Cadbury, but Cadbury never needed Kraft.
QUEST: Were you against any take over or were you just against this take over?
Because I think there's a big difference, isn't there?
LOUDON: Huge. I was resigned and, obviously, I am not a heavy businesswoman. I am not in this world of corporate finance. I was resigned to the fact that when Cadbury sold Schweppes that, in a way, you put up the "for sale" sign. And I gather through reports, that Mr. Carr was in favor of offloading Schweppes. And I think that that had to be the end result. And I think they all knew it in -- in the management.
But I think that it could have been -- it would have been wonderful if Cadbury had remained in England, of course, in Britain, in the U.K.
QUEST: But it was not to be.
QUEST: What do you fear is going to happen?
Because if you accept that Kraft are not fools, they're not about to buy something only to destroy it.
LOUDON: They've got to pay for it, Richard. They owe a fortune. They overpaid, according to Warren Buffett. They have a lot of debt.
How are they going to pay it back?
They're going to strip assets. They're going to, obviously, offload some of the workforce and that's my huge worry. And I honestly, I own -- I tell you, look at Terry's of York. Terry's is no longer of York. It's just a wreck in York. It's in Poland.
QUEST: This battle or this inherent conflict that takes place between the needs of globalization and national industries, it's a fascinating one, isn't it, because you -- it does create this emotional feel, doesn't it?
LOUDON: I tried so hard to find -- and with others -- to find a white knight who would come in and return the company to being a private company and making chocolate and to keep it in the way that my forebears envisaged.
And the factory in the garden, what will happen to that, Richard, really?
And I honestly -- I -- I would appeal to you, Irene Rosenfeld, to look at her feminine side, to look at the fact that she's a wife, she's a mother. And I would ask her to look at what she's doing to the workforce.
QUEST: Irene Rosenfeld, who would say well, come on, Felicity, I'm not a fool. I'm not about to kill the goose that's laying the golden egg. I've bought Cadbury's because it makes money I want it to make money for Kraft.
LOUDON: She bought it to save herself. She bought it to bring in an icon which she wasn't in possession of. She bought it to save her skin.
QUEST: Are you angry -- not with Irene. She's doing -and-a-half.
LOUDON: She's doing -and-a-half.
QUEST: She's doing -and-a-half.
Are you angry with the chairman, Richard Buktar (ph), the chief executive, the institutional shareholders that sold you down the river?
LOUDON: Totally, 100 percent.
QUEST: If they were...
LOUDON: One hundred and ninety percent.
QUEST: If they were sitting where I am, look me right in the eye.
What would you tell me?
LOUDON: You sold out to greed.
QUEST: Felicity Loudon of Cadbury's.
When I come back in just a moment, some thoughts on bankers' bonuses - - it's a profitable moment -- this time, very profitable.
QUEST: Tonight's Profitable Moment.
If you want an easy target, bash the banks. It would be easy for me tonight to attack Barclay's, saying 38 percent of its barcap (ph) revenues in compensation. Those investment bankers in New York will be doing very well, thank you.
To be sure, there are rumored to be tensions within the banks between the old U.K. bankers in London and those that joined from Lehman Brothers in New York. This latest set of results should help put paid to much of that tension. The old Lehman Brothers raked in the cash -- the new cash this time around. The fact is, Barclays' has performed throughout this crisis like few other banks. It didn't take taxpayers' money. It raised its own capital as expense. It did some nifty deals. And it's one of the few to say bankers can't be immune from public anger.
Barcap tonight and Barclays perhaps the bank that deserves the money they've made.
And that's QUEST MEANS BUSINESS.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.
"AMANPOUR" is next, after the headlines.