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QUEST MEANS BUSINESS

Yahoo! Buys Tumblr; Millennial Merger; What Tumblr Purchases Says About Yahoo!; Dimon Faces Grilling; Mourinho to Leave Real Madrid; Dollar Down; Stocks Extend Gains; Japan Upgrades Economic Outlook; "Abenomics"

Aired May 20, 2013 - 14:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


MAX FOSTER, HOST: Yahoo! buys Tumblr promising not to screw it up.

Shareholders at the gates. Jamie Dimon could see his role split in two.

And taking aim at the euro-skeptics. UK business leaders say keep Britain in the EU.

I'm Max Foster, this is QUEST MEANS BUSINESS.

Yahoo! is buying the blogging site Tumblr in a deal that was sealed with a gift. Yahoo's CEO Marissa Mayer told users, "We promise not to screw it up." The web giant is paying more than $1 billion in cash for Tumblr. It's all part of attempts to court a younger audience.

Now, Tumblr gets 300 million unique visitors a month, though over the age of 24, there's a good chance that you've never even used it. Around a third of users are in the 18 to 24 bracket, most of them female. It's basically a blogging website.

You can post videos, text, and images on whatever subject that you choose, really, including pictures of cats with their heads covered in bread. Yes, that is just one of the many weird Tumblrs out there.

Now, altogether, it's all made David Karp a multimillionaire at the age of just 26. Not bad for someone who dropped out of high school. He'll stay on as the Tumblr CEO. As promised, it'll be business as usual on the site. He's been reluctant to plaster the website with adverts, and Marissa Mayer says there'll be no Yahoo! branding on Tumblr itself.

Well, all of this represents a big gamble for the Yahoo! boss. This is by far her biggest acquisition since she became CEO. Now, it's her job to make it work for Yahoo! She called Tumblr and incredibly special company, comparing the deal to when Google bought YouTube or when eBay bought PayPal.

Maggie Lake joins us now from CNN New York, and we were expecting this, weren't we, Maggie? But it's a huge deal, particularly for Yahoo!

MAGGIE LAKE, CNN INTERNATIONAL BUSINESS CORRESPONDENT: It is, and it's a lot of money. Listen, a billion dollars, even though Yahoo! has cash, it's about a fourth of it, but it's very important for them.

And Max, this is really an attempt to right the boat they completely missed, which was social media and, to a certain extent, mobile. Tumblr's mobile apps are more popular than Yahoo's, which they say right off the gate. And to sort of attract that younger audience.

It's incredibly important, and Yahoo! was really up front about that on the conference call with analysts this morning. Have a listen.

(BEGIN VIDEO CLIP)

MARISSA MAYER, CEO, YAHOO! Inc. (via telephone): Tumblr itself is growing. We actually think it can help increase the engagement on out media properties, like our homepage, news finance, fashion, food, et cetera. And finally, we think that there is an opportunity to grow our search business through integration with Tumblr.

(END VIDEO CLIP)

LAKE: And the numbers they're talking about, Max, are pretty startling. They want to grow their audience by 50 percent and traffic by 20 percent. Those are big numbers.

But importantly, also, might be the perception here. Everyone thinks of Yahoo! as a company that has a long trail of failed acquisitions, most notably, Flickr, which they've really messed up.

This would be a chance for Mayer to prove that this is a different Yahoo!, that it's new, and it's not only a different company that investors want to invest in, that users want to visit the website, but also that talented people and tech want to work at. That's really going to be key for their survival if she's going to turn this around, Max.

FOSTER: And David Karp, will he really stay on in an operational role? That's very important for the users, I'm sure, but is he going to do that?

LAKE: Yes, he's -- they say he's going to. It's going to be incredibly important for the users, because he is likely going to be the element that makes sure that you don't get a flood of advertising and that the user experience for Tumblr stays the same.

But interestingly, we're looking at some video here. I actually interviewed him back in 2010. That's from the office when we went there to talk to him. He's really considered a very sort of hot, bright mind in technology, very well-respected, very smart. He was trying to interview me when I was interviewing him. He's incredibly inquisitive.

And so, he's got a great reputation and Marissa Mayer herself is calling him -- and this is a quote from this morning -- "one of the most perception, capable entrepreneurs I've ever worked with, and also one of the nicest." That is high praise coming from somebody who was at the inner circle at Google, worked with the founders really closely.

So this is really, again, trying to acquire that talent. Yes, he's going to be CEO and stay CEO at Tumblr. My interest is, what else does he do in terms of Yahoo? That's going to really be the interesting thing to watch. Important for her that he stays on and he's happy, too. Clearly, he's happy, Max. He got a very big payday today.

FOSTER: And he's just 26. It's fantastic, isn't it? Thank you so much, Maggie, for that.

Well, the simple press release just isn't enough to announce tech deals these days. Marissa Mayer decided to sign up to Tumblr herself, posting this image earlier today. "Keep Calm and Carry On" is the order of the day. She said this was the first-ever acquisition announced by animated GIF, interestingly.

Well, David Karp wasn't to be outdone. He poked fun at his new boss with this GIF titled "The Great Workplace Dilemmas of Our Time." If you're wondering what these letters stand for, "WFH" stands for "Work from home," something which Marissa Mayer famously opposes, and "NSFW" stands for "Not safe for work," something which applies for plenty of content that you find on Tumblr.

So, it's all smiles at the moment. Is the feel-good factor going to last, though? Nicholas Carlson is the senior editor of "Business Insider." Thank you so much for joining us. Was this deal -- I mean, this type of deal, really defined by what Google did with YouTube, that way of keeping an identity, a brand identity, but still within the company?

NICHOLAS CARLSON, SENIOR EDITOR, "BUSINESS INSIDER": That's right. There's this new precedent that's happened where -- and Marissa Mayer talked about this when she announced the deal -- where companies acquire these hot start-ups and really let them be. And they just sort of say, you're doing a great job, we'd like to own you, continue doing a great job, please.

Google did this with YouTube, like you mentioned, and eBay did this with PayPal. And Facebook just did this with Instagram last year, and it's just going gangbusters. So, it's the new way.

FOSTER: So, how does that, then, feed back into Yahoo! if it's kept as a separate brand?

CARLSON: Right. So, a couple ways. Yahoo! will benefit when Tumblr grows to be -- it's big now. They really need it to grow much bigger, even. And Yahoo! will benefit when Yahoo! can start selling ads for Tumblr.

Yahoo! doesn't care if it's got Yahoo! branding on it or if it's Tumblr branding. It's their ads, so they're going to make the money, and that's really where they want to be. And notably, those ads will be in mobile, which is where the whole internet is going. So, that's the big plan.

FOSTER: We've all been waiting, haven't we, for Mayer's first big acquisition and what it says about her strategy? So, what do you think this says about what she wants to do with Yahoo!, which is a very well- known brand, but not a particularly well-managed one?

CARLSON: Well, I think one of the big things it says is that she's interested in this user-generated content world. She could have gone out and spent the better part of a billion dollars on the rights for NFL on mobile. Content.

But instead -- and that's where her predecessor, Ross Levinsohn, would have probably taken this company. But instead, she we went out and bought a platform. And so, she envisions a world in which Yahoo! can make a lot of money sort of creating a platform where users can be the content creators.

And obviously, that has its benefits. It's free. They don't have to pay the people to do their blogs on Tumblr. The downside is that whether or not advertisers really want to be next to cats with bread on their head.

FOSTER: What does it say about the other units of Yahoo? Which direction are they going to go in? Because they have been creating a lot of their own content as well, haven't they?

CARLSON: Right, so the other units at Yahoo! are probably -- Mayer talked about this a little bit -- they talked about using some of the content from Tumblr to staff up their gossip -- their celebrity gossip sections, their politic sections. Because there is some content coverage of that sort of thing.

And Mayer even talked about using that content -- that'll make those media properties more appealing to a younger demographic. So she's hoping not only will Tumbler -- just owning Tumblr have -- give Yahoo! access to a younger audience, also by using that content will make traditional Yahoo! more appealing to a traditional -- to the younger audience.

FOSTER: Nicholas Carlson, thank you very much, indeed, for that. Fascinating deal.

Still ahead, Jamie Dimon is being grilled many times, of course, by senators, by Wall Street analysts as well. And on Tuesday, he'd due to face JP Morgan shareholders. It's a meeting that could change everything for the top banker.

(COMMERCIAL BREAK)

FOSTER: A day of reckoning looms for Jamie Dimon, the CEO and chairman of JPMorgan Chase. He'll find out on Tuesday if he gets to keep both of his job titles. As Felicia Taylor reports, the shareholders' vote in Tampa, Florida, is the most serious challenge yet to the boss of Wall Street's biggest bank.

(BEGIN VIDEOTAPE)

FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT (voice-over): He's been called brash, bold, and the toughest guy on Wall Street. Jamie Dimon, the head of the largest and most profitable bank in the United States.

MICHAEL BLOOMBERG, MAYOR, NEW YORK CITY: This is the guy who is considered probably the best banker in the country.

KEN LANGONE, VENTURE CAPITALIST: It's an incredible company, extremely well-run, with the highest ethics and integrity.

TAYLOR: For years, Dimon seemed to do no wrong. JPMorgan Chase thrived throughout the financial crisis, while competitors teetered. The company's profit gave him the clout to push back against calls for the tighter regulation that followed. And in an interview with CNN in Davos early last year, Dimon tooted his firm's horn.

JAMIE DIMON, CHAIRMAN AND CEO, JPMORGAN CHASE: We've got more clients, more customers, more online banking.

TAYLOR: But in July 2012 came the trading scandal dubbed "The London Whale."

CHRISTINE ROMANS, CNN ANCHOR: JPMorgan's bad derivatives bet has ballooned.

DIMON: We made a mistake.

TAYLOR: A massive trading blunder that cost the company more than $6 billion. Dimon infamously called the incident a tempest in a teapot, enraging the public and lawmakers. Dimon had to change his tune.

DIMON (via telephone): We've learned a lot. I can tell you this has shaken our company to the core.

DIMON (on camera): When we make mistakes, we take them seriously. And often, we're our own toughest critic.

TAYLOR: JPMorgan Chase recovered. Last year, the bank posted a record $21 billion in profit. But concerns remain about how the company is run.

SUE CRAIG, FINANCIAL REPORTER, "NEW YORK TIMES": It exposed a problem in terms of risk controls, and it sort of laid bare, I think, a year of regulatory problems for them that have been really difficult for them, and I think it's also hurt the image of Jamie Dimon.

TAYLOR: Among other things, the bank's handling of mortgages and questions about how much they guarded against money laundering have kept regulators busy and fueled negative headlines.

Still, Dimon believes the bank is better with him in the role of both chairman and CEO. But his fate now rests in shareholders' hands.

CRAIG: I think if -- if the majority shareholders vote to split it, I think it'll be very difficult for him to stay in that role.

TAYLOR: Influential leaders are giving him a boost, including former GE head Jack Welsh. He'll need that support now that it's crunch time for Dimon, and the global banking community is watching.

Felicia Taylor, CNN, New York.

(END VIDEOTAPE)

FOSTER: Real Madrid have announced that Jose Mourinho has stepped down as manager of the football club. "World Sport's" Pedro Pinto joins us, now. A lot of talk about this today, and it has actually happened.

PEDRO PINTO, CNN SPORTS CORRESPONDENT: It has. The president, Florentino Perez, has just held a press conference, which is still going on right now. He's still answering questions from the journalists there in the Spanish capital, and I believe we're seeing live pictures of that press conference coming into us now.

And just a few moments ago, Perez confirmed that by mutual agreement, Jose Mourinho will be leaving Real at the end of the season, even though he had more years on his contract to go. A lot of speculation, Max, had been on social media, on the newspapers around Europe over the last few weeks, really, that Mourinho would leave Real, but this is confirmation now.

He said it's not a sacking and that Real Madrid at this moment are just focusing on seeing out the season. There's two games left so far. So, it's just confirmed that after the second of June, Mourinho will be a free agent so he can sign with any team without there being a compensation package having to be paid to Real Madrid.

FOSTER: So, in laymen's terms, you say he's not being sacked --

PINTO: No.

FOSTER: So, he's resigned?

PINTO: No. Both parties decided that it was best at this point in time to go their separate ways.

FOSTER: They're not getting on.

PINTO: They're not getting on. Mourinho did admit that he had a failure of a season. He didn't win any trophies this year. Many people in Spain believe he didn't live up to the expectations over the three years he was there. He won one Spanish league title, one Copa del Rey, which is their national cup, and one super cup.

The big objective was to win the Champions League, and he made the semifinals three straight years, and that for a lot of fans, wasn't enough.

FOSTER: Since you've come on, we've heard that Real Madrid have reached no other agreement with another coach.

PINTO: Exactly. That's something that Florentino Perez -- it was actually the first question that they asked him after they wanted to make sure that Mourinho wasn't sacked, they said, have you reached a pre-contract with any other manager to take over?

Because there's been a lot of speculation that Carlo Ancelotti, the current Paris Saint-Germain coach, will take over, and Perez said no, we have no agreement with anyone in place, and it's something that we will start to address after the season is over. So, in a few weeks' time, they say they're going to start their search for a new manager.

It's quite important that he's saying this, Max, because basically, Real Madrid could get in trouble with Paris Saint-Germain, because Ancelotti has a contract with the French champions now, so they could be in trouble with FIFA if they would be infringing on his contract right now.

FOSTER: And as for Mourinho, where do you think he will go?

PINTO: Well, that's the question everybody's asking now.

FOSTER: Will people be fighting over him?

PINTO: They will be, but I believe that it's a matter of time before we hear that he's signed with Chelsea.

FOSTER: OK.

PINTO: I don't think he has yet. I think there have been various conversations that have been taking place over the last weeks and months that set up a return for Jose Mourinho at Chelsea, where he spent three and a half very successful seasons. He won six trophies there in total.

And I believe you won't hear anything regarding that, though, until after the season is done. I think Mourinho wants to leave in the best way possible because his image in Spain isn't great at the moment because he's clashed with players, he's clashed with the media. And he's quite a turbulent character overall.

FOSTER: That's why the Brits love him.

(LAUGHTER)

PINTO: Yes, that's why they can't wait to have him back, I know.

FOSTER: He's going to get a welcome home here, isn't he?

PINTO: Yes. The tabloids will love him.

FOSTER: Yes, and you love interviewing him.

PINTO: Yes, I do. I do.

(LAUGHTER)

FOSTER: Pedro, thank you very much, indeed.

PINTO: OK.

FOSTER: A Currency Conundrum for you now. You may be aware Denmark won the Eurovision song contest on Saturday. We've just learned that, haven't we? Denmark was the winner. Its currency is the krone. What feature is included in the 100 krone note to help the visually impaired?

Is it a Braille text? Is it embossed print? Is it C, distinctive edging? We'll have the answer for you later in the program.

Dollar's down against the euro, the pound, and the yen. The yen edged up after the Japanese economy minister suggested further weakness could be harmful to its recovery. We'll be back after this.

(COMMERCIAL BREAK)

FOSTER: New week, new high. US stocks are trading in record territory, though the gains are subdued. Money flowing into equities, investors pull out of commodities, meanwhile. M&A deals also driving the markets. There's also Yahoo's $1 billion purchase of Tumblr, of course.

And in the pharmaceutical space, Warner Chilcott will be acquired by Actavis. The deal, including stock, is valued at $8.5 billion.

This is the picture in Europe. Investors picked up from where they left off, really, on Friday, gains all around. Japan has been one of the best- performing markets this year. Take a look at the Nikkei 225, up 81 percent in just 12 months. On Monday, the Japanese government raised its assessment of the country's economy.

An upgrade is a further sign that prime minister Shinzo Abe's policies are having an effect. Let's talk about Abenomics and whether it's a good thing. Frederic Neumann is co-head of Asian economics at HSBC. Thanks so much for joining us. We should first of all define "Abe-omics." Abe- omics? Abe-onomics? How do you say it?

FREDERIC NEUMANN, CO-HEAD OF ASIAN ECONOMICS, HSBC: Yes. Abenomics. Asset bubble economics. I don't know exactly you would phrase it. But it's really three -- it's a three-pronged strategy. Monetary -- cheap money, pump in liquidity, fiscal stimulus, and then also structural reforms. And it's the third part that hasn't quite happened yet.

FOSTER: And that's the longterm solution, isn't it? So, the market's being accused of being too knee-jerk to this sort of liquidation that's happened in Western markets.

NEUMANN: That's right. There's a big expectation trade, if you will. We buy on the expectation that these reforms will be delivered. But it's a tall order. We had Japan growing at less than 1 percent over last the two decades. Abe wants to push it up to about 3 percent, almost, through structural reforms. But a lot of political headwinds to deliver on these reforms, of course.

FOSTER: These were the lost decades, weren't they? And people talked about that so much, there's this flat period for so long in Japan. But is this partly to do with the fact that people haven't got anywhere else to put their money right now? It seems like an attractive market. It's a major economy and it hasn't been doing well for so long.

NEUMANN: That's right. There's so much liquidity being pumped into market, whether it's Western central banks, or now the BOJ, that it's inflating asset prices. And the hope by policy-makers is that higher stock prices make people feel wealthier, they spend more, and that helps the economy to accelerate.

FOSTER: But is Abenomics -- the concern about that might be that it may come back to haunt him? Because he's done this quite good job of building things back up slowly, and suddenly, he's got this massive influx of cash, and it could blow things for him, because it's not the longterm strategy he was looking for.

NEUMANN: That's right. Now -- up to now, it's just short-term. What we really need is the structural reforms, and you haven't really -- he hasn't really delivered on that yet.

So, if he doesn't follow through on the structural reforms, then we have the problem of suddenly the market being disappointed and markets again falling. So, it all depends on whether he can deliver on these very tough reforms that he's promised.

FOSTER: But he's obviously given some good policy to attract the money in the first place. What is the market like about what he is suggesting in terms of structural reform?

NEUMANN: Well, he's holding out the possibility of free trade agreements, for example, an ambitious agreement being negotiated with the United States, the TPP agreement, for example.

FOSTER: Which is likely.

NEUMANN: Which is likely. Although still, we have seen time and again Japanese opposition trying to derail these types of agreements. And then, there's health care reform, for example. And raising the participation of women in the workforce. Japan has one of the lowest participation rates.

And as the population ages and less workers become available, it is necessary to raise the participation of women in the workforce to make up for that.

FOSTER: Is HSBC suggesting that people should invest in Japan right now?

NEUMANN: Well, it's still a momentum -- what we call momentum trade. It's built on expectations. So, we're a little bit cautious on that. I think we need further evidence that, really, these reforms come to fruition.

And it's -- remember, it's a longterm game. It's not about the next week, it's really about the next several quarters.

FOSTER: Yes. But don't necessarily take your money out, but don't necessarily chuck it in, as well?

NEUMANN: Yes. Be wise. Tread cautiously, do your homework. But it's not something you need to rush after, necessarily.

FOSTER: OK, thank you very much, indeed, for joining us.

NEUMANN: Thank you.

FOSTER: Well, as we've heard, a key component of Abenomics involves structural reform, and in many cases, the uprooting of traditional protection for some industries. Diana Magnay reports from a farm in an already hard-hit part of Japan.

(BEGIN VIDEOTAPE)

(MAN SPEAKING JAPANESE)

DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT (voice-over): There is, I'm learning, a very particular way to pick strawberries.

UNIDENTIFIED MALE: OK.

MAGNAY (on camera): Very talented.

MAGNAY (voice-over): Masayuki Owada's small two-hectare farm holding is not far from the Fukushima nuclear plant. The last two years have been tough, customers wary of produce coming from this area. Now, he's anticipating another business shock: the Trans-Pacific Partnership, or TPP, which with Japan included, would account for one third of global trade.

"The current government claims that they'll protect rice and livestock," he says, "but I have a lingering concern that they might say it's protected for the time being, but that protection will be lifted in five to ten years' time."

For now, Japan's rice farmers have the luxury of a 778 percent tariff on imported rice. Sugar and butter also heavily protected. But the elimination of farming tariffs is top of the agenda at this week's meeting of TPP trade officials in Peru. What they decide will impact Japan's bargaining power when it joins the talks in July.

YOSHIMSA HAYASHI, JAPANESE AGRICULTURAL MINISTER: We already forecast that if -- that's a big "if" -- but all tariffs gone and all voices we don't do anything to counter that, then the three-year production, domestically, to be deleted. So, it's almost one third of the total production of Japanese agriculture.

MAGNAY: Japan's prime minister, Shinzo Abe, has just announced a series of agricultural reforms aimed at revitalizing an industry characterized by tiny plots of land and aging part-time farmers.

Now, there'll be a system to lease farmland to corporates to add scale and to bring in young blood. And he wants to double agricultural and food exports to 1 trillion yen, $10 billion, by 2020.

Oisix specializes in organic produce delivered to your door. But it also exports to Hong Kong. Daiju Takahashi, who runs the export team, thinks there's a niche for high-end Japanese food products.

DAIJU TAKAHASHI, OISIX: Japan quality we need to market more. But the taste of Japan's vegetables and fruits especially are clearly different from other products. And I believe that those products have global value.

MAGNAY: Masayuki Owada may lament what's in store for rice, but he's already got a backup in his strawberries and in juicy Japanese tomatoes, which he thinks foreign farmers will never be able to match. Or at least not until long after he's retired.

Diana Magnay, CNN, Fukushima prefecture, Japan.

(END VIDEOTAPE)

FOSTER: Coming up, putting politics before economics. That's what some business heavyweights are accusing euro-skeptic British MPs are doing. We'll hear from one of them after the break.

(COMMERCIAL BREAK)

FOSTER: Welcome back. I'm Max Foster. These are the main headlines this hour.

(BEGIN VIDEO CLIP)

FOSTER (voice-over): Around 50 people have been killed in series of attacks targeting Shiites in Iraq. Most of the car bombs in and around Baghdad. Iraq has seen a surge of sectarian violence recently. Prime Minister Nuri al-Maliki says he is overhauling his security strategy.

In Syria, opposition activists say at least 62 people have been killed across the country today, many of them in a battle for the western town of Qusayr. Rebels say they fired rockets of Hezbollah targets over the border in Lebanon, Hezbollah fighting alongside President Bashar al-Assad's security forces.

Myanmar's President Thein Sein has arrived at the White House for talks with President Barack Obama. It is the first White House visit by a Myanmar head of state in nearly half a century. President Obama made a trip to the country last year.

Yahoo! has bought the blogging site Tumblr for $1.1 billion. Chief executive Marissa Mayer says Tumblr will operate as a separate company. Shares in Yahoo! are up more than half a percent at the moment.

And in football, Jose Mourinho is to step down as manager of Real Madrid. Mourinho has agreed with the club that he will resign at the end of the current season. Mourinho is tipped to return to Chelsea for a second stint as the English club's manager.

(MUSIC PLAYING)

(END VIDEO CLIP)

FOSTER: A group of British business leaders is hitting back at those within the U.K. should leave the E.U. in an open letter published today in "The Independent" newspaper.

They say, "The benefits of membership overwhelmingly outweigh the costs and to suggest otherwise is putting politics before economics." Signatories include Richard Branson, Martin Sorrell (ph), Michael Rake, the chairman of telecommunications company BT.

Richard Quest caught up with Michael Rake earlier today and began by asking why he put his name to the letter.

(BEGIN VIDEO CLIP)

SIR MICHAEL RAKE, CHAIRMAN, BT: Well, (inaudible) starting a business has stand up and give its view. And I think in this case, we're very clear that it is important that we have a discussion around the European Union.

As we've said in the letter, there do need to be reforms on a single market. But we believe it's important that the benefits of us remaining in the European Union are not understated and are clear. Therefore, I think our role is simply to provide the facts and to allow a sensible and informed debate to take place in order to get the reforms that are necessary that will increase wealth and jobs.

RICHARD QUEST, CNN HOST: Do you fear -- and I know some business leaders do believe -- that a rolling process has begun and that unless people like yourself start speaking up on the pro-European camp, it's almost like the other side gets away with.

RAKE: I don't think it's a question for me of whether or not it's a pro- European camp. It's about -- you know, it's about what's doing right for jobs and investment and growth in the United Kingdom and in the European Union and with our allies and partners in the United States and the rest of the world. That's what it's about.

There does need to be a debate, clearly. That's what's happening. Business people do not determine the political decisions that are made. But we can help by trying to give an input into the facts so that British people can see at the end that they can make choices around the political issues and see what the economic issues are as well.

QUEST: And a final thought: on that point, many people are prejudging the negotiation that the prime minister has promised. And even in your statement to me just now, you say it's all predicated on what that negotiation looks like. I guess what I suppose I would say is if the negotiation doesn't look good, what happens then?

RAKE: Well, I think that -- you know, that's too far away. I think there are a number of countries in the European Union that would be very sorry to see United Kingdom go. We bring a lot to the European Union in terms of design, in terms of, you know, our pragmatism and many welcome that.

So and I think there are many countries European Union would like to see the completion of a single market, like to see opening up to more investment, would like to see a trade deal done with the United States where we have nearly 800 million people, which would be beneficial to everyone. And we'd like to -- like everyone in business would like to see unnecessary red tape removed.

(END VIDEO CLIP)

FOSTER: Well, straight ahead on QUEST MEANS BUSINESS, the outspoken airline boss who wants to offer free flights, fewer toilets and planes with one pilot. Ryanair races ahead.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

(BEGIN VIDEO CLIP)

FOSTER (voice-over): And now the answer to tonight's Eurovision "Currency Conundrum," earlier I asked what special feature is on Denmark's 100 Krone note to help the visually impaired? The answer is embossed print. The banknotes are also different sizes and feature strong color variations.

(END VIDEO CLIP)

(END VIDEO CLIP)

FOSTER: Now Ryanair, the cheap and cheerful Irish carrier, celebrating a rise in profits and passenger numbers, despite the rising cost of oil, last year the Dublin-based airline reported a profit of -- a rise of 13 percent to $732 million.

Ryanair carried nearly 80 million passengers was up 5 percent, a remarkable achievement considering the rise in cost of fuel, which now accounts for nearly half of the carrier's costs.

Well, Ryanair's route map is considerable. This shows the extent of the network. Ryanair operates more than 1,600 routes with lots of connections from Stansted, as you can see. There aren't many places where Ryanair hasn't got places to go to. It's got airports in all of those destinations, even if they are some way from the destination of the traveler.

While legacy and flag carriers struggle with European short-haul, Ryanair is expanding, not contracting. This is a list of more than 150 new routes planned for just this year alone. That's in addition to the 200 new routes it launched last year.

A little earlier, Nina dos Santos asked Ryanair boss, Michael O'Leary, why Europe should be doing more to help him and he let slip that he still wants his planes to fly with a single pilot.

(BEGIN VIDEO CLIP)

MICHAEL O'LEARY, CEO, RYANAIR: If you look around the continent of Europe at the moment, you see government struggling with huge unemployment numbers, particularly among young people. And there's no industry that creates more entry-level jobs for young people than tourism. And yet so many European governments don't have a policy of stimulating tourism.

You look at the Spanish government, for example, where unemployment among kids under 25 is running at 50 percent. And yet they're raising the taxes on Spanish airports. Instead of lowering them and using tourism as a -- the weapon to combat youth unemployment and to get the kind of industries that governments can control like tourism back growing again.

NINA DOS SANTOS, CNN HOST: OK. So let's have a look at one of the things that you just mentioned there. It's, of course, airport fees.

O'LEARY: The joy we have at Ryanair is we're in a position where we're currently flying to over 180 airports. We're negotiating with another 70 new airports that we don't presently fly to. So there's intense competition between the airports for our growth.

We're also being approached now by bigger airports, the major airports in Germany, where Air Berlin is restructuring; in Scandinavia where SAS is restructuring, in Italy, where Alitalia is in a terrible state and cutting back their shortfall operations.

These airports now realize that if they don't want to see their traffic decline in the next several years, they have to deal with Ryanair and which is why they're coming to us and offering us much better terms.

DOS SANTOS: So you've been very, very successful in exacerbating and taking advantage of that gap in the market that you were mentioning there, where some of these legacy carriers just can't make the shortfall flights work.

How are you managing to do that with the high fuel costs as well, as well as those airport fees, even if you manage to bring them down, the fuel bill still remains high.

O'LEARY: I think it's (inaudible) most impressive thing about last year's numbers was in the year when our oil bill rose by 18 percent, we still increased our profits by 13 percent. I think what we do is we continue to buy very large aircraft; the Boeing 737-800 is the cornerstone of our fleet. That means we have high seat densities; we're very efficient. We have very high load factors.

So we're spreading that fuel bill across a lot of passengers on every flight, every day.

DOS SANTOS: Now you've been at the helm of Ryanair for the last 20 years or so. You said just last week that you're going to stay in the job another five years. You're famous for making all sorts of interesting statements about standup flights, charging people to go to the toilets.

What's next for Ryanair (inaudible)?

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O'LEARY: (Inaudible) get misreported. What we're always trying to do is focus on how do we actually transform the way airlines have mismanaged their businesses in the last 20 years, to make flying more affordable?

How do we keep the cost of flying down? (Inaudible) obvious developments as the technology improves, why do we move from two-pilot flights to one- pilot flights? Most airlines would save a fortune. We want to add extra seats to the back of the plane so that we can lower everybody's fare by 5 percent year-round. That means either moving two of the toilets or taking two of the toilets out.

So everything we do in Ryanair is focused on how do we make it cheaper? How do we lower the fares? How do we continue to revolutionize the way people travel? So I want to see a time in 10-20 years' time when half our flights are free and the other half only cost five bucks.

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FOSTER: Well, thousands of people took to the streets of Italy over the weekend.

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FOSTER (voice-over): It was in protest against rising unemployment and the government's continuing austerity policies. Some protesters demanded the Prime Minister Enrico Latta focus on growth but not cuts. Mr. Latta has been in office for less than a month, heading the coalition formed after inconclusive elections this year.

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FOSTER: Few things are considered more Italian than pizza. But as the country changes socially and economically, so, too, are its traditions. As Ben Wedeman now reports, these days you're likely to find a non-Italian cooking at one of Italy's greatest exports.

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BEN WEDEMAN, CNN CORRESPONDENT (voice-over): It can get pretty hot in the pizza kitchen and for the pizziolo (ph), the pizza chef, there's no time for rest. Increasingly many Italians, however, can't stand the heat in the kitchen and are getting out of this most Italian of professions.

Despite high unemployment, they're leaving it to others, like Gamal from Egypt, to make the dough.

And that's just fine with Gamal.

"It's an area where lots of jobs are available," he tells me. He's been in Italy for almost a dozen years, and recently was hired by the Tramonte de Roma (ph) restaurant in the seaside suburb of Ostia. Across this city, you're more likely to find a Bangladeshi, a Bosnian or an Egyptian than a local working the oven.

It doesn't faze pizza critic Armando evaluating Gamal's work.

"It's good," he says, "the crust is thin as I and a lot of people here like it, and it's tasty."

And maybe pizza isn't really as Italian as is commonly thought.

According to some historians, pizza actually comes from Egypt anyway. So there's nothing unusual about having an Egyptian make your pizza.

"There's nothing odd about it," says Gamal, a most practical man. "I'm here to work. If there's work, I'll do it."

And it doesn't really matter where the pizziolo (ph) comes from. The proof is in the pizza -- Ben Wedeman, CNN, Rome.

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FOSTER: From Italy to North America, some deadly tornadoes. Tom Sater has the details from the Weather Center.

Hi, Tom.

TOM SATER, AMS METEOROLOGIST: Hi, Max. It was not a kind day yesterday. Mother Nature in the U.S. spawning at least 24 tornadoes, preliminary report we've had. This is 12 hours ago. In the red boxes here, these are tornado watches that alert the public. And they were actually spread from Texas all the way to Minnesota yesterday.

Well, put this into motion, and now we're starting to see just the beginning of more watches. These, again, will spread in the same area. A typical month of May in the U.S. can give us a total of 342 tornadoes.

Before last Wednesday, only three, a very slow start. But we're already starting to see -- you can see here in red -- these are the preliminary reports of the tornadoes yesterday along with wind reports. The thunderstorm activity was quite interesting, 24 preliminary reports of tornadoes.

But they spawned from what we call parent storms, only seven storms, just like a parent can have multiple children and siblings, a thunderstorm, a super cell, can drop numerous tornadoes.

So to give you an idea of where we had the damage yesterday, again, Oklahoma, Kansas, Iowa, Illinois, Missouri saw a tornado; we could see another 15 to possibly 25 again today and tomorrow as the storm system really is starting to take shape.

In Oklahoma, it was devastating. But I want to take you first to Wichita. The National Weather Service, which alerts the public, had to seek shelter. They passed the responsibilities on to another National Weather Service.

Here's Norman, Oklahoma, where the university is. We had one nearby. But it was Shawnee. Let me show you pictures. The first one, these were actually taken live and placed on the air by our CNN affiliate, KFOR in Oklahoma City, alerting the residents there.

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SATER (voice-over): Our sister network, CNN USA, also broadcast these pictures live to alert the public to get to safety. The best place is you've got to get underground. This is from the air. Let me show you storm chasers that know what they're doing and listen to these guys.

UNIDENTIFIED MALE: Breaking back here, we got to go soon.

SATER (voice-over): Listen to what he says here. It's shifting.

UNIDENTIFIED MALE: If it shifts, we're done.

SATER: "If it shifts, we're done." They noticed that with these erratic tornadoes sometimes that they can shift. Many of them bounce up and down and they skip. So the National Weather Service will go through the damage reports.

We have plenty of pictures as well. They survey the damage from up above to see what thunderstorm relating to the data of radar, how many thunderstorms actually produce tornadoes, which ones skipped and jumped over communities. This is an aerial picture, of course, and now we're going to show you some from on the ground, total devastation.

Look at this. In the top of this tree, there's a mattress. We had two fatalities in the town of Shawnee. This is in Oklahoma last Wednesday it was Texas with six fatalities. So again, we're watching these. And this one here comes on the scale at an EF-4.

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SATER: And to give you an idea of the winds, 267-322 kph, the frequency of these tornadoes is quite rare, 0.6 percent of tornadoes are actually that strength. Again, we're going to find it fire up in the same place today. The last thing they need is sunshine. And of course, we -- that's what they're going to get.

Sunshine is the fuel, along with the moisture. And, again, we're looking at an area of 1.2 million square kilometers, Max. And again, 55 million people are going to be looking at the threat of this today.

So again, this will continue, not just the next 24 hours; it goes into Tuesday, Wednesday and Thursday, so just a significant event in the U.S., of course, in the devastation. That really has been picking up now in strength after a slow start.

FOSTER: Amazing, amazing images, amazing audio. Thank you so much, Tom.

After the break, Asia's next economic frontier just a few years ago. Myanmar was shunned by global investors. Now it's heading down the path to reform and its economy is already seeing the benefit.

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FOSTER: Well, the news of two of the world's biggest emerging economies have been meeting today. Chinese premier Li Keqiang is on his first foreign trip since taking office in March. He's in New Delhi holding talks with the Indian Prime Minister, Manmohan Singh. But not everyone in India is welcome to Mr. Li.

These protesters staged a demonstration on Sunday against what they see as China's incursion into Indian territory of the disputed Himalayan border last month. Myanmar's president is in Washington to drum up business for his country. He's meeting President Obama at the White House right now.

This is a sign of Myanmar's improving relationship with the West from a virtual pariah state to an emerging Asian economy. Myanmar is fast becoming the go-to destination for international investors. (Inaudible) Dan Rivers gets a first-hand view from Yangon.

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DAN RIVERS, CNN CORRESPONDENT: Sule Pagoda, a rallying point for Myanmar's past political struggles now surrounded by signs of its booming economy. The lifting of many Western sanctions is clear to see. International brands are arriving and this city of stupors is slowly being transformed.

This is Centrepoint; started well before the Asian financial crisis of 1997, construction was repeatedly put on hold. Now it's being finished off. By next year, it will include Myanmar's first big brand hotel, the Hilton Yangon.

Well, this is the highest point in Yangon, 23 floors up. There aren't many cities left in Asia with a skyline that is not dominated by hundreds of skyscrapers. But look at this, all across the other side of the river. There is nothing but open countryside.

Inside the city center, there's a huge amount of construction going on. This building is a great example. There are new firms arriving all the time. Some have opened up shop just in the last couple of weeks.

RICHARD MAYHEW, CEO, CENTREPOINT: There is a focus on Myanmar.

RIVERS (voice-over): Richard Mayhew runs the tower and says demand for office space is overwhelming.

MAYHEW: Companies coming in were here. We have Fonterra, Nestle, Standard Chartered Bank, Juntai (ph) Bank, Maybank and at the tower I believe about 90 percent are international companies. The take-up currently is about 70 percent.

RIVERS: So it's really booming?

MAYHEW: Oh, yes. We say the next three months the tower should be full.

RIVERS (voice-over): Other Western firms like Ford have opened up. This new car dealership is still being built. Expect to see more of these cars on the street soon, thanks to political reforms that have seen the military loosen its grip on power.

Kevin Murphy advises companies on business in Myanmar.

KEVIN MURPHY, BUSINESS CONSULTANT: People need to understand that Myanmar is not a green field operation. It's sort of a brown field operation. People are doing most things here. They may not be doing them as well as elsewhere; they may not be as well capitalized as the (inaudible).

They may have lots of room to improvement. But people shouldn't assume that it's just coming to the -- a new plant.

RIVERS (voice-over): But despite all the hustle, problems remain. Into ethnic violence and human rights abuses are still thorny issues and potential risks for those who are thinking of investing -- Dan Rivers, CNN, Yangon.

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FOSTER: Well, to mark his historic visit to Washington, Myanmar's president sat down for an exclusive interview with CNN's Christiane Amanpour.

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AMANPOUR: You must be amazed at the speed with which relations with the United States are improving. I mean, it wasn't many years ago that you were enemy number one for the United States. This is incredible.

THEIN SEIN, PRESIDENT OF MYANMAR (through translator): I have to agree. I myself am amazed at the speed of the improvement of our bilateral relations. But there are no permanent friends or permanent foes in international relations.

AMANPOUR: Yes, that's a famous saying.

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FOSTER: Well, watch the full and exclusive interview with the president of Myanmar, coming up in the next few minutes, here on "AMANPOUR," at 8:00 in London, 9:00 in Berlin and 11:00 in Abu Dhabi.

When we come back, we'll talk about why gold and silver are losing their appeal to investors.

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FOSTER: Well, (inaudible) dollar are on the rise and investors have been dumping gold and silver. Today the price of silver fell to its lowest level since September 2010. Look at the price of gold. Stability ended in mid-April amid heavy selling.

Where are we? They love me, these charts.

Rumors at the ECB as well with foresight (inaudible) sell its reserves to fund its bailout, today it fell to a low $1,339 an ounce before recovering slightly. There's a similar story as well for silver. It's now on the up following a big fall earlier on Monday to less than $21 an ounce. Traders are blaming a large sell order, according to analysts.

The decline is down to improving economic growth prospects, low inflation and the recent rally in equities. There are also fears that the Federal Reserve will trim back its stimulus program.

Let's have another last look as well. The U.S. stock markets this hour, the Dow slightly lower, 11 points in fact, less than 0.1 percent. It's been down slightly all day, a slow day, really, with exception of two major mergers, Yahoo! buying a blogging site, Tumblr; we spoke about that earlier, for more than a billion dollars. And this is what CEO Marissa Mayer had to say about the deal.

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MARISSA MAYER, CEO, YAHOO!: Tumblr itself is growing. We actually think it can help increase the engagement on our media properties, like our home page, news, finance, fashion, food, et cetera. And finally we think that there is an opportunity to grow our search business through integration with Tumblr.

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FOSTER: Meanwhile, in the pharmaceutical industry, Warner Chilcott will be acquired by Actavis, so a much bigger deal, including stock valued at $8.5 billion. That is QUEST MEANS BUSINESS. Thank you for watching. I'm Max Foster in London.

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FOSTER (voice-over): The headlines this hour:

Around 50 people have been killed in series of attacks targeting Shiites in Iraq. Most of the car bombs in and around Baghdad. Iraq has seen a surge of sectarian violence recently. Prime Minister Nuri al-Maliki says he is overhauling his security strategy.

In Syria, opposition activists say at least 62 people have been killed across the country today, many of them in a battle for the western town of Qusayr. It is a strategic location near the Lebanese border. Rebels say they fired rockets at Hezbollah targets over the border in Lebanon. Hezbollah is fighting alongside President Bashar al-Assad's security forces.

Myanmar's President Thein Sein has arrived at the White House for talks with President Barack Obama. It is the first White House visit by a Myanmar head of state in nearly half a century. President Obama made a trip to the country last year. Christiane Amanpour has an interview, an exclusive with the president, in just a moment for you.

And two people were killed when a string of tornadoes swept through the midwestern U.S. on Sunday, ripping across this small Oklahoma town. The Red Cross estimates the tornadoes tore apart 300 homes.

And in football, Real Madrid announced in the last hour that Jose Mourinho is to step down as manager. Mourinho has agreed with the club that he will resign at the end of the current season. Mourinho is tipped to return to Chelsea for a second stint as the English club's manager.

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FOSTER: And that is a look at some of the stories we're watching for you here on CNN. "AMANPOUR" is next.

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