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YOUR MONEY

Tablet Wars; Buy or Sell?; Hardcore Solutions; Following the Money on Obamacare; The Mystery Face of Obamacare

Aired October 26, 2013 - 09:30   ET

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


CHRISTINE ROMANS, CNN HOST: What the tech is going on? I'm Christine Romans and this is "Your Money."

Twitter stock for sale. But what will it cost you to buy in? Facebook stock finally soaring. (INAUDIBLE) spent the week (INAUDIBLE) whether to allow videos of beheadings on the site.

And when it comes to stock prices, everyone is playing follow the leader with Google. Google shares crossed $1,000 a share this week. Meanwhile, residents of Blackberrys hometown are vowing to survive even if that company begins to layoff nearly half its workforce.

And all this on a week as top competitors trying to steal Apple's iPad thunder. In the 1990s, Bill Gates famously said Microsoft was committed to putting a computer on every desk and in every home. Today the battle is for this space, and it's getting ugly.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: This isn't going end well for me, is it? No. Definitely not ending well. Do you still think I'm pretty?

(END VIDEO CLIP)

ROMANS: Ouch. Sales of laptops and desktops are falling. But tablet shipments are taking off. Expected to jump 53 percent this year.

Here to explain what the tech is going on in tech, CNN's tech business correspondent Samuel Burke.

Sam, the iPad may be the founding father of tablets, but will it be the last device standing?

SAMUEL BURKE, CNN TECH BUSINESS CORRESPONDENT: Well, it's still the one to beat. They just came out with a new one. It's lighter. It's faster. But it still has that $499 price tag. So that's pretty heavy for some folk. But there's also the iPad mini which is also now the iPad. It's not called the iPad mini anymore. And it has a better screen now. But it's 399 bucks. So it's still a lot of cash, isn't it?

ROMANS: It is still an awful lot of cash.

BURKE: So a lot of people think that iPad Mini or as it's now called the iPad has to compete with this thing. The Nexus. You look at that. That's pretty small. You can hold it in your hand. That's from Google. And it's $229. So a lot less expensive than the iPad Mini. And a lot of people -- it's a big question. Should I use IOS, you know the Apple tables.

ROMANS: Right.

BURKE: Or should I use android. So I use my mom and dad as the example. My mom already knows the iPhone. So I tell her just get an iPad because it's going to be hard for you to relearn a new system. My dad has kind of fat fingers.

(LAUGHTER)

And so one thing that people like Android is that it has customizable keyboard.

ROMANS: Right.

BURKE: So maybe it's time for my dad to get an android because, you know, he can use the keyboard as --

(CROSSTALK)

ROMANS: How much is brand loyalty going to be? I mean, right now with this fight for supremacy if you get generation Y with I like Android, I'm doing this, are they going to stay forever?

BURKE: Well, here's the thing. Android actually already has more market share than Apple when it comes to tablets. Yes, Apple sells more tablets, but it turns out that Android has 62 percent of market share when it comes to operating systems. Apple only has 32 percent of market share. But I think what's happening is a lot of people, you already have your apps on Apple. So you might just want to stick with Apple.

If you already have your apps on Android, you might just want to stick with an Android tablet. So if you've already purchased the apps, you've sent like 20 bucks, then you'll just do that. But those aren't the only new tablets. Not just from Apple. Then there's also this thing. The Microsoft Surface 2 just came out, 499 bucks. It doesn't have nearly as many applications as Apple or Android. But people like it because of the keyboard. Yes, you can get a keyboard for a tablet like with Apple.

ROMANS: Right.

BURKE: But this has a keyboard that comes with it.

ROMANS: All right.

BURKE: And so people like that keyboard.

ROMANS: All right. Watch the space. Thank you, Samuel Burke.

All right. A year-and-a-half after Facebook's IPO face plant, Twitter says it's ready to go public now. The company says shares will cost between $17 and $20. That's the price for the big institutional investors. Not for you and me. That can change before the stock launches, of course. The question is should you buy in?

Here to answer that, Matt McCall. Matt is the president of Penn Financial. He's here to play our game, "Buy or Sell."

Nice to see you, Matt.

MATT MCCALL, PRESIDENT, PENN FINANCIAL GROUP: Nice to see you.

ROMANS: What a crazy week in tech. OK. You were weary of Facebook IPO.

MCCALL: Yes.

ROMANS: But how concerned are you about Twitter?

MCCALL: Well, you know, I'm kind of torn on Twitter because it's pricing between $17 and $20 a share. As you said, you and I are not getting that share. That's for big institutional investors.

ROMANS: Right.

MCCALL: Once this opens for trading, they're saying possibly November 6th, it probably opens at $30, $40, even higher. So as the individual investor, I don't run out and buy at that price because typically one -- public, it does pull back the next couple of weeks. We saw that in Facebook. It fell 50 percent before it actually bottomed down.

ROMANS: Right. So we don't know what's going to happen there. I mean you could buy, you could sell it. Let it have a little bit of a trend.

MCCALL: I think -- yes, yes, exactly.

ROMANS: Let it sell back. OK, $930 a share. This is amazing. That's going to -- the most expensive iPad air. What you will not get for the price of an iPad Air is the price of this. Look at that, $1,000 for Google shares.

What do you think about Google?

MCCALL: You know, I look at this chart and I'm kind of overwhelmed like the way five year -- I should obviously have been buying it about six months ago.

ROMANS: I mean, for a lot of people, that looks like a sell. Wow. Look at that huge run-up, you know?

MCCALL: I'm going to override you here. I'm going to drop in and say --

ROMANS: OK.

MCCALL: -- I still think this is a buy. I may not buy Monday morning. But at some point you're going to have a week where it pulls back a little bit.

ROMANS: Why? Why do you still like it, the fundamental --

(CROSSTALK)

MCCALL: You still have amazing growth. You have a four P.E. ratio of below 20. And Google is everything. They have self-driving cars. They have search -- I mean, they are really the company that controls the world in my mind. I want to have a piece of Google in my portfolio.

ROMANS: All right. You're on the record there. Where are you on the record for Apple? I mean you look at this one. So people are counting out Apple down here.

MCCALL: Yes.

ROMANS: This had a nice run here. Carl Icahn, the activist investor, one of the reasons why this stock I think has been going up. People know he's interested. Also, they've had some good product launches lately.

MCCALL: They have. And you also look and where we were from the start of the year, we're actually unchanged throughout the year. When you have Microsoft and some of the other big names up for 35 percent. Apple is actually unchanged. I think to me this is extremely bullish pattern. It's coming back up. I think we see this level up there and I hold that a buy.

ROMANS: All right. He gives Apple a buy right there. Let's up the last one here. Netflix, even the CEO.

MCCALL: Yes.

ROMANS: Even the CEO is saying hey, don't get so excited about my stock.

(LAUGHTER)

What do you think about Netflix?

MCCALL: Well, if the CEO is telling me not to be excited, I'm not going to be that excited either. This stock is up over 230 percent this year. I mean, that's one of the best looking charts. To me, if it comes back down around 200 or so --

ROMANS: You're going buy that.

MCCALL: But, you know, right now, if I'm owning this, I'm selling the stock right there.

ROMANS: All right.

MCCALL: I'm taking a profit.

ROMANS: Buy -- (LAUGHTER)

Matt McCall -- thanks, Matt.

We can't all look like movie stars. That doesn't mean we can't invest like movie stars. We caught up with Jake Gyllenhaal this week. We asked him about the best investing advice he ever got. Listen.

(BEGIN VIDEO CLIP)

JAKE GYLLENHAAL, ACTOR: I've seen the financial ups and dough downs of the business and never really having much security. And I think creating your own security is the most important part. And being able to have enough discipline to put things aside, even if it's in small increments.

(END VIDEO CLIP)

ROMANS: We also caught up with Curtis Jackson, AKA 50 Cent. He's so committed to sound investment principles he released an album titled "Get Rich or Die Trying."

(BEGIN VIDEO CLIP)

50 CENT, RAPPER: Be really careful. And this value -- hold on to your money. A lot of times your ideas are enough.

(END VIDEO CLIP)

ROMANS: Hold on to your money. All right. Coming up, he's back.

(BEGIN VIDEO CLIP)

LES GOLD, STAR OF "HARDCORE PAWN" ON TRUTV: He should done was put a penny in that fortune teller to realize less ain't going to go a penny more than 80 bucks.

(END VIDEO CLIP)

ROMANS: All right. What America's most famous negotiator can teach Washington about making a deal. Les Gold -- Les Gold returns for us next.

(COMMERCIAL BREAK)

ROMANS: Gridlock, dysfunction. Intransigence. Aren't you tired of hearing all about the Washington problems? Let's talk solution. The U.S. deserves a long-term fix to the budget mess. And it may just require something no one in D.C. has thought of yet.

So on this show we've been lawmakers some new perspectives since they clearly don't have any. And today we have the most hardcore solution yet.

Les Gold is the star of "Hardcore Pawn" on truTV. It's part of the Time Warner family, along with CNN. He's a friend of the show. He's also the author of the book "For What's It's Worth". Business wisdom from a pawn broker. He not only deals with difficult people every day, he makes deals with them. Watch.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I'll tell you what, my shoes are cleaner than this couch.

GOLD: Then don't buy it. Make me a deal.

UNIDENTIFIED MALE: I've got cash in my pocket, man.

GOLD: Including two chainsaws, four nail guns. They got plug and a crowbar. Eight hundred bucks all together.

UNIDENTIFIED MALE: Sounds good.

(END VIDEO CLIP)

ROMANS: OK. That reminds us of the Washington's bickering which can -- Washington bickering can get nasty.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: You've got the "Wall Street Journal" out. And it says well, we don't care how long this lasts because we're winning. This isn't some damn game.

SEN. HARRY REID (D-NV), MAJORITY LEADER: I read that modern day anarchists in the House have been celebrating the shutdown.

REP. ERIC CANTOR (R-VA), MAJORITY LEADER: It's pretty unfathomable to me to see that the Democrats are voting against the veterans.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: I urge our colleagues to see this for what it is. It's pathetic. It's not responsible.

(END VIDEO CLIP)

ROMANS: Oh my. One of the most important lessons that you learned in the pawn business, one of the most important lessons is close the deal no matter what. How do they focus -- get the focus back on closing a deal?

GOLD: I wish I could answer that question. That's something that's going to be in the arena for a long time. You know, there's so many issues with this medical issue. There's so many things going on in Washington right now. They're so caught up in this emotional involvement. They need to get the emotion out of it and understand what do they really want to accomplish? I don't think anybody knows what that is yet. That's why it will never be resolved.

ROMANS: How do you break down a stubborn customer? Somebody walks through the doors of your store. How do you break down a stubborn customer who will not move from their position? GOLD: What will it take? You know, that's one of the issues that we're dealing with. Nobody knows what it will take. You know, that's -- you know, when I'm selling a ring or when we were on the streets of New York we knew that there was an item. We knew that it had value. And we knew that we didn't want to pay too much.

With this thing in the political arena right now, I don't think anybody knows what they really want and that's the problem. Once they'd figured that one, then we'll understand, that's when a deal is going to be made.

ROMANS: You know --

GOLD: Once they figure out what their bottom line is going to be.

ROMANS: You know we talked to a hostage negotiator on the same subject. And he said ultimately the authority lies in the president. The president has to put the leadership. That is the ultimate deal maker. Even though other people are making deal.

You -- I mean, in the end, your place, you are the ultimate dealmaker. You decide whether it's going to happen. Is it the case here that there are just too many people involved in the deal?

GOLD: Well, it's -- you know, the president already made the deal, you either agree with it or you don't. So I don't think there is a variable when it comes to that. So, you know, the bottom line is, what does the president think? What does he think is going to be the right decision for America? That's what it is.

You have both sides bickering. But there's no resolution. You have the Republicans, you have the Democrats. Who's going to win? Hopefully the people of the United States will win. That's the ultimate goal. But how we get there, I wish I could answer that question.

ROMANS: I know, me, too. I just love hearing your perspective on it, though. Pawnshop politics that's when we see -- you know, really nice to you, Les.

GOLD: Pawnshop is easy. Politics is tough.

(LAUGHTER)

ROMANS: Exactly. Exactly. Nice to see you again. Thanks for coming by and best of luck to all of you there.

GOLD: Thanks so much for having me.

ROMANS: In Detroit. Love the -- love that you're doing business in Detroit. We wish the best for Detroit and everybody doing business there. Thanks, Les.

GOLD: Thanks so much.

ROMANS: For more stories that matter to your money, give me -- give me 60 seconds on the clock. It's "Money Time."

(BEGIN VIDEOTAPE)

ROMANS: More young people are just saying no to work. In 2000, 83 percent of 20- to 34-year-olds had jobs or were looking. Today it's less than 78 percent. Men are doing more grocery shopping and food makers are taking notice. Darker packaging, buzz words like ultimate and commercials like this are designed to snag male customers.

From singles bar to search bar, according to a new survey, 38 percent of Americans who are single and ready to mingle have used online dating. Almost 60 percent of Internet users say it's a good way to meet people. A 15-point jump from 2005.

Good news for gas prices. They could fall to three-year lows if current trend lows. But watch out for airfares. You can expect to pay 9 percent more this year for Thanksgiving travel. Tax season will be delayed thanks to the government shutdown. The IRS will start processing returns around the end of January. A week or two later than planned. That won't push back the April 15th deadline to file.

And Lionel trains chugging into cyberspace. The 113-year-old brand is going digital with a new iPad app and a new iPad app game.

(END VIDEOTAPE)

ROMANS: Hundreds of millions of dollars later the Obamacare Web site is a disaster. Where all of that money went next.

(COMMERCIAL BREAK)

ROMANS: Washington can't stop talking about Obamacare. And both sides are frustrated for different reasons.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Nobody is madder than me about the fact that the Web site isn't working as well as it should, which means it's going to get fixed.

SEN. TED CRUZ (R), TEXAS: I intend to speak in support of defunding Obamacare until I am no longer able to stand.

(END VIDEO CLIP)

ROMANS: So what are they really saying? I want to show you something. It's called a word cloud. This is where we take the text of those messages, we turn it into a visual representation. The words said the most appear the largest in the cloud. This is a word cloud for President Obama's statement on Monday.

I want to show you what really strikes me here. He wants to get people insurance. The president apologizing for the Web site. The message that jumps out right there in the middle. The president wants to get people insurance. Now here's another word cloud from Republican Senator Ted Cruz's 21- hour pseudo filibuster of Obamacare. You see that word Obamacare. During that speech on the Senate floor he said a lot of things including (INAUDIBLE) and ham. But what came up over and over again Obamacare. A dirty word, really, among his contingent, and protecting the American people from Obamacare.

Each side clearly has a message. But what word isn't nearly big enough in either of these? The word money.

Zain Asher joins me now.

Zain, we know the government is pouring millions into health care. Healthcare.gov. Help us follow the money. Who is making the money? Because I'm telling you something. If the shutdown was no way to run a business, this rollout is no way to run a -- a tech business. You know. Who is making the money here?

ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Hey, Christine, well, federal contractors pretty much walked away with hundreds of millions of dollars in taxpayer money for a Web site that barely even works. We are talking about 55 contractors, 36 days, 4,500 insurance. I mean, this has got to be one of the most complex Web sites ever created.

But for all that money, Christine, what did we get? We got problems logging on, we got lengthy wait times. We got error messages. So the big question as you're asking us, who got paid.

Want to talk about CGI Federal. They were the lead contractor for the online exchanges. Pretty much is responsible for the enrollment process. They landed the heftiest contract. We're talking $200 million total. Optum, secure accounts and register users, they stand to gain a possible $85 million.

The problem, though, Christine, is that nobody wants to admit fault. The contractors either fear losing lucrative contract or being forced to pay back some of the cash. At the congressional hearing this Thursday, listen to how contractors washed their hands of any blame.

(BEGIN VIDEO CLIP)

JOHN LAU, PROGRAM DIRECTOR, SERCO: We have no role in the development of the Web site. We have no role in the determination of eligibility and we have no role in health plan selection.

LYNN SPELLECY, CORPORATE COUNSEL, EQUIFAX WORKFORCE SOLUTIONS: Equifax work for solution's role in the federally facilitated market place is limited.

CHERYL CAMPBELL, SENIOR VP, CGI FEDERAL: The first set of issues on the exchange concerned another contractor's enterprise and daily management.

(END VIDEO CLIP)

ASHER: So that is what has been on CGI but they were not the only ones raking in cash. As of March $55 million had been for Quality Software Services to set up the data port. $31 million was paid to National Government Services for consumer call center and the Mutual Corporation got $22 million for project management and I.T. security.

So for all the public money that was spent, why the big flop? Are the problems fixable, Christine? Or should the administration start from scratch? Senator John McCain has his own ideas on a possible quick fix.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: It's been a fiasco. Send Air Force One out to Silicon Valley, load it up with some smart people, bring them back to Washington and fix this problem. I mean, it's ridiculous and everybody knows that.

(END VIDEO CLIP)

ASHER: So a lot of confusion and more questions than answers. But one thing is clear, the old adage that you get what you pay for certainly did not apply in this case -- Christine.

ROMANS: It's just so frustrating. I mean, everybody is just so frustrated by it. I mean, especially if you're trying to get insurance for the first time, you know?

ASHER: Especially when you are.

ROMANS: Zain Asher -- thanks, Zain.

ASHER: Of course.

ROMANS: We'll keep following the money.

Coming up, a $6 ticket to a Red Sox World Series game. The company that sold it says it's not legit. So why was the lucky fan at the game anyway? There he is. His story next.

(COMMERCIAL BREAK)

ROMANS: All right. The Boston Red Sox and St. Louis Cardinals are slugging it out in the World Series. Tickets on resale sites like Stubhub start around $400. But one fan got into Fenway for less than the cost of a beer.

Here's the "Score."

Erik Jabs bought a $6 ticket to game one of the World Series on Stubhub. It was of course a fraudulent sale. Six bucks after 40 minutes on the phone with the Web site, they offered a $50 credit. He pushed back and so did a few media outlets saying Stubhub fans protect guarantee should cover a ticket to the game. It worked. He sent us these photos from game one.

Nice seats. Free game. Breaking with the World Series tradition, St. Louis Mayor Francis Slay tweeted he won't be participating in a bet with the Boston Mayor Thomas Menino. Why? He said the bets take time away from his work for the city.

You hear that, Washington?

Mayor Slay is promoting a fundraising effort, though, between churches in the two cities. The governors of Massachusetts and Missouri, oh, they're betting all right. If St. Louis wins, clam chowder from Legal Sea Foods and beverages from Polar will head west. Bissinger's chocolates and Fitz's cardinal cream soda will come east if the Red Sox win. Plus goodies from local bakeries near each of the governor's offices.

President Obama says he's madder than anyone else about the botched rollout of healthcare.gov. Don't tell that to the woman smiling on the homepage. You've seen her. How many times have you seen her? Who is she?

Our own Jeanne Moos set out to find the woman dubbed the Mona Lisa of our time.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Have you seen the mystery girl? She's not missing, but she is almost impossible to miss.

GEORGE STEPHANOPOULOS, ABC NEWS: The troubled launch of President Obama's health care law --

UNIDENTIFIED MALE: The bust rollout of health care has not only embarrassed the White House.

UNIDENTIFIED MALE: Credibility debt spiral.

MOOS: She's been floating across our TV screens, smiling out at us from our computers.

(On camera): Online at least. This isn't the face of Obamacare. This is.

(Voice-over): And critics are having a field day tweeting congrats, rapidly smiling healthcare.gov. splash page stock photo girl, you're now the most despised face on planet earth.

How would you like having your face associated with phrases like "problem plagued."

(On camera): Watch your back, newscasters. She's behind you. Screen left.

JOHN BERMAN, CNN EARLY START ANCHOR: Takes the heat for the Obama Web site glitches.

MOOS: Screen right.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: The problems --

MOOS: When we asked about her identity, the company responsible for building much of the Web site didn't call us back. Nor did Health and Human Services.

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: This is not a sort of lickedy split process.

MOOS: A small company that originally worked on the home page told us she was part of the mockup from the design folks.

We checked stock photo files, but couldn't find her face as even being defaced. Does she have Obamacare, someone tweeted.

Obamacare girl isn't getting the love the original Obama girl got back in 2008.

Some are crushing Obamacare girl by comparing her to Joey on "Friends."

MATT LEBLANC, ACTOR: As of today I am officially Joey Tribbiani, actor/model.

MOOS: But Joey's dream modeling job became a nightmare when he saw his photo plastered all over New York on a poster warning VD. You never know who might have it.

Are Obamacare girl's friends snickering like Joey's?

LISA KUDROW, ACTRESS: We're just laughing. You know how laughter can be infectious.

MOOS: But Obamacare is the treatment, not the disease. While the original Obama girl sang of health care reform.

Poor Obamacare girl gets the cold shoulder. And all she does is smile. The enigmatic, normally sought health care.

Jeanne Moos, CNN.

(On camera): If this is you, call me.

(END VIDEOTAPE)

ROMANS: For more on what matters to your money, check out our blog. There you can find the full video of Les Gold and me hitting the streets of New York. I got quite a lesson in negotiating. That's right at the top of the page, CNN.com/yourmoney.

Coming up on a brand new show at 2:00 p.m. Eastern, is it now time for a $15 minimum wage. How one phone call about food stamps and heating bill is pushing this conversation forward. We'll see you at 2:00.