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Twitter IPO Discussed; U.S. Economy Added over 200,000 Jobs in October, 2013; Documentary Promoting Nuclear Energy Profiled; Blockbuster Video Out of Business
Aired November 9, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
POPPY HARLOW, CNN ANCHOR: From 140 characters to tens of billions of dollars, Twitter now a public company, but what does that mean to your money? I am Poppy Harlow, in today for Christine Romans. Well, as you well know, investors went crazy for Twitter on its first day of trading. The stock opened at $45.10 a share, more than a 70 percent premium to that offering price. It stayed in that range for much of the day, closing just below $45 a share when that closing bell rang at 4:00 p.m. That stock price put the company's value at just about $25 billion. Let's talk about that, because that's a hard number to grasp. I want to bring in Matt McCall, the president of Penn Financial, and Rachel Sklar, she's a media writer and founder of The List and an avid Twitter user. Thank you both for being here.
When I see that number, $25 billion valuation, bigger than Alcoa, bigger than Delta, bigger than Tiffany, Hershey, all these companies, why do you think it priced that way and there was this investor reaction, Matt?
MATT MCCALL, PRESIDENT, PENN FINANCIAL GROUP: Well, it's a bit surprising considering its value is bigger than the companies you mentioned and it's never turned a profit. When you feel like you have a connection with something, especially a company like this, you want to be involved in it. So that's a big reason the stock opened so high yesterday because the average investor feels I know Twitter, I feel it. I want to buy it.
HARLOW: You and I have talked about this. Does that mean you should invest in it just because you know it? Do you understand the fundamentals, the business plan, where the profit is going to come from?
MCCALL: Unfortunately it does not. Just because you use Twitter does not mean it's a great investment. Ask anybody who out there is buying, the average investor, how does Twitter make money? Most people do not know. They make it by advertising, these tweets that look like advertising. But most people don't understand that, they're actually losing money.
HARLOW: Rachel, you're a huge Twitter user. It's helped you a lot professionally.
RACHEL SKLAR, CO-FOUNDER, THE LIST: And personally.
HARLOW: A lot of fun on it. But I'm wondering what your take is in terms of what it has done for you in your business and in terms of where the advertising needs to go.
SKLAR: I've been on it since 2008. So when I was on Twitter I was working at the "Huffington Post" covering the presidential election in 2008. And the first early adopters in media were on Twitter. And that's how I started to consume my news. I really remember noticing it in the conventions in 2008, that I wasn't even looking on any of the news sites. I was just looking on Twitter. So it's become this first line of news consumption for most people.
But it's so much more than that for me personally. As an activist it helps me get my message out. As someone who likes to engage across a broad variety of industries, I can easily do so and find the common denominator. I do a lot of work around women. So I can do that across every industry.
HARLOW: Let me ask you about advertising. I noticed a big ad in my Twitter feed. Is advertising going to flow smoothly and be adopted the way it needs to be for this company to bring in a lot of money?
SKLAR: That remains to be seen. There's a lot of creative stuff that they have yet to do. Having promoted tweets in your feed is a pretty prosaic way of making money. I'm not sure I ever clicked on a promoter tweet. Last night when I was clicking on the "scandal" hash- tag, there were tweets there that had nothing to do with "scandal" and they irritated me.
HARLOW: And to you, Matt, there are a lot of question about do we know the plan for advertising, do we know a lot of what they're planning to do? You mentioned the TV show "Scandal," Rachel. They have television viewers that have these whole conversations on Twitter during shows. But do we know enough about their ad plan?
MCCALL: Right now they get 85 percent of their revenue from advertising. So obviously that needs to grow. They're projecting $600 million this year, close to $1 billion next year. That is some really nice growth. The problem is they can't rely that much on advertising.
You mentioned TV. One thing that they do have is the demographic between 25 and 34 years old, half the people that watch TV in that age group are tweeting about the show that they're watching. If that's not an opportunity to go to these networks or go to products, Coca- Cola, as you're watching, whatever a show may be on TV right now, Coca-Cola can put ads in there, that's half the people watching, demographics that advertisers want. If they can take advantage, that would explode Twitter.
SKLAR: There's so much metadata, geographic, who these people are following. There's a lot of that that could be targeted. So I think there's so much more that they can do. And they haven't even touched Twitter as its own platform. Facebook did Facebook Live. It had events that were only on Facebook. Twitter actually is a conduit right now for events hosted by other people. They haven't even explored their own possibility as a media company. And I think that could be very exciting. HARLOW: That's a really good point, especially how valuable all that data is that we are freely, freely putting out there for them. Thank you both, appreciate it, Matt and Rachel. Thanks for coming in.
MCCALL: Thank you.
HARLOW: Love the talk.
For more stories that matter, put 60 seconds on the clock. Christine Romans has this week's "Money Time."
CHRISTINE ROMANS, CNN ANCHOR: Men aren't pulling their weight at home. Data shows women are working more outside the home, but they're still doing the bulk of cooking and cleaning. In the U.S. both men and women work about 50 hours a week, but if you break it down, men spend most of that time on the job while women spend it working at home.
More bad news for BlackBerry. The former king of the smartphones fired its CEO this week and is giving up the search for a buyer.
Black Friday? Try Thanksgiving Thursday. Kmart is opening at 6:00 a.m. on Thanksgiving Day and it will stay open for 41 straight hours. Macy's, Sears, J.C. Penney, Kohl's, and Toys R Us will also open on turkey day.
German authorities recovered 1,500 paintings confiscated by the Nazis more than 70 years. Valued at more than $1 billion, the collection includes masterpieces by Matisse. The art was found in an elderly man's Munich apartment.
We could soon travel like the Jetsons. The air mobile 2.5 prototype is a hybrid vehicle that can drive on normal roads or transform into a two-seater airplane.
You can now indulge in chocolate covered potato chips. Lays hopes to get the attention of millennial women with this new snack.
HARLOW: Coming up, as technology soars, we say goodbye to some old favorites. On the week Twitter went public, America says bye-bye to Blockbuster DVDs.
HARLOW: You probably use Twitter, and this week you can own a piece of the company if you want. But as we welcome the future, we also say goodbye to some of the past. Blockbuster, you know the company, it is closing its remaining 300 U.S. company-owned stores and shuttering its DVD by mail service. But its demise is part of a larger story about the disruptive power of technology. Our very own Richard Roth joins me here in New York. So this sort of sounds like the death knell of the DVD. RICHARD ROTH, CNN CORRESPONDENT: Yes, I was going to say that. We know all these brands, products, Polaroid and others that seemed to just disappear. And as you mentioned, the Dish Network, which owns Blockbuster stores, is closing all of them. There were 9,000 of them just a few years ago. Now only a handful of franchise independent- owned places will survive. If this was the video rental, the movie would be called "Digital kills again and again."
UNIDENTIFIED MALE: You look like a new release.
ROTH: Now there's nothing new at Blockbuster. The remaining hundreds of video rental stores are closing.
UNIDENTIFIED MALE: It just means nobody wants to buy or rent videos anymore. It's technology.
ROTH: This Manhattan Blockbuster is now a pop-up Halloween store.
UNIDENTIFIED MALE: Do we need Blockbuster? Do you use Blockbuster?
ROTH: I'm not going to let you into my home to see my video collection.
The ruthless march of new technology and changing consumer taste led to a bloody end for yet another physical media icon.
UNIDENTIFIED FEMALE: I think it's kind of sad. I used to love going to Blockbuster with the family.
ROTH: Nostalgia mocked in the comedy program "South Park."
UNIDENTIFIED MALE: All on Blu-ray or DVD. Well, what do you think?
UNIDENTIFIED MALE: It's awesome. You should try to get on the ancient civilization sew so people could see how cultures used to live.
UNIDENTIFIED FEMALE: I'm upset that it's gone. I don't think it will be back considering all the latest in technology that people have now.
ROTH: "Seinfeld" reminds us how people used to get and return their movies.
UNIDENTIFIED FEMALE: $3.49.
UNIDENTIFIED MALE: It says $1.49.
UNIDENTIFIED MALE: You didn't rewind. There's a $2.00 charge.
ROTH: Yes, people used to have to leave their homes to obtain "Rocky 4." The Onion News Network claims there are now Blockbuster museums in America.
UNIDENTIFIED MALE: A specialty shop where customers exchanged money for the short-term use of videos in an archaic system called "renting."
UNIDENTIFIED MALE: The tour is amazing. It's like stepping into a time machine.
ROTH: Do you ever use eight-track tapes anymore?
UNIDENTIFIED MALE: I've never seen an eight-track tape.
ROTH: And CDs, DVDs, and video games are also disappearing under a digital tidal wave. After looking at a tiny video screen in 1987, technology analyst Gordon Gekko in "Wall Street" saw it coming.
UNIDENTIFIED MALE: I tell you, we're going into a new age, pal.
ROTH: It's difficult for me and others to keep up with all the changes in technology. Would you like a one-year-old newspaper? Or how about a VHS cassette for home viewing tonight.
In Greenwich Village people can touch the classics. The music album stubbornly survives.
UNIDENTIFIED FEMALE: It's part of history. It's one of those things that you learn to appreciate. It's art.
PETER KAYE BLEECKER STREET RECORDS: Because they didn't think something like this exists anymore. They feel like they're walking into a time capsule.
ROTH: The owner makes house calls to record owners to evaluate their collections. Kids, doctors used to do that, too.
ROTH: Everybody I asked on the street looked at me as if I was from a time capsule. They were saying, look, I get it from Netflix or online streaming or whatever.
HARLOW: Certainly not an eight-track.
ROTH: Do you have any record albums at home?
HARLOW: Of course.
ROTH: Really. What do you have?
HARLOW: I have my parents' collection. That's what I have.
ROTH: Lawrence Welk, maybe some Beatles?
HARLOW: Point taken, my friend. Richard Roth, thank you so much. I appreciate it.
Coming up next, a surprising jump in hiring last month despite the government shutdown. But here's the question -- are there enough jobs for those that have been fighting for America's freedom?
(BEGIN VIDEO CLIP)
ROBERT GATES, FORMER U.S. SECRETARY OF DEFENSE: These young men and women, mostly young men and women, don't want similar think, and they sure as heck don't want charity. What they're looking for are meaningful careers.
(END VIDEO CLIP)
HARLOW: I'll talk with former secretary of defense Robert Gates and Starbucks CEO Howard Schultz next.
HARLOW: A big upside surprise in the October jobs report. Take a look at the headline number, 204,000 jobs created last month, unemployment staying relatively steady at 7.3 percent. The big question in this report was, were we going to see a skewed report because of the few weeks in October when the federal government was closed and all those government workers were furloughed, was that going to have a big impact? It really frankly did not have a big impact.
One caveat, though, in this report, even though this number, 204,000, shows the third best month in terms of job gains for the whole year, we still have 11.3 million Americans that are unemployed and 4.1 million of them who have been out of work for six months or longer. So there's still a lot of pain in the labor market.
And as we turn to Monday, the eyes of Wall Street will turn to veterans as they ring the opening bell in honor of Veterans Day. But photo-ops aside, what many veterans want from big business is a job. The unemployment rate for veterans many United States is 6.9 percent. Compare that with the national jobless rate of 7.3 percent. But look at the rate for vets who fought in the wars in Iraq and Afghanistan since 2001. That is 10 percent. Those numbers have improved a bit over the past few years with broader job gains. Also helping, some major corporations stepping up to help get vets back to work.
Here is an example. General Electric hired nearly 7,000 veterans over the past year. Shipping giant UPS has added 2,800 vets to its payroll since March. JP Morgan Chase brought on 6,000 since 2011. The largest U.S. employer, Wal-Mart, hired more than 20,000 vets this past year, part of a pledge to hire 100,000 over the next five years.
And this week Starbucks made its own pledge. It says it will hire 10,000 veterans or military spouses over the next five years. I sat down with Starbucks CEO Howard Schultz and former U.S. defense secretary Robert Gates, who sits on the Starbucks board, and I asked them why are they doing this now?
HOWARD SCHULTZ, STARBUCKS CEO: This is a time in America where we have an obligation and a responsibility to do the right thing. But in addition to that, these are young people who have significant value to add to the workplace and to companies, great values, leadership skills, and an opportunity I think to really make a difference.
HARLOW: Secretary Gates, you have said our veterans with one of the most underutilized talent pools in this country. You sit on the Starbucks board. I'm interested to know what advice did you give when the company was forming this initiative, especially when it comes to taking all the talents from the armed services into the private sector? It's sometimes hard to translate on a resume but it really pays off in the workplace.
GATES: That's a very good point. Over the next five years, another million men and women will come out of the military and into civilian life, and they bring with them extraordinary skills. They first bring great technical skills from logistics to supply chain management, advanced electronics and countless others. But they also have in common unique leadership skills, the ability to lead small teams, to lead people who are mission-oriented, to operate under tight deadlines, and so on.
But I'll tell you one other thing. These young men and women, mostly young men and women do want sympathy. And they sure as heck don't want charity. What they're looking for are meaningful careers, fulfilling careers where they can make a decent living and continue to contribute as they have been contributing.
ROMANS: In reading for this, Secretary Gates, one thing I did find is especially veterans with disabilities, some with PTSD but are still able to work, find it very challenging to find work and employers that will hire them. Do you think that that has been a big obstacle, Secretary Gates, to getting these veterans to work?
GATES: It's been a dilemma for us, frankly. For me when I was in the Department of Defense and I think for others, we obviously want to call attention to post-traumatic stress so that the troops who may have experienced some of it get treatment and care for themselves. But at the same time we don't want to convey in some way that these returning veterans are somehow impaired. Giving these folks an opportunity and a fulfilling career opportunity is probably the very best treatment they can get.
SCHULTZ: These are extraordinary people who have defended the country and deserve a unique opportunity, and I think we're going to try at Starbucks to do everything we can to give it to them.
HARLOW: And now the real challenge is going to be helping these veterans build careers from those jobs. There are 21.3 million veterans in the United States. That is more than the number of people who live in New York, Los Angeles, Chicago, Houston, and Philadelphia combined.
Residents of Fukushima, Japan, still struggling to clean up more than two years after the meltdown at the Fukushima Daiichi nuclear plant. But a new very controversial documentary here on CNN argues a new generation of nuclear reactors is the only way to power the future.
(BEGIN VIDEO CLIP)
CHARLES TILL, FORMER DIRECTOR OF REACTOR DEVELOPMENT, ARGONNE NATIONAL LAB: This is not a dream. This is not somebody's calculations on a piece of paper. This is real. We know how to do these things.
(END VIDEO CLIP)
HARLOW: Nuclear power, is it dangerous, is it green, is it necessary? That's next.
HARLOW: When you turn on one of these, do you think about where the electricity comes from? Two-thirds of the electricity in United States comes from fossil fuels, chiefly coal and natural gas, 13 percent comes from renewables, hydro, wind and solar, and 19 percent comes from nuclear power plants like this. The Department of Energy predicts that electricity production around the world will nearly double by 2040. Supporters of nuclear power say that no other source can deliver clean, reliable energy on a massive scale. But those same supporters admit when it goes wrong, as it did at Fukushima, it can be catastrophic.
(BEGIN VIDEO CLIP)
MARK LYNAS, ENVIRONMENTAL ACTIVIST: There's no other energy source that does this, that leaves huge area contaminated by this strange, invisible presence which you know is potentially deadly.
(END VIDEO CLIP)
HARLOW: That was a clip from "Pandora's Promise," a controversial new documentary airing right here on CNN. The film's director Robert Stone is here with me now. Thanks for coming in. I appreciate it.
ROBERT STONE, FILMMAKER, PANDORA'S PROMISE: Great to be here.
HARLOW: So I watched it. It's fascinating. The first thing I thought was this NIMBY, not in my backyard. Even if you have got people supporting nuclear power, oftentimes you find they don't want it in their back yard. How do you tackle that given the risks that we all know and we saw at Fukushima?
STONE: Nobody wants to live next to any power plant at all. And when giant wind farms are put up on the beautiful ridgelines, I live in the Catskills, people are against that kind of thing, too.
HARLOW: I think there's a safety concern that people have, not wanting it in their backyard.
STONE: That's right. So I think one has to step back and look at the broader context. We've got 440 reactors all over the world. We've had nuclear power for about 50 years now. Out of that we've had three major accidents, Fukushima, Chernobyl, and Three Mile Island, only one of which there's been any death or any sickness, which was at Chernobyl. And then according to the World Health Organization and the best science we have, only 60 people were known to have been killed even after 25 years as a consequence of Chernobyl. So that's the reality of that. I know it's counterintuitive, a surprise, but that is the fact.
And then you look back at the big picture on fossil fuels, which, again, according to the World Health Organization, kill 3 million people every year, 3 million people every year just from particulate pollution. That doesn't even account for ocean acidification, climate change, which is the big elephant in the room, and all that. So the surprising thing to me on the whole thing with safety is that nuclear power is actually one of the safest forms of energy we have.
HARLOW: But when it goes wrong, it goes terribly wrong, like at Fukushima.
STONE: Absolutely. That was an old 1960's era reactor. And I think the thing that excited me about this and the thing that excited environmentalists who are changing their minds on this is new reactors, even the ones that are being built now that are orders of magnitude safer, and the ones that will come online in a decade or two where the very physics of them prevent a meltdown.
HARLOW: I want to get your take on one more thing. German Chancellor Angela Merkel made a very stunning turnaround. She was a huge supporter of nuclear. And then after Fukushima she got a report and she studied it, and she decided for that entire country, Germany, to completely phase out nuclear by 2022. France, on the other hand, gets about 75 percent of its electricity from nuclear. So what do you think we can learn from those two European countries?
STONE: I think there you've got a very interesting example. As you said, France has 75 percent to 80 percent nuclear power, has the cleanest air in Europe, cheapest electricity in Europe, and the lowest CO2 emissions per capita. You have got Germany next door going with renewables. That's great. But keep in mind, they're five percent solar and seven percent from wind. So it's still a huge amount of energy that's coming from other sources, and they're still building coal plants. But we'll see how it plays out. And there I think you have a great example of a country going gangbusters for renewables and a country that's dependent on nuclear.
HARLOW: We will certainly see what happens. A controversial film, fascinating. So I encourage people to watch it and weigh in on the debate. Thank you so much for joining us.
STONE: Thank you so much for having me.
HARLOW: That's it for "YOUR MONEY." Thanks so much for spending this portion of your weekend with us. Christine Romans will be back with you at 9:30 a.m. and 2:00 p.m. eastern right here on CNN. Have a great weekend.