Yahoo Earnings in Line with Expectations; Verizon Expected to be Top Bidder for Yahoo; Yahoo Management Believes Company is Undervalued; EU to Charge Google with Antitrust Over Android; Huawei Launches Dual-Camera Phone
NEWTON: Hello, I'm Paula Newton in New York. Coming up in the next half hour of QUEST MEANS BUSINESS, Google faces a massive antitrust case in Europe over Android phones and I'll speak to one of the lawyers leading that case. And we'll break down a Yahoo's latest earnings numbers and the future from Marissa Mayer. Before that though, these are the top news headlines we're following this hour. At least 28 people mostly civilians have been killed after a powerful explosion in Kabul. Now, a suicide bomber detonated a car full of explosives before a gunman attacked security forces. The Afghan Taliban has claimed responsibility for the attack, which appeared to be targeting a security team that protects members of the government. Speaking at The Hague, U.N. Secretary-General, Ban Ki-moon, condemned the violence.</s>BAN KI-MOON, U.N. SECRETARY-GENERAL: First of all, I'd like to express my deepest condolences for the victims and their families and friends for -- and I condemn strongly this terrorist attacks for the people in Afghanistan. There is no justification whatsoever attacking civilian people, as well as even security people. We must fight against this terrorist attacks.</s>NEWTON: The death toll in Saturday's earthquake in Ecuador has risen to 443. The country's defense minister says more than 200 people are still missing and more than 4,000 injured after the 7.8 magnitude quake. It's the deadliest earthquake to hit the country since 1987. New Yorkers are going to the polls to vote in Democratic and Republican presidential primaries. Hillary Clinton and Donald Trump both voted in New York State earlier as they look to solidify their leads. The first exit polls from the primary are due out in about a half an hour from now. U.S. law enforcement officials say breaking into the iPhone that belonged to the gunman in the San Bernardino shootings helped their investigation. Investigators say they now have a better idea of what Syed Farook did immediately after the mass shooting last December. Apple resisted the FBI's demand to unlock the phone. The FBI then got into the phone without Apple's help. Dilma Rousseff says the upcoming Rio Olympics will be the best in the world. In a response to a question from CNN's Shasta Darlington. The president said she's confident the games to be a success despite the current impeachment proceedings against her. Yahoo has posted its first quarter results and they're mostly in line with Wall Street's expectations. The stock though is trading flat in afterhours trading. Clare Sebastian joins me now. Giving everything that's going on perhaps flat is OK. I mean going into the numbers a little bit more deeply, what do you see there, Clare?</s>CLARE SEBASTIAN, CNN MONEY REPORTING: Well, I mean, the bottom line is could have been a lot worse. This came in roughly in line with and maybe even slightly better than some analysts were expecting. Revenue per share -- revenue just around 1.09 billion, earnings per share around 8 cents. So that is roughly in line with what's expected and there's a bit of up and down here in the earnings report. Some good and bad. You've got mobile revenue increasing. We've growth revenue declining. The thing that got investors excited in afterhours trading initially was the fact that Marissa Mayer said they've made substantial progress toward potential strategic alternatives for Yahoo. That is of course the major focus at this point. We still expect many of the questions in the earnings call at the top of the next hour to be focused on that, on the future of the company going forward whether or not they're going to sell off all or part of the core business. That bidding process has been very opaque, very much the subject of rumors in the past week. And we now know, you know, this earning report shows that while this is roughly in line with what people are expecting, this is a company of revenue is declining and earnings declining and struggling to get it back on track.</s>NEWTON: Yes, and in fact even pricing Yahoo without the cash it has on its books has very difficult. I mean, Clare, she says there's been strategic progress but in terms of the suitors we see lining up for Yahoo, what are they buying here? Why would they buy Yahoo?</s>SEBASTIAN: Well the bidding price has revealed quite a bit to us about what it is that could be of value in Yahoo. We look at Verizon who has expressed interest. They could well be interested in the advertising assets. They acquired a company BrightRoll, which specializes in video advertising. There's also Yahoo's Gemini platform and Verizon of course also interested in media assets that Yahoo has, Yahoo Finance, Yahoo Sports, Yahoo news and it also owns AOL. So that would add to that portfolio. Also interest from the parent company of the "Daily Mail" in the UK and also sheds light on how valuable Yahoo's media assets could be. It's said it has a billion monthly users. It ranks third in the U.S. in terms of most trafficked web properties in February behind Google and Facebook. But the point of the matter is, you know, when you strip out the parts of the car, they're of value. But altogether this company is still declining. So it remains to be seen who could, if anyone, could move in and turn the sum of the parts into something that's more reliably profitable.</s>NEWTON: Yes, which is so interesting that a lot of people believe that perhaps the Verizon deal is the best one. Who knows at this point? Is Yahoo Really going to string along shareholders for a long here? When will we see what Yahoo's future is going to like?</s>SEBASTIAN: The timing, Paula, really depend on how many bidders there are and how much they're offering, if there are lower bids, it could take longer. If there are many bid it could take a while for them to troll through the various offers. We at the moment, no published offers. It's like underlining. It's just the rumors and reports out there. So we really don't know at what stage is company is at in terms of -- all we know is that phrase substantial progress that came out of the earnings report today. And of course there's also the issue of the activist investor stock would value which is seeking to replace the entire board of Yahoo at their meeting in June. They're hoping to see progress before that on some kind of major move, either a sale or spinoff of the core business or perhaps something else. They could block a sale potentially if it doesn't fit with what they believe is the fair value of the company. So very uncertain still going forward for them.</s>NEWTON: Which is why it's going to be a very tough call for Yahoo. That's coming up in about 20 minutes and we'll continue to bring you more news on Yahoo. Clare Sebastian, thanks so much, appreciate it. Now Google is coming under fire from the EU's competition, Watchdog, over the way it uses the Android operating system. Now, reports say the European Commission plans to file official anti-trust charges against the company on Wednesday in Brussels. Competition Commissioner, Margret Vesger, argues that Google abusing its dominant position by unfairly favoring its own apps. Android used on a majority of phones in Western Europe and Google mandates that a suite of Google apps come preloaded on every device. Google denies that it's broken any rules. It says Android is what it calls open source and the consumer ultimately decides what apps to use. Now, if google is found guilty, it could be on the hook for a fine as high as 10 percent of revenue. That's about 7 $billion. Now, FairSearch is one of the companies that launched complaints about Google to the European Commission. Earlier I spoke to FairSearch's legal counsel and spokesperson, Thomas Vanje, he told me Google is inhibiting competition and depriving consumers of choice.</s>THOMAS VINJE, FAIRSEARCH LEGAL COUNSEL AND SPOKESMAN: I think if the commission does what it seems to be about to do then OEMs, manufacturers of phones in particular will be free to differentiate their products. To give space to other innovative providers of apps in particular. So consumers will have more choice of applications. And they might also have more choices with respect to the devices that they can purchase.</s>NEWTON: Now, Google argues that, you know, the customers already have choice. I'm holding an Android phone here and an Apple phone here. And I can tell you, both come with these prepackaged apps, but that doesn't mean you can't use other apps. And in some cases you can delete some of the apps. The crux of your argument, though is that somehow the customer does not have choice that they're locked in.</s>VINJE: The power of default is very intense. Lots of studies indicate that and I think it's fairly common knowledge it is the case so consumers tend to use, and this was true in the Microsoft case ten years ago, as well. They tend to use what they're provided. And so that means that the programs that are included by default with prominent placement are the programs that consumers tend to use. That means that competitors have difficulty reaching their audiences, that means they have difficulty competing, generating revenues necessary for further innovation and that I would suggest does in the end limit consumer choice.</s>NEWTON: It's the Microsoft case here and the fact that Microsoft lost that case, that is what's giving you hope here and some people estimate as much as 10 percent of Alphabet, the parent company's, revenue. Is that what is making you hopeful in terms of what your case rests on?</s>VINJE: There's certainly similarities of this case and the Microsoft case. And the European Commission showed that it was capable of being very strong in the Microsoft case. So, I think we have based upon the merits of this case and the president of the commission acting versus Microsoft and others. We have good reason to hope that this case will end in a finding of violation by Google. With respect to the fines, that's not at all what drives us. It is possible that Google will be fined some significant amount. But to us, the thing that really matters is the change in the conduct. And we hope that will give room for more competition and again more innovation and choice for consumers.</s>NEWTON: Now whether you choose to use android software or something else, taking the best photos on your mobile device comes down to hardware. Chinese phone maker Huawei has equipped its latest smartphone with two rear cameras. And claims it's taking a leap toward professional quality photos. CNN Money Samuel Burke took the new P-9 for a test shoot around Manhattan.</s>SAMUEL BURKE (voice-over): That line between professional cameras and smartphone cameras is blurring. Huawei's new P-9 smartphone with dual cameras. I'm not just the one in front and the one in back. It takes one picture with these two lenses and we went to three New York landmarks to test it out.</s>BURKE (on camera): The first up, the Brooklyn Bridge.</s>BURKE (voice-over): The two lens system lets you take high quality pictures with the foreground in focus and the background blurry or the other way around.</s>BURKE (on camera): Huawei worked with the famed German camera maker Leica to develop this technology. One camera takes photos in color, the other one in black and white. Combined the companies are promising a higher quality photograph. Our next test is at one of New York's newest landmarks, the High Line. A bit of an artsy photo with the P-9 and compare it with the same shot of the iPhone 6</s>S. BURKE (voice-over): The Huawei lets you control just how soft you want the background to be. The iPhone, not so much.</s>BURKE (on camera): Huawei is already a top smartphone manufacturer in china. They're gaining ground middle markets like Mexico. And now looking to take on the West with the P-9 and set you back about 680 bucks. Of course, you can't spend the day sightseeing in Manhattan without a visit to Central Park. The dual cameras even let you focus after you've taken a picture. I've never seen pictures taken on a smartphone look quite this good and even if you're not in the market for an Huawei phone, rumors say Apple might bring a two camera system to the iPhone 7. With pictures like these, I'd expect to see a lot more smartphones with dual cameras soon.</s>NEWTON: That was our Samuel Burke there. I have no excuse for bad photos. We are covering President Obama who is traveling to Saudi Arabia. After the country said it might sell U.S. assets.