tomegamerger abandoned create the worlds biggest ad company. apple needs a doctor. the tech giant is close to buying beats electronic for more than $3 million. russia celebrates victory day as the ukraine crisis wages on. welcome to "countdown." it is 6:00 in london on this friday morning.

they have abandoned their $35 billion deal to create the world's biggest advertising company. both companies say they could not overcome obstacles that delayed the process. for more, let's get right to martin sorrell. thank you very much. >> how are you? >> i am good, thank you. are you feeling a sense of schadenfreude today? >> i would not know how to spell that. anyway, i do not think we are surprised. thingy 7, when the whole was announced, we said it was strategically and structurally challenged with regulatory problems. surprised with the speed with which it fell apart.

we thought it would go through to july 27, when the 500 million feet would lapse -- $5 million fee would lapse and both parties could walk away with their tails between their legs. i think we said it was strategically and structurally challenged and that has proven to be the case. >> or martin, when i started in business many years ago, i was always told that there is no such thing as a merger of equals. does this prove the point? >> i was told that, too. the reason this did not happen because it was proving to be a do not think that either party really spent a lot of time on the details before -- maybe it is one of the weak points of our industry that we do not think about the details. egotisticalfor

reasons. i think one is left with a lingering impression that it was both ceo's sat in the room for six months. maybe they should have had a few expensive advisors around. ,f you look at what is going on the detail with which that deal -- it was also described as a merger of equals, that had its structure well worked out from before and detailed implementation before the announcement. this suffered from it being an emotional, rather than a strategic and practical set of decisions. lack of forethought and ill conception from the beginning. >> the deal was obviously causing consternation to shareholders, to clients, and

employees. what is the reputational damage from this? >> i do not know. we have to see. i do not think this is the end of the story. there will be more fallout from the results. ceo's makes a very significant and surprising decision and they spent 10 months wrestling with it, the regulatory authorities have not it must be al, couple of hundred million dollars between them on this deal up to now and there must be some questions raised about what they have done and how they have done it. i think there will be continued fallout as a result. from our point of view, the best result would have been that there was some sort of state of

suspended animation that could have continued on for long periods of time with the announcement of no regulatory consent. we have gained significant amount strategically. we have taken people on a ratio of about four 21. one.o another good month. we just got our results and they were stronger than the first quarter. both the revenue and gross margin levels. >> when it comes to mna -- in publicist will search for public group of companies. they're likely to seek

acquisitions. we know you are highly inquisitive. ?hat permutations are out there who is going to search for who next? >> we will remain focused on small and medium-sized deals. bloomberg as number one or number two in the last two and three years together with google and intel. we will continue to do small and medium-sized deals. my bet would be that they will go for ipg. , they willrpay probably -- it will be another field day for us all. that would be my bet. my bet would be that it ends up inside vivendi. >> does it matter that you are number one or number two? is it ultimately important to you?

>> i think if my mom was still alive, it would be important to her. dad --to my mom, or my beyond my mom, or my dad, probably little or none. it is more of the issue of whether we thought from the very beginning that putting the number two and three together was ill-conceived. the two companies are very different and the two ceo's are very different. i was talking to one omni, executive in beijing this morning he said to me that the smoke signals started to come up in december. was thatgoing around he would never go back to paris unless it was for morris leavy's leaving. >> if you had one bit of advice, what would you say?

>> when the deal was leaked by bloomberg, i was asked by bloomberg as to what i thought about the possibility of two of our competitors merging and one of them would not be ipg. saying if you are going to be chairman, can i be cfo? no. said no point in giving them any advice. >> thank you for chatting to us. sir martin sorrell speaking to us from china. jonathan ferro is here. >> sir martin saurav -- four sorrell, always good. it is about power and generating market share. they are talking about it breaking down because of tax

issues. the analysts are talking about the same thing. it is managerial. organizational structure. the sticking point, everybody was talking about one thing, the conflict of client interest. on, ourer it goes clients interests are starting to be hit by this. that is what you have to talk about. it just does not stop here. what is the hangover of the breakdown of this deal? what does it mean for the industry? what if it means for the clients that have been left hanging? martin sorrell has made a point that he has managed to put his strategy in place. >> he wanted it carry on. is a key point. this deal got announced in july. had they been able to implement

their own strategies aggressively -- >> it was all about scale, wasn't it? >> going into the digital revolution aggressively. but it was less about synergies and more about -- >> it was less about synergies and more about financial firepower. >> they have lost 12 months now. they have to start again. is it over on the consolidation side of things? that is going to be very interesting. >> good to chat, thank you. it is friday morning, the big news. apple is said to be in talks to acquire dr. dre's headphone maker for $2.3 billion. applegate outld of acquiring -- what would

applegate out of the deal like this? >> the line of very popular headphones that have been gaining ground. people are walking around with these stereos in their pocket, the use of these headphones is proliferating. on top of that, subscription music service in which somebody pays $10 a month for access to unlimited access to the songs on your phone or through a web browser. now, has mainly just had itunes, which you use by downloading a song at a time. -- some of these other services out there have a subscription fee. >> what does it say about future products from apple and dr. dre? -- apple has

resisted doing the kind of subscription service. itunes is the biggest outlet for buying music in the world. digital download sales have been falling. last year was the first year that tracks sales fell ever. openingws that they are -- open to moving in a new direction where younger companies where you pay a subscription fee and you get unlimited access to all of this music and you can personalize it. apple to dosual for a deal of this size? >> this deal right now is being valued at about $3.2 billion, which will be by far the biggest deal apple has ever done until now. one of the biggest deals was about $400 million when they

bought the company next to bring steve jobs back into the fold. this is an unprecedented deal for them if it goes through. if they completed. it signals a new era for them in terms of how they do acquisitions. >> adam scott triano joining us live on the phone from san francisco. apple betting big on beats. that is one of the big stories today. big thanks to our man in san francisco. mario draghi says the euro is "a cause for serious concern." is that enough for a new rate cut next month? we will explain when we go inside luxury skincare company. ♪

>> welcome back. some breaking numbers from french equipment maker. the company has announced a loss of the first quarter. the loss was 73 million euros. revenue little changed, 2.9 6

billion. the gross profit margin, the percentage of sales was 32.3%. this is a company that is cutting costs amid sputtering demand. nude executives have taken over in the last year and the plan is to cut expense -- new executives have taken over in the last year and the plan is to cut expenses. it is a massively changing industry that is very competitive. focusing almost exclusively on network equipment. erickson is expanding its services business as well. we will be speaking more about the earnings later in the show. i will be speaking with jewel abbey in the second hour of "-- joel abbey in the second hour of "countdown." mario draghi has set the clock ticking for stimulus in june. before we want to see the

staff projections that will come out in early june. >> for more on the likely policy action, let's bring in chief economist. always good to see you. what is on the cards in june? >> the ecb has set the stage for a rate move next month. mario draghi was not specific about whether it will be a conventional policy easing that we will see. what is clear is that having expectations nonmarket will be difficult not to deliver a rate cut for fear of provoking unwanted euros strength. the way he downplayed the importance of the overnight market rate. it has become completely this

anchored.- dis >> will we continue to see volatile money market rates? it is the case unless ecb comes up with more liquidity measures. hostage thetes are volatility, which is not by the ecb design. he indicated that volatility means there are more players in the market. from a market perspective, the ecb rate cut next month to weaken the euro will have credibility -- it will be difficult without more ecb liquidity injections. >> the euro could weaken initially. --how much can limited bases basis point really deliver? the drivers have very little to

do with that ecb rates. mario draghi admitted that himself this month. it is no match for the week u.s. dollar trend. janet yellen's remarks pointed -- cpi inflation rising in the u.s. versus any concerns that might be about the size of the balance sheet. >> we have to talk about china's cpi. two things we will be chatting about. ♪

economist is here. consumer inflation in china moderating. prices, does it give the authorities are in to implement -- more room to implement measures to boost growth? >> probably going to be a more balanced approach to the cost of the chinese economic rebalancing. a framework of inflation across

the chinese economy, housing, retail, wholesale. that is one of the prices to pay with a bumpier gdp. it characterized the breakaway expansion of recent years. the important thing is that it feels concerns that the slowdown is less rather than more managed and the fears of tail risks of a bumpier harder landing have increased. they are quite agnostic and their approach to this because some inflation and growth volatility will be the price to pay. >> let's spin it forward to next week. we had the rate meeting yesterday and nothing happened. masked -- next week is exciting, thet it? a big debate about

slack in the economy. there is the changing of personnel. >> absolutely. extremely exciting times at the moment because the u.k. economy .s expanding at a pace of 3.5% with the u.k. unemployment rate in february, the markets focus is on the first bank of england rate hike. the main inflation report is important because it will stress test the markets assumption about the conditional tightening guidance of the bank of england has adopted under its new forward guidance. there are three things that will be instrumental in terms of shaping the markets understanding.

depending on the banks thoughts about business investment and the productivity growth. the second thing is how inflationary this environment is in the current environment and the reality is we have seen a much more rapid than expected u.k. unemployment rate. there is some suspicion that this would be understating the capacity and overstating inflation. >> the third point, quickly. but this is a market that is one way direction. yes, of course, the direction of policy is between steady rates and tightening rates. with the market -- it looks highly unlikely that any member will feel the need to put even more tightening.

>> good to chat to you. we will get numbers from telefonica. ♪

>> welcome back. let's go over to jonathan ferro. >> there is only one current thing that we can look at right now and it is the euro. check it out yesterday. although the action happening at the ecb press conference. at one point, the bets were on. we are comfortable acting in june, they used this meeting to preview the next one when the ecb releases their forecast. what will they do? june 5 is the day for your diary.

defended their independence. deutsche bank says if he does not act, the credibility will be shattered. will they deliver? what exactly are they going to do if they do deliver? theyraine's leaders say are ready for peaceful dialogue with representatives in the eastern region. a russian separatists in the east say they will push ahead onh autonomy referendums sunday. that a calls from vladimir putin to delay the vote. -- despite calls from vladimir putin to delay the vote. 20 years after taking power under nelson mandela, the agency still enjoys strong backing among the black majority. representatives of professional football european makes say any attempt to reschedule the world cup in 2022 would damage their

season. proposed moving the world cup to november or december to avoid qatar summer temperatures. britainas stores across and has cemented its reputation of the purveyor of the finest cosmetics. anna edwards spoke with the founder. the company and the early 1990's. the apothecary now operates 62 stores across the u.k. lipsticks economics of just -- suggest consumers still buy pricey makeup in tough economic times. quickly opened the doors in 1993.

i think we have benefited from some of the money coming from fashion into makeup and beauty. the international business includes 23 stores in the u.s. alongside a growing online presence. future aspirations they lie in the east. us to internet has opened a global customer. i have aspirations that it would be fabulous to be open in southeast asia. countries like japan and korea where there is such a heritage and people welcome skincare regimens. >> her passion for the beauty world started in childhood and it is passion that she says makes the successful business. >> if you want to be an entrepreneur, you have to be passionate about what you are involved in. anyone can be good at anything, if you feel passion, you will do the job so much better. >> what about getting outside

money involved? you have to give up a little bit of control. >> it was always about more than having just money. it was other people's expertise. you can always find money somewhere, but it is getting the right money and the rind mindset -- the right mindset. >> let's continue the conversation. we are joined by another entrepreneur, the founder of the luxury fragrance company. good morning. perfumery is very much in your genes, isn't it? your father was known as the perfume man. >> he started the business and together with my mother they founded what it is today. .he heritages multilevel

i see myself as a very true british brand and entrepreneur. the heritage goes back all the way to imperial britain, colonial britain, india, africa. arabia.into ancient those are my roots. it is trying on all of those routes and bringing it back to britain. >> he came back to the family business in 2009. what was your ambition? was to revive the family roots and the traditional skills and the artisan of true perfumery. i went back to the traditional formulas my parents had created and looked into these and revive them again. that was not enough because i wanted to use those skills to create my own collection, which i did. that was always the ultimate goal. >> give us an idea of what it

takes. takes a lot of passion and dedication and a lot of patience. where do i get the patient's from? ce from.n it is a labor of love and i have always had it in my blood. to see others enjoying it and really taking the pleasure, that is where the satisfaction comes from. i like to see that. >> you have this passion and anna was talking about that. where did the business acumen come from? was -- having been in the industry for such a long time, it was not just about -- the business, yes, it is nice to have a healthy business. andme, it was the passion the skill that great britain has

always been known for. for me to contribute towards .hat was very important to see britain as a thriving economy. i had to get all my resources back into the u.k. and support manufacturers. the perfumes are handmade in the u.k.. everything is handmade and i'm proud to say made in england. >> how do you gain recognition? how do you attain brand awareness? >> a lot of it is through word of mouth and previously through what my parents had developed in the relationship with the clients. they have continued to follow and to seek the same quality of products and having seen that i have taken over, the second generation has created quite a clients, their

children and grandchildren are following in a luxury market. a lot of it is to do with word-of-mouth and interacting with a like organization. theow do you compete with multitude of celebrity perfumes that are out there and be the big player? how do you compete with those factors? >> i do not feel it is a big challenge. celebrity perfumes are celebrity perfumes. a targeted different clientele. create for the niche market. we create people who really want to -- we create for people who really want to enjoy perfumes. they can wear it for years to come and it becomes an heirloom. to wait for ance

perfume to be created. >> you can create your own perfume. of 1.5 yearsnimum to get your perfume made because the process is lengthy. we select each ingredient. a series of consultations before we get to the final. >> how would you create a perfume for this show? >> it would have to be something quite fresh. >> good answer. >> it would have to be fresh, relaxing, uplifting. it is important to look at the lifestyle of the individual client. >> fresh, relaxing, uplifting, you have some it up. good luck to you. they are almost recession proof. have you fared well in a

difficult economic times? that's absolutely. -- >> absolutely. we are launching a new collection next week. >> good luck to you. come back and tell us how you do. just getting some earnings from telefonica. europe's second biggest phone company. operating income leaving out appreciation, and first quarter was 3.93 billion. that is down from last year. he much in line with estimates. -- pretty much in line with estimates. net income 692. it is a bigger mess for net income. let's -- it is a bigger mess for net income.

>> you have been following that story. let's talk about the deal. they could potentially overshadow those numbers. we do see that pressure on telefonica. the deal is a paid $1 billion for a six percent stake in digital one. this makes telefonica the most powerful pay-tv operator in spain. lions share of the rights to most sports broadcasting. you can imagine how valuable that property must be in spain. it allows telefonica to bundle together cable, internet, and television altogether. it will be able to find a new

revenue stream at a time when traditional telefonica revenue streams are under pressure in spain. but also under pressure in latin america. they're also being hit by , thencies, one example argentinian peso during the first quarter down 19%. what is the status in telefonica's bid for the german mobile operator? this is a bid that would make this deal seem like small beer. to recap what the -- this is the bit where telefonica wants to unite telefonica deutsche land with the german mobile operator now owned by a dutch phone company. that would make it the biggest operator by customers in germany.

bys is finding some concerns the competition authorities. the european commission is looking at. will get anhey approval for this in june. yesterday, the european commission says they have suspended the deadline because they do not have enough information. >> thank you. passionate barclays premier league fan. ♪

>> time for today's company news. omnicommerger between has been terminated. there were difficulties in completing a transaction. no termination fee will be paid by either party. apple is said to be close to a electronicsng beats . the $3 billion price tag includes the headphones and the new music streaming service.

it would be apple's largest ever purchase. the deal values the company at just under a billion dollars. the deal expands liberties european dominance in the cable and television industry. will come back. -- welcome back. it is the final week of the football season here in england. as a way to celebrate, the premier league stage an experiment using wearable technology to monitor supporters heart rates. joining us is shawn thompson, the chief creative officer of the company behind this campaign. what happened? >> we have been working with barclays premier league all season. we have been saying thank you to fans.

been a very popular #. one of the first companies -- leagues ever to do that. we wanted to say thank you in another way and test the passion of the fans, the passion of their heart rates using heart rate monitors. it was an exciting and experiment. >> you monitored fans, some former players. >> we wanted to make -- the premier league is hugely popular internationally. we wanted to bring that element into it. south africa, some super fans who support man city. gains.massive >> some big scores, liverpool with a few goals.

quite get itll not this season. >> what was discovered? there were some fascinating data. when you -- when your team concedes and when you score. -- the heartrs rates go up to 145%, which is pretty high when you concede. .hen you score, it is 215% right on the edge. if you think about the hit that a fan gets because they are just waiting and not running around like the footballers, they are normal guys watching again. when the gold goes in, there is a huge hit. >> fans are experiencing more stress than players. the players hearts are

up anyway. they are very fit athletes. they have a lower resting rate. they have an athletic heart rate. --is far more >> you are a queue p.r. fan. ask -- a qpr fan. >> i am. one.ld definitely try i think my heart would be pounding if and when we win. >> you are a creative agency. you would have heard about this deal, omnicom and publicis. it is your industry. that must be intriguing. >> the deal has collapsed. it is interesting, early morning news for me.

it is interesting why it has not worked out. when you have two different companies like that, it will be difficult. >> the perils of a merger of equals. >> shawn thompson, the creative director. would you ever marry someone after meeting for the first time? we will tell you about some couples who actually did. ♪

>> welcome back. here.s hans nichols is in berlin. away with ake it picture that could give me in trouble in germany. it is a baby in utero flicking off the ultrasound. three months later, the sweet little girl also gives her mother the bird. it is a big deal here to get -- to give someone the middle finger here. that? do we top >> it is impossible. >> i have a serious story. we have live pictures from red square. the victory day in moscow officially kicks off.

i went with a story from the guardian. shawn walker went inside this town in the far east of the country to probe the siege mentality. the thing about this conflict in ukraine that it comes in and out of the news. despite this conciliatory comments we heard from farmer , -- vladimir putin, things are ratcheting up for more trouble. >> do not move. manus is here. six singletons who have never met one another will be married live on television channel 4. 200 applicants. they are profiled and they will be married. and in the tv cameras follow them for the first six weeks. >> did you apply?

comment. >> it is based on a danish program. >> do not ask me that. >> the reason why i do not do the newspaper section. it is unscripted. the danish version. none of them lasted. >> do not marry someone you have just met. children have been told to use traditional alarm clock rather than smartphones to wake them up so they do not become addicted to electronic gadgets. if you bring your mobile to your bedroom, it will impact your sleep. use the traditional alarm clock. what do you use to get yourself up in the morning? >> a smartphone. >> we know what keeps you awake at night. >> do not even go there.

thank you. the parent of iberia, reddish airways -- british airways. the latest from red square. ♪

omnicomcis and canceled their deal to create the biggest ad company. apple is close to buying beats electronics for more than $3 billion. but in your pretend -- vladimir putin celebrates the troop, russia celebrates victory day as the ukraine crisis rages on. welcome to "countdown.

we are getting breaking news from aig. manus cranny has the details. >> a loss in the first quarter, which was expected. tax, 184 million. pounds inbillion cash. thinking those are the top line items. the big thing, fuel costs for the quarter are down by 8.9%. this is a trend. loss.owing a narrowing of items of loss before 150 million euros. that is a little bit better than the estimate.

>> turning iberia around. it has not been a small feet. -- it has not been a small feat. masterminded a deal. being the pilots to fly 100 hours, and additional 100 hours per month. setting up iberia express, transferring from iberia into iberia express. bringing down the starting salaries. base of 770 million euros. they are talking about their overall cost base. >> some guidance about the full year. operating profits will be up by

at least 500 million euros. it will be profitable. >> that is what we have been guided to. you want to know a little bit more about the margins and how iberia breaks down. is iag, which is the parent company of iberia and reddish airways. -- british airways. ferro.ring in jonathan what is the reason for this call off? the real reason? listen to the two companies, they will tell you about regulatory obstacles. if you listen to sir martin sorrell, this is probably about managerial issues. you break this down to what it was about to begin with, power. getting market share, knocking

wpp off their perch. are we surprised? some martin sorrell was not surprised. he predicted this when it was first announced. >> we do not see any major hurdle. it is only a link the -- lengthy process and something which is taking more time than we inspected -- expected. we do not see any major problem with the chinese authorities. with all of the questions they have put to us, we do not see anything that could come in the way of an agreement. >> something happened in the last month. >> that was three weeks ago. listen to maurice levy, that did not, command who was worried

about a deal about to collapse. one of the points are martin sorrell gave was that they have managed to carry on putting forth their strategy. what is the hangover from this deal? it, we arele about likely to hear more from this. there will be more fallout. it is about consolidation in the industry. what happens from here? what this came down to was about a conflict of client interest. you have a company like coca-cola and a big competitor like pepsi and they'll are managed are the same ad agency. those kinds of things can happen . you have these two big competitors under one roof. ?s there a conflict of interest the longer this deal went on, the more uncertainty there was. >> you are the manager of a big

division and you're thinking, what will happen to me? defecting, they have four. they will have to push forward from here. expect more news out of this. >> do you have your beats headphones? on this apple deal, i find it so weird on so many levels. they have gone foreign acquisition outside -- they have gone for an acquisition outside the company. could they not have developed a set of headphones? >> the earphones are good? asked the air very good, in fact -- >> they are very good, in fact. looks we will talk about apple. it has made a play for beats.

it is all about streaming as well. hans nichols is breaking down the deal. talk us through this deal. if it happens, it is apple's biggest. >> it would be their biggest in its entire history. it is a departure from the way steve jobs ran the company. they get a piece of all of those subscribers. for prescription -- subscription per month. when you look at downloads, downloads of actual music, 2013, it was down for the first time. that was the first decline since itunes opened in 2003. where are people going? they're going to places like beats. in their first day, 1000. 24,000. they are moving very quickly. they are trying to challenge

pandora and spotify. spotify has more subscription-based and pandora is more revenue based in terms of what their ads are. subscriptions are up 50%. that is when you look at just the subscription streaming industry business. behind this company, some big names. people way cooler than any of us. dre. i will not ask you what dr. dre's real name is. if you know it, it you get bonus points. >> i know his seminal album was called "the chronic." >> this is a family program and we will not talk about it. >> what is his real name? >> it is andrew young. do you do spotify or pandora?

x i do spotify. i'm a bit prehistoric. music.igital i cannot let go of the past. do you still buy? i download songs, but i do not have a cd player. >> what was the last album you bought? >> the sound of music. children love it. the movie has everything you can imagine. >> what more can i say? are getting live pictures from the russian capital moscow. what you are seeing is the country's victory date for aid in red square -- victory day parade in red square. tanks and missile systems will

rumble across red square to commemorate soviet victory over nazi germany in 1945. its muscles inng the standoff with the united states over ukraine. >> the parade kicks off 10 minutes ago. has been shown on camera congratulating the veterans. is he going to go to crimea to review the troops and russia's navy? angela merkel saw fit to say he would recommend you not do that, that would be sincerst trip to crimea russia annexed the peninsula. we saw him make some conciliatory comments. he softened his tone. the west says he did not follow it up with some of the things he was from a thing. you also have this into a tory

-- conciliatory tactic from the central government in ukraine. we are still headed for more trouble. the separatists regions in the easternmost part of ukraine, they are still set to hold this referendum on sunday. that will be very volatile. foreignion, the eu ministers gather on monday and the expectation is they will rubberstamp some sanctions that they have agreed on against more russian individuals. and some russian companies. >> explained to us, tell us about the significance of this day. it is commemorating the day of 70 years ago, the end of world war ii. but in the context of the current conflict. day. is a massive

it is the fourth of july, all of the holidays put together, because of the losses the soviet union endured. it is a very patriotic moment in celebrating the soviet union's victory over nazi germany. it also has a contemporary context because the kremlin has been very actively characterizing the conflict in ,kraine as one against russians and we saw on friday of last were 40e fire pro-russian activists were killed. the russian media has been describing that as a fascist attack to kill russians. really, if you think about it, the russians celebrate victory day on may 9. the deal was signed on may 8. russians take issue with that.

ukraine was talking about switching to may 8. russia says that is a provocation. and conflict in ukraine has been infused with this historical background of world war ii. the ukrainian nationalist back collaboratedii with the not cease -- with the nazis. they like to describe the sector as neo-nazis who should not have any role in the government, who they say to have a role. sayskrainians government that there are no fascists in the ranks. pictures of the russian president. we will keep coming back to

this. more and what might be president vladimir putin's u-turn on the referendum on succession. ♪

london.is this is pictures of what is happening in moscow. is addressing the

crowds in red square. rush is celebrating its victory day today. russia is celebrating its victory day today. let's continue to focus on events in russia and ukraine. this sunday is the deadline for the concession referendum, which ahead despiteoing vladimir ahead despite vladimir putin requesting a delay. joining us to take a look at the reasons behind his u-turn is our next guest. we will keep an eye on these pictures. ne inhe softening to recent days? >> we have seen an escalation and a real threat of military intervention by russia. the whole tragedy in odessa, intervention by russia.

where we saw scores of people dying. russia has been playing a game where it was putting pressure on key of -- kiev to make sure it achieves its goal. i do not think military intervention would have served russia's interest best. slightly pullingwhere we saw sce dying. back, opening a door for diplomatic solutions two geneva talks. >> round one was not much of a success. >> ultimately, it is about both sides deciding whether a compromise solution is the best way to go forward. it is really up to moscow and kiev. it is not about the u.s. and the eu. wantsdimir putin pro-russian separatist to be part of those talks.

details ofjust small the negotiations. the ultimate goal of moscow is to make sure the rights of those russian speakers in the east and south are protect constitutionally and they have some influence on future foreign policy decisions. russia has been and will remain sensitive to your canes -- ukraine's plans of joining nato. we are seeing a diplomatic effort in some ways, put in place by moscow to lay grounds for geneva 2 to bring back to life those failed geneva 1 talks. >> it's such an eventuality does not happen, what sort of economic crisis is ukraine facing? >> ukraine is already in economic crisis. having normalized relations with russia is paramount for ukraine

to pull out from the current predicament that they have landed into. biggestemains the trading partner. this is where most of the machinery and value-added goods go to and on the other hand, ukraine is heavily dependent on russian natural gas imports. that, the industrial heartland is in the east and south and you have many withries that operate russian capital as well. it is not in the ukraine's economic interest to see it going away. russia moving some of these production lines into russia. these are additional pressures

kiev to try to find a compromised solution. >> thank you for making us understand the crisis in ukraine a little clearer. senior analyst at ihs. ♪

>> this is "countdown." equipmentications maker alcatel lucent reported earnings this morning. paris.s us from good morning, sir. thank you for joining us. >> good morning. announced a net loss, but it was below analyst estimates. will you be profitable this year? >> we did announced profitability. we have shown improvements of 200 million euros at that level, which is the main element of the measure of success so far. in terms of net income, we do show a lot.

it is a reflection of a variety of nonoperational items, including financial expenses and are restructuring costs. 2015ve given targets for and we're are focused on achieving those targets. >> can you give us 90 is of where you are -- can you give us an idea of where you are in achieving those targets? you are aiming to cut expenses by a billion euros and you want to sell another billion euros of assets. i will take a both items in sequence. we did announced an objective of one billion a 2015. q1 2014 shows another milestone in that we are reaching total humility of cost -- to militant cost savings -- key relative --

umlative cost savings. we have done a little more than a third. we have an objective of reaching a billion euros and we stand by that objective and we will come back to the marketplace when events warrant to show progress in this regard. >> you can you give us an idea of where demand is weakest and strongest? we know demand is slowing down in japan and the u.s. because of the stage of the cycle we're in. what about places like china? europe? europe will pick up in the next 18-24 months. what are you seeing in those regions right now? when you look at our results and extrapolate what is happening in the marketplace, we do see a continuing trend toward

all ip networks and that is across all regions and that it is up 16% year on year. substantial improvement in performance in the top line. ando see up to the in china that will continue throughout the year. probably accelerate into q3. thatally, we do hope andpe will consolidate result in higher capital spending. we are seeing good growth in europe. softer in other areas. our revenues in europe are broadly stable the same way they are in north america. >> you say you hope you will see further consolidation in europe.

it is certainly happening within the space. what about for you yourself? what role do you have with an the consolidation process? you have a big role to play within that space? many have talked about such a tie up. could we see a big tie up for alcatel lucent in coming years? usi think the best way for to develop our presence is to focus on our cost savings, and being relevant for our customers. industry shaper and the thought leader. when you do that, you become very much a key element and a key driver of your industry. concerned, were

are very much focused on our own plan and developing our own destiny. >> i want to talk to you about the euro. you are a company that reports in euros. you have businesses all over the world, revenues come from a wider range -- a wider rate -- a wide array of countries. mario draghi yesterday, the euros to strong and policy might need to be implemented in june to dampen the effects of the euro. needed bynk action is the ecb to drive down the euro? >> i will not comment on macro events that are not my domain of expertise. i'm interested in managing our

own exposure in terms of currency fluctuations. that is something that is very much under control, as far as i'm concerned. find that from our perspective, we can adapt to changing circumstances at the macro level in the most efficient manner. >> great to chat to you, thank you. lucent cfo speaking to us from paris. these are the bloomberg top headlines. ukraine's leaders say they're ready for peaceful dialogue with representatives in eastern regions. >> you asked your guest, should the european central bank act? you will struggle to find a bank that is not calling for action right now. mario draghi turns around and

said we are comfortable acting in june. they use this meeting to discuss the one coming in june. june 5 is the date for your diary. start of the q&a to defend the central bank's independence. next month, he will be defending their right ability. if they do not act, the credibility will be shattered. can they deliver? will they deliver? what will they deliver? >> let's try that again. ukraine's leaders say they are ready for peaceful dialogue with representatives of the eastern regions. a russian separatists in the east say they will push ahead with autonomy referendums on sunday and that is despite calls from vladimir putin to delay the vote. south africa's ruling party has won its fifth straight national election. it insures the second and final term for president jacob zuma.

enjoys is still -- still strong backing from the black majority for ending apartheid. welcome back. the first major exhibition devoted to fashion icon john paul gauthier goes on display in london. most of his innovative pieces will be featured. let's take a closer look at his career and his impact on fashion. good morning. thank you for joining us. i gather this is the first major john paul got ta -- john paul gauthier exhibition. why has it taken so long?

>> it is a fantastic exhibition. 2011 and hasved in been on this international world tour. this is the eighth venue and the largest presentation. theave 165 garments from 1970's to now. we have a wealth of fashion and art photography. sketches. it is a wider rave -- it is a wide array of sumptuous clothing. it is not chronological. it is designed in somatic sections. -- the mattock sections. >> he has a special place in his heart for london. >> he does. he used to go to all of the underground clubs. he was obsessed by the rocky horror show. when he went to the theater,

there was an usher who put a torch under her face. he did not find that in france. london was the and duration. >> we will listen to a sound bite. he shows his lovely sense of had slightse he reservations about staging an event like this. >> to be something like a funeral. museum, itbe in a should be like -- i am still alive. >> he is very much alive. i do love his sense of humor. ask he was very concerned about -- he was very concerned about museums. the show is very the ethical and kitsch.

-- theatrical and kitsch. there is a mechanical cap walk. -- catwalk. some smile, some talk, they really bring the exhibition to life. >> what are some of the most iconic images? >> the cone bra. >> that has to be among the most famous. but he is synonymous with making corset bras. he really revolution allies the way -- revolutionized the way we perceive corsets. he made women sexy. you can see madonna. >> where did he get his inspiration? his maternal grandmother was inspirational to him. ofgrew up in the outskirts paris. he had no money, but he used to hang out with his grandmother.

he would pour over fashion magazines and became obsessed. he used to sketch to collections a year. >> how was he regarded? you only have to read the catalog and there are designers , really talk about him being an inspiration. there is a wealth of photographers, filmmakers, performers who hugely respect him. news -- quite a few muses. anding at reddish models musicians -- british models and musicians. >> does he like his image? he is known as the bad boy of fashion.

does he draw inspiration from that? >> that was back in the 1980's. i think he is trying to grow old gracefully now. he is still playful. he does not take himself too seriously. >> is he constantly evolving as a designer? that is the beauty of him. he takes inspiration from the world around him. he is never static, he is like a sponge. >> he likes the union jack. >> i do not know why. >> have you met him? >> he is a joy, very genuine. lovely.nt is he is a delightful man. trash -- your own trash --

euro trash was that cold program. -- cult program. think he was the first designer to have a puppet made of him. that is quite an accolade. >> great stuff. take sure go to this exhibition. -- make sure you go to this exhibition. there is the puppet. thank you. do not fly away. manus will break down the numbers from rish airways -- british airways and iag. ♪

betweenegamerger omnicom has been terminated. the company say they were difficulties in completing a transaction within a reasonable timeframe. no termination fees will be paid by either party. apple is said to be close to a deal to buy beats electronics. matterfamiliar with the say the $3 billion price tag includes both the headphones and

the new music streaming service. it would be apple's ever -- largest ever purchase. liberty and discovery will buy all three media. the deal values the company at just under a billion dollars. welcome back. we are 18 minutes away from the start of today's european equities session. we have set numbers from iag, the parent company of iberia. manus is here. it lookslike walsh -- like walsh is delivering at iag. >> music to everybody's ears. iberia, the losses dropped by over 50%.

ba, operating losses absolutely getting crushed. that comes down to 5 million pounds from 72 last year. iberia, you are seeing the losses dropped. -- they areeing flat. the take away is first-quarter operating loss 150 million euros. the estimates were 168. employee costs are getting crushed. parties., various ifthe top one for costs -- ,ou can squeeze your cost down down by 12%, that is the headline number in the first quarter. he is telling the market that operating profits for rise over

half a billion euros this year. he has been on the tape -- i want to get through some of these breaking headlines. he is on a conference call. sher willhe -- sla tagline. >> they have not paid dividends since 2008. this is all about re-equipping the fleet. one of the biggest criticisms has been his building capacity in the transatlantic areas. there is the view that he is building too far too fast. dividends will be music -- language will be music to everyone's ears.

you wanted to talk about iberia. where do you want to go with that conversation? >> a have been in talks with all parties. three deals have been struck. it has been no easy target. facetious and lasher. was the s he did it for british airways. the people there have strange things to say about the in player attitude. -- employer attitude. 3000 jobs have been taken out of the system. pay cuts of seven percent at iberia. through 2015, no pay rises. you are looking at quite an aggressive plan. iberia was losing 1.7 million euros per day. one of the biggest criticisms

leveled against walsh was that you have paid over 5 billion pounds and you have given away 40% of british airways. there was a great deal of criticism,- deal of if you think about the hours that we work, the pilots, he squeeze them for another 100 hours in any given month. 28-day.ilots over a that gives you an example of the kind of thing that is going on at iberia. >> thank you very much. watch out for those iag shares. a busy earnings day. telefonica, earnings fell 14%. more in line with estimates.

the agreed to a billion-dollar deal that makes it the most powerful tv operator in spain. >> this is the one that will overshadow those earnings. they came in in line with expectations. underlying the fact that telefonica is under pressure in spain but also in latin america. combined with the fact that you have got weaker telephone businesses in latin america and you have a decline in the currencies like the argentinian peso, down 19%. the news we got overnight that their bid for 50% of digital plus, it giving them 78%, very good news. that will allow them to do two things. digital has the rights to broadcast a lot of sports,

including anything to do with barcelona. you can understand why that is such a valuable asset. it is going to allow telefonica to put together its cable, digital internet, and traditional television operations and sell them in one package. ofy important in terms finding new streams of revenue. david, what is the status of telefonica's $11 billion bid for the german mobile operator? this one makesp, the digital plus one look small beer. this is a billion-dollar takeover. it is a german mobile operator and a subsidiary of the dutch telephone company. if telefonica is able to merge

telefonica deutsche land, it will be the biggest wireless operator in germany by the number of customers. it is a very big deal. the european commission is looking at it. yesterday, the commission said they had suspended the deadline for making its decision because it had not received enough information from telefonica. they're expecting to get approval for this deal in june. that is something to watch very carefully. >> thank you, david. megamerger called off, call it and omnicom off. how will the stock opened today? details, next. ♪

>> i think we were surprised by the speed in which it fell apart. after the q1 call they made three or four weeks ago, i think it was highly predictable that it was going to fall apart because they did it separately. they semi-criticized one another and they both said it was better for them to be -- it was as good to be separate as it was together. >> that was there martin sorrell talking to me earlier about the deal being called off. where less than 10 minutes from

the start of today's equity session. what will be the opening of the share price? >> down by three percent. was anyone surprised? sir martin sorrell was not surprised. it was not obvious to me when maurice levy spoke to us. we have not got the deal done and now the question is, what is the hangover? what happens next? for everyone employee lost, he has gained four. what happens from here in terms of consolidation? these two companies want to grab market share and expand. this is big news overnight. >> very big news. sir martin was saying some fascinating stuff. >> if you are going to be this ceo and coo, can i be the cfo?

he was really having a joke. this will go down in in the textbooks as to why there is no such thing as a merger of equals. it came down to management and organizational structure. who was going to be the manager of what? what are they going to do with their clients? they could not get it done and they have killed the deal. >> sir martin was hoping that the deal would carry on the uncertainty so that wpp would continue to benefit. it is amazing, we have not talked that much about mario draghi and the ecb. on the normal day, we would have been all over it. >> the euro drops lower again. i watched the whole press conference. everyone was on twitter. we are comfortable acting in

june, we previewed this meeting as a preview for the next meeting. how much did he mean to put that much pressure on himself? you would struggle to find a banker not calling for rate cut. is that what he meant to do? the bar is so high for the >> telefonica. its earnings missed estimated.

we are five minutes away from the european stock market. ftse futures are lower, dax futures are lower. cac 40 futures are lower. on the move is next here in a second.

>> welcome to "on the move." i'm mark barton. francine lacqua is off today. we are just moments away from the start of european trading. our markets team has everything covered. here with me now is jonathan ferro. david tweedditor also joins us from berlin. manus cranny is here to kick things off. >> is a tough one. we're thinking about having a discussion.

there's a confidence that there is a unanimity. i've written down to big words. cpi is easing. still, the world is on easy street. the markets are at record highs. technology is pressure in the u.s.. they are a few reports of earnings which i think have underwhelmed the market. there's also the failed megamerger. whenever they spoke to us were confident about it. ... is now at one percent. blicis is now at one percent. this is about management and organizational structure. it is something we talked about a lot on this show.