welcome to "worldwide exchange," i'm karen cho. these are your headlines from around the world. s&p slashes russian rating to just one notch above junk. we speak first to the ratings agency at the top of the show. microsoft earnings are given a shot in the arm, sending shares higher after trade. the cost of international expansion weighs on amazon after weakness in its china unit outsells a stellar performance in the u.s. home market. and alstom shares are

suspended in paris as reports suggest the french trainmaker is meeting today to discuss a potential bid from ge. you're watching "worldwide exchange," bringing you business news from around the globe. a rating agency standard & poors downgraded russia's credit rating to one notch above junk, citing capital flight as the key reason for the move. this after secretary of state john kerry says moscow is not keeping its side of the geneva pact and warned of the potential consequences. >> let me be clear, if russia continues in this direction, it will not just be a grave mistake, it will be an expensive mistake. already the international response to the choices made by russia's leaders is taking its toll on russia's economy. prime minister medvedev alluded to the cost russia is already

paying, even president putin has acknowledged it. as investors' confidence dwindles, some $70 billion in capital has fled the russian financial system in the first quarter of 2014. more than all of last year. >> significant risks out there in the market, of course. let's get to kasten thschroeder. looking at some of the action by standard & poors, they've lowered the local currency long-time rating. is this the right move when you look at the risks around russia and ukraine. >> it's almost surprising that it comes at this late stage. as the crisis was unfolding with crimea, the there were concerns and the russian ruble was under pressure. even if you look at the country from a domestic perspective, given the weak economy, it's not

an unreasonable move. it's almost following already the reaction of the market given the massive devaluation the ruble has experienced in the last couple of weeks. >> the agency is citing some fairly interesting detail, it's a very comprehensive report that's been issued to the markets. they're talking about credit worthiness and due to reduce monetary policy flexibility when you look at the outflows that have happened so far in russia, the first quarter has been equivalent over what you've seen over the course of most years an an annual basis. do you think this is likely to continue? the rhetoric doesn't seem to be getting any better. >> i don't think it will continue at that scale. russia has not been, at least from a valuation level, not really been an expensive mark tote invest in. the p/e ratios have hit rock bottom.aggressive. if you compare it to other p/e

ratio we've seen in emerging markets, it was a cheap place to invest in. given also the potential danger of the crisis, i think the price impact we've seen on the equity markets was somewhere in the region 20% year to date. i would say it's moderate. it could be much worse. if you look at other scenarios where you have military action in other countries, devaluation happens on a much larger scale. the market was relatively cheap before the crisis, i don't think we'll see more significant price drops going forward. >> you're staying with us throughout the course of the first hour of the program. now, riding on the breakfast boom, starbucks says coffee sales rise as americans complement their breakfast takeaways with morning joes. that's one of the stories we'll be talking about later in the program. we want to get back to what's playing out in russia in particular.

standard & poors has downgraded russia's credit rating to one notch above junk, citing capital flit as the key reason for the move. joining us is kristen esters. we've been wading through your release this morning. tell us about the key reasons for the downgrade, christian esters. >> they related to the weakening of the standard position related to the consequence of the financial outflows we've already seen over the first quarter. we estimate those outflows at $51 billion. which is basically close to what the annual outflow was on average over the past couple of years. and we do see the risk that there could be a shift in fdi flows. that could be detrimental to

russia's growth prospect, which even before the crisis started, the ukraine crisis, have not really been very high. the growth expectations. we see further risk to russia's economic growth path in the near future. >> talk about further ratings action. that's also been flagged up as a possibility in this report. "a" if there are further sanctions and "b" if you see changes around growth, monetary flexibility and volatility. what's the likelihood of some of these issues playing out. >> a negative outlook reflects concern that growth could be below our current expectations. there's a likelihood that growth could be this year below 1%. gdp, this risk would increase if sanctions were to be imposed, were to be tightened. the monetary flexibility is another important component.

we have been -- the rating is under the -- reflects our view that the russian central bank is moving or transitioning to floating exchange rate by 2015. and we express our concern that possibly this process could be stalled by, if not financial markets could become more volatile in russia and might strain the flexibility of the central bank. generally speaking, an outlook reflects our view that the rating would go down with the probability of around about 30% of the next 24 months. >> christian, one of the most interesting things in your report today was the impact and the reliance on oil. we know this has been a trump card. the might of russia's energy power in this whole debate with ukraine and the way europe has been responding. you noted in the past, an average oil price of $55 was necessary to balance the budget

in russia back in 2008. these days it's closer to 110. 110 is the level brent has been trading at on market. how tenuous a position is russia in when it relies on these oil exports? >> we think the fiscal dependency on oil exports has increased. if you break it out, the price has increased quite substantially. we expect $110 is necessary in order to balance the budget. so the fiscal position has been weakening. as a consequence as well. >> christian, one question from me. how difficult do you think it's going to be for russia when the situation with the ukraine worsens and the ukraine is not going to be one of their major partners anymore in terms of oil exports? how would they close that gap? ukraine has taken a lot of oil from russia. if the situation breaks down, who will be their next big

customer? >> yes, i'm not sure how -- i have an answer. the dependence on oil, the fiscal dependency has increased quite a bit. so that would raise -- possibly raise an issue, both on the fiscal side and for the external side. >> thank you very much for joining us today in a first on cnbc. christian esters, senior director at sovereign ratings at standard & poors rating services. this has been the fallout on european stock markets on concerns about fresh concerns around ukraine and whether there will be more sanctions on russia. the benchmark index trading lower by 0.5%. one of the underperformers trading down 18. we saw that in session

yesterday. this is one of the first markets to turn south and it tries to recapture some of its late elle se -- selling. the ftse and the cac down, of course, but not to the same extent. we're seeing that on some of the down days to move fairly steeply lower. on the up days they move higher as well. let's move on to the bond markets and see what the safety bid is. we've got yields pushing a little bit lower on gilts in particular, 2.6 7%. slightly more elevated on the periphery. 3.13 on italy. bunds getting the safety bid along with gilts. trading lower on the yield. on foreign exchange markets, let's dive into some of the trade. the u.s. dollar was trying to claw back early on. against the japanese yen it's trading weaker. the euro and the aussie, a lot

of movement. you're seeing in the australian dollar trying to bounce back from some of the softness it's had in the last 24 hours. the pound giving back some of yesterday's gains in session. let's check on how some of the concerns around ukraine and russia are impacting the asian region. let's get out to sri jegarajah. it looks like you have a fair bit of red on your charts today. >> yes, karen, especially in the greater china markets. it's exactly the issues you were talking about earlier. the prospect of further destabilization in the ukraine over the weekend headline risk means investors in this part of the world are very wary of committing to some big positions while we go into that weekend. nikkei 225 was in focus as was the japanese yen. tokyo cpi, 22-year-old high. you strip out the impact of that vat, it was modest. that indicates boj has work to

do. broadly, very cautious mood as we head over into the weekend. karen, back to you now. >> sri, thank you very much for that. let me bring you up to speed with news from alstom. this is one of the biggest movers on the french stock market yesterday on reports that ge is interested in buying the firm. the late set that the french economy minister has weighed in. he says he's worried about the loss of alstom and that it will meet with ge's chief to voice its concerns. already we are seeing the government weigh into this debate. let's get out to stephan for a bit of an update. shares have been suspended in paris. bring us the latest on this. one of the concerns always was if you have american corporate coming, there might be a push back from the state. this seems to be coming right through in the commentary first up this morning. >> according to some sources, alstom will hold a board meeting this afternoon. we don't know the topic but

obviously the conversation, the discussions, will be on general electric. the french industry minister confirmed this morning that alstom was in negotiations with ge. he says he met with the ceo of alstom yesterday afternoon and indicated that they are due to meet with the head of general electric, probably in france very soon. he confirmed what we were seeing yesterday, the french government is not ready to give its blessing to a takeover, at least perhaps a partial takeover of alstom. he said the government was worried about the possible loss of alstom and stated clearly that the government was working on alternative plans to merger or acquisition of alstom by general electric. that seems to confirm that, in the view of the government, alstom is considered as a strategy issue. the company is the the maker of power turbines, used in the nuclear sector.

and that would be the main reason why the company couldn't be taken over by a foreign group. also, alstom is the maker of the tvg, the french high-speed train, some sort of national pride. for that reason also, the government would be reluctant to see the tvg in american hands. we are of the confirmation that there is something on the table between alstom and general electric. yesterday, alstom said it was not aware of any offer, public offer, on its shares but didn't dae nigh that there were negotiations with general electric. actually, the company indicated it would be ready to negotiate as it said it was reviewing permanently all options for its businesses. we'll follow very carefully that story. stay with us. >> stephan, thank you very much for the update. ecb vice president says the central bank is looking at all instruments, including asset purchases. shouldn't need to respond to low

inflation levels. speaking madrid, he stressed no decisions have yet been made. this comes after ecb president mario draghi gaft markve market that he could be trying to fight off inflation. >> in our view, a tightening of the policy stress could come through a further lowering of the interest rate corridor, including a negative deposit rate. if necessary, the measures could include newly created injections via liquidity operations, including longer term fixed rate operations. >> more detail on that conversation yesterday, that speech by draghi. i'm not sure there's anything exactly fresh for markets to trade off. it seemed to me, language is, again, being use as the tool

instead of actual policy by draghi. >> i think it's really the first time the ecb is looking at more wider options to inject liquidity into the markets. we've seen quantitative easing from the fed. it's interesting few that the u.s. is tapering their activities, that ecb is so concerned about a deflationary scenario here in europe. >> is it a concern? he's mentioned all of these options from at every press conference after the ecb has been moving. this is the first time he flashed out what they would be used for directly. he wasn't flagging up anything we didn't know. >> i think it's more -- i think they are more convicted to do it now. and i think that's outright purchase for a long time has not been an option for the ecb. taking that stab, they are entering a completely new territory. which so far only the u.s. has been done. if you think about it like the

mandate of the ecb, like in the old days, was inflation stability was the mandate of the fed. it was more to facilitate the growth of the economy. this is the ecb taking a completely new route. this was all potential measures that they can, you know, use. i think this could lead to quite interesting developments in the markets. you have the u.s. on the one side tapering and europe becoming very easy on the monetary policy. even doing it negatively, what he was saying actually, doing all this does not stimulate the economy, therefore, he wants to do a negative deposit rate for the banks. they pass the liquidity on to the real economy. >> very quickly because we're out of time. what's the trigger point as you see more action coming? april 30 is when people say we'll see a higher inflation rating. it didn't seem like that will be the capitalist. what's it going to be? >> i think he's concerned about growth, with inflation numbers

being so low. plus the russian crisis, i think that could tip it off. >> thank you very much for joining us today. the ceo and chairman of amplitude with us today. today we ask an analyst what might be next for the finnish company, nokia.

you're watching "worldwide exchange." microsoft reports says smaller than expected drop in third quarter profit on flat revenues, although both numbers beat forecasts, results were helped by lower operating costs and strong consumer sales. on the conference call, new ceo says he sees a cloud rush in computing. the deal cleared all of the regulatory approvals. the transfer, valued at $7.5 billion is set to formally conclude today. the question marks remain about the fate of a phone plant in india. a spokesperson for the finnish firm said thursday the time was running out to include the massive plant in the deal.

meanwhile, press reports says nokia could be planning theo announce their next ceo on tuesday when they report results. tell us why you think this spells more control for microsoft over the windows phone. >> quite clearly it lets microsoft have full control over not just the software but of course the hardware direction as well. nokia, of course, is by far the largest producer of windows phones, smartphones in the world, producing about 8% of the smartphones. one of those manufacturers is windows phones are the key operating system, the main operating system they use. for microsoft, it means they're able to bring that partner under its one, try to build something

bigger than it has been, challenge the likes of android and apple's ios system. >> wonder if groth in one area could be offset by losses in another. if microsoft has control over the hand set business, does it turn off other competitors from using the operating system? does it force them to some of the other competitors? >> that is a distinct possibility. and at the moment, windows phone is for want of a better word, the second chase operating sy fhtc, et tera, after android. when doughs phone is so far behind android in those stakes. android shipped about a billion smartphones last year, windows phone had only 40 million phones last year. nokia did 80% of that number. you're looking at that, the threat of scaring off some of the other manufacturers, it isn't such a big issue as it could be for microsoft because

of the market position of windows phone. however, the up side for microsoft in terms of being able to accelerate the growth of its units to get very good relationships with the mobile operators in particular across all parts of the world. that's one of nokia's biggest strengths. that can really help grow the unit and really try to break into that 10% market share that microsoft is targeting. >> let me ask you about nokia then and what remains of the slimmed down company, typically in the past, after big investments like this, the company becomes more nimble. is this going to be the case for nokia? >> nokia will try to be more nimble. nokia will try to be most nimble is advanced technologies unit. at the moment that unit will mainly be based around licensing. you'll see research into new technologies and hopefully products will come out of nokia

in two or three year's time from that unit. in the meantime, the majority of nokia will be in nsn, in its networks business, which over the past couple years has shed thousands and thousands of jobs and is much more lighter and nimbler unit. the nokia we see that will emerge from next week on is going to be a much, much, much smaller, much more efficient nokia than the nokia you had a couple years ago when the hand set unit had thousands and thousands of people and the whole business wasn't particularly profit at any rate. >> thank you so much for joining us today, daniel gleason. >> thank you. we've seen a burst of m&a activity elsewhere in europe this week. here's what some of our guests had to say about all of the deal talk. >> they were debating. it was the right time to call the health care sector a value

proposition. it's a sector due for a rewriting. it's always tough to call for the exact type of target in the m&a deals, but you'll see it's actually a win/win situation. at least from market reaction. you don't have this behavior that one stock is lacking. >> it's a dynamic landscape at the moment. a lot happening. it's all about these big pharmaceutical companies trying to future proof these companies like we've seen this frenzy this week. everybody is trying to ensure innovation is the key of any company out there. >> we are spending more and more time on those considerations than in the past. i think once upon a time we'd think about value creations, synergies would give less consideration to these issues. right now as we give the best advice to our clients, that's an important part of the section that will be considered. >> despite the political statement, the economical decisions will be smart. this is what i wish.

i don't think there's any reason, specific reasons to block something that could be of best interest for the industry. >> busy week it has been out there in the m&a space. still to come on the show, the latest uk retail data is about to be released. stay tuned for more details and analysis after the break. ♪ [ banker ] sydney needed some financial guidance so she could take her dream to the next level. so we talked about her options. her valuable assets were staying. and selling her car wouldn't fly. we helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today...and tomorrow. so let's see what we can do about that...

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you're watching "worldwide exchange," bringing you business news from around the globe. welcome back to "worldwide exchange," i'm karen cho. these are your headlines from around the world. s&p slashes russia's rating to just one notch above junk, citing concerns over capital outflows. microsoft shares are given a shot in the arm after the software giant beat expectations. the cost of international expansion weighs on amazon after weakness in its china unit offsets a solid performance in the u.s. home market. and the french government says it's working on alternatives to an alstom/ge

bid. the economy minister says he's worried about the loss of the firm. this is the latest picture across on european markets, red across on these charts, again, on fresh fears around ukraine and whether there might be more sanctions against russia, the german stock market taking a fairly big hit on call there, down 18%, the ftse, the cac. bond markets, a bit of a safety bid has gone in. yields falling across on those trades. the periphery lifting up from recent lows. and on some of the foreign exchange markets, you'd think the dollar would be getting more traction but it remains on the back foot. despate some of the increased risk out there, you'll notice the dollar is not exactly clawing back much territory, in particular one of the commodity currencies, the australian

dollar, 0.9276. on the data front, let me dive into the numbers from the uk march sales numbers, including fuel up 0.1% month-on-month, 4.2% higher year-on-year. actually, it was expected to weaken, minus 0.4% was the expectation. the numbers coming in firmer than expected. we have seen a rather large impact on some of the numbers where fuel has had a negative drag on some of the retail numbers, specifically for corporates. so it's minus 0.4% month-on-month, if you strip out fuel, expected minus 0.5% month-on-month. 4.2% year on year. the numbers expected were

slightly higher. joining us around the set is brian roberts. retail insights director at cantor retail. the initial take on the numbers, is the uk looking dovish in the month of march? >> there's always a degree of raised eyebrows around the o & s figures in terms of how they relate back to reality in terms of retailers. one impact could be the late timing of easter into april this year, which i think has an extremely dampening effect on food and food retailers. i think one of the main reasons behind -- i think we're seeing this morning the fastest growth in nonfood retail sales since 2002 which would be remarkable were it not for the big weather impact in march 2013. so dreadful weather last year in march. lots of snow, lots of rain. shoppers going indoors, not going out to some of the big retail parks. if we pick apart the numbers, i

think if we try and disregard the weather impact, try and disregard the easter timing impact, i think what we'll be seeing is a tepid uplift in consumer activity. i think sentiment is slowly improving. the retailers we're speaking to are becoming slightly more optimistic about the year ahead. >> so far for the month of march, we're tracking the single digidits on the year-on-year read. as we progress throughout which has been a fairly strong economy, does that number move to the high single digits near year end? >> april this year will be impacted by the easter falling into that month. but yes, i think as we progress through year we'll start hearing slightly better news from some of the retailers. we heard some good news from tesco in the food sector. i think what we're seeing is a

strong structural shift. >> its markdown, i notice there was a survey just out by markets saying britain is expecting the bank of england to raise interest rates over the next year. so those numbers getting better. how interest rate sensitive do you think the customer is at the moment? >> clearly i think that will have an impact. if rates go up, that will have a substantial effect on people's disposable incomes. but again, when you speak to lots of retail ceos, they say the biggest influence on the consumer sentiment is unemployment. i think there's still concerns out there for job security. obviously there are significant job losses to come in the market that does impact people's behavior. overall, lots of broad factors influencing shopper sentiment, inflation, interest rates, employment.

i think the sense we're getting some shoppers is that of cautious optimism. that is feeding through into perhaps an improvement definitely in nonfood retail performance. grocery remains a blood bath. >> the numbers today don't tell us anything about what's playing out in the actual space. i wonder how key trends are to the overall consumption figure? for instance, we've seen in some of the numbers from the retailers internet accounts for a big growth factor. do you think new age technology and the way we shop is causing more consumption across the uk these days? >> i think very little of that online spending is incremental. digital downloads it might be. most retailers will happily admit the rapid growth is cannibalizing their store by sales. it does help to have that multichannel approach for shoppers. that big structural influence is trying to create a more seamless, multichannel

experience. you can shop across all channels with each retailer. >> we have some comments crossing from ukraine, from the prime minister yatsenyuk. he says russia aims to occupy ukraine militarily and politically. he goes on to say russia wants to start world war iii. also says russia attempts to start a conflict in the ukraine will lead to a military conflict in europe. so the comments from the prime minister playing into some of the worst fears that are out there about where this conflict will end. many people hope that after a volatile month, potentially we could get to the point where this crisis will peter out and that we will come back to some form of normality. increased concerns about whether there will be sanctions, the u.s. is pushing russia to pull back from the brimpg. that's come across in the most recent comments from john kerry.

but the comments from the prime minister of ukraine suggesting that there is heightened risk out there, across from the geopolitical tensions for europe. let's return to some of the deal making. alstom shares have been suspended in paris today. the french trainmaker is meeting today to discuss a potential bid from ge. reuters sources say alstom's board will meet this afternoon. this as france's economy minister says the government is working on alternatives to the ge deal. let's get out to stephan who has been fleshing this story out for us. isn't this one of the biggest concerns when it comes to the french government? you have a capital markets deal, with the french government weighing in, saying, no, we don't want this deal to take place. it doesn't send the right message to the investors. >> i don't agree, really. they are linked to the national defense or in the case of alstom, nuclear energy. it's not only the case in france. it's the case in plenty of

countries and in some cases the government has to step in to protect what it believes would be essential for the french economy. the government is not ready to give its blessing for the takeover of alstom. he's worried about the potential loss of alstom because the company is, quote, a symbol of the french industrial strength. he met with the ceo of alstom yesterday and is due to meet very soon with the general electric. to work on alternative solutions for alstom. the company needs to find a solution because it's facing a sharp decline in orders from utilities. last year, alstom announced 1,300 job cuts. they have concerns of its cash flow situation. the shares of alstom have been suspended on the french market at the request of the market watchdog, which has already requested a statement from the company. according to reuters, alstom will hold a board meeting this

afternoon and could make, will make, probably a statement right after the meeting. yesterday, the ceo was reporting that general electric would buy not the entire company but its energy business. it would be a significant chunk of alstom. that accounts for 70% of its total revenue. we'll follow the developments there. >> we'll agree to disagree on that point there. starbucks gives us buzz, looking it's outlook on strong quarterly sales. all those details, next.

wpp has posted a 7% rise in like for like first quarter revenue, beating expectations. the advertising giant's ceo tells cnbc currency head winds remain a concern. >> we've seen some massive devaluations as you know in the first quarter of 2013. that's taken its toll certainly in sterling. sterling has become the strongest currency in the last three to six months and has

shown no signs of weakening. >> starbucks' second quarter profit rose 9%, matching forecasts. as customers continue to indulge in specialty coffees and baked goods. revenue was shy of estimates, but same-store sales rose 6%, beating expectations. starbucks is raising its four-year earnings outlook and expects revenue growth of 10% or more. the company is rolling out new physiocarbonated drinks in the states and asia this summer. and the new oprah chi drink. goes on sale next week. shares in frankfurt rising 2.5%. microsoft reports say smaller than expected drop on revenues, though both numbers beat forecasts. results were helped by lower operating costs and strong consumer sales. pc sales were down 4% in the quarter, they may have been muted by microsoft ending

support for windows xp which may have motivated people to buy a new competer. new ceo says the shares were up 3% in after-hours trading. not quite matching up in frankfurt but close at 2.7%. amazon shares rising after hours as well after its first quarter earnings came in line with expectations. investors were concerned about heavy spending in the new quarter. megan brennan has more. >> per share of 23 cents. that was in line with the street. on revenues of $19.74 billion. so that was actually a top line beat compared to consensus estimates of a 19.43 billion. but when it comes to amazon, analysts are especially interested in sales growth. and whether that rate continues to slow as it has for the past two years. one reason we've seen the stock down this year.

sales for the first quarter increased 23% from the year before. analysts had expected 21%. that was good. it was thanks largely to north american sales of electronics and other items. whereas international sales were considered a drag, growing at only 18%. investors, analysts were watching for early numbers or indications about the 25% price hike that we've seen for amazon prime. on the earnings call, cfo says it's still early since the increase only took effect last month. he did note prime subscriber numbers continue to grow week over week. some of the most interesting figures relating to amazon's video service. stream for prime instant video, nearly tripling over the past year. also that the company is working hard to keep its new set top box, fire tv, in stock. on wednesday, amazon inked an exclusive deal with hbo allowing its streaming service to access some of the coveted hbo library.

saying in earnings on thursday, amazon plans to roll that out on fire tv as well. back to you. >> internet content delivery network acme -- akamai. joining us now to go into greater detail about this is james krichmar. akamai, tell bus that. >> it's a hawaiian word for intelligent or cover. >> let's wade through the report. it seems the threat some cybersecurity is fairly widespread. the report suggested nearly 200 different countries that raised red flags for you. it seems an awful lot of different variables to contend

with. >> akamai, we deliver about 30% of the traffic on the web. through that wide global distribution we're able to look at the trends on the internet and understand what's going on. security is really an emerging trend. we see more and more attacks over time. they're coming from everywhere and the interesting thing is that even though we can say the source of attacks are coming from one particular country or another, that's where the machines are doing the attacks from. it's not always clear where the bad actor is coming from. what's very clear is the attacks are getting higher in volume and more and more prevalent. >> that's an interesting point you raise. there's been a lot of criticism around china. are you saying china is not the biggest offender, it's just that internet systems are routed through that country? >> one of the major problems in security on the internet is distributed denial service attacks. the idea is to commandeer as

many machines around the planet as possible. the attacker uses those machines to focus traffic on one website they want to take down. their choice of machines is where they can find compromised machines, where there's high bandwidth available to stage the attack. >> the new ceo of microsoft was telling us about cloud computing. what's the risk in your book as more people share intel over the internet? >> in cloud computing there's two challenges. one is to provide good performance on the cloud and the other challenge is to make sure it's a business that's moving to the cloud, you can keep your data secured and use it the way you want to use it. it's important really to make sure that you have a system that's effective to man taken your control as you extend into the cloud. >> is there a difference in security around the external cloud and the entinternal cloud

this is the way some have been taught to manage their businesses. you can keep more private stuff shielded. is that possible? >> there's differences for sure. there's often a lot of misconceptions. it's easy to believe because systems are internal they're somehow more safe. knotts at always the case. we see an increasing interest in hybrid cloud, the combination of public and private clouds. >> how private is the private cloud, though? >> this all depends on specifics. the thing about security, it's actually quite difficult. so you are in a game of being ever more vigilant to make sure you're staying ahead of what the problems are. you have to investigate every in depth and have good defenses on your systems. >> let's talk about the widespread bugs that have been on the internet. hot blade, the likes of google,

facebook, was your phone ringing when this was out there? >> it was a serious vulnerability compared to ones we've seen in recent history. in addition to the seriousness because of the problem, it also affected many vendors and websites on the internet. this shows exactly how difficult security is, right? if you find one glitch it can be explo exploited. one thing we're starting to do is look at using the intelligence we can gather from a widely deployed system, to try and identify problems early and block them before they become big problems. >> appreciate the conversation. thank you so much for joining us. james kritchmar, ceo at akamai. the deal averts a trial scheduled to begin in late may that could have exposed tactics that steve jobs and former

google ceo eric schmidt used to keep lower paid employees work on their companies products and services. reports say the firms are paying $324 million to settle the suit. which had been seeking $3 billion in damages. consumer inflation in tokyo has hit its highest level in more than two decades. the april number suggests japan sales tax hike is having a big impact on prices. nationwide, cpi and japan only rose 1.3%. the bank of jep's tarring set 2%. let's get out to andrew sullivan. andrew, many people think this is a step in the right direction that you've got at least a little bit of stabilization in the inflation rate. what was your view today? >> i think it's a little bit disappointing. we didn't see growth over and above the rise in the sales tax. i think if we'd seen that number coming through in the tokyo number, it would have shown we

have 100% pass through. the fact that we didn't probably shows the momentum is probably slowing slightly. >> yes. if you look at the reaction to abonomics, there is the feeling we had the sales tax increase that would be brought into effect, that would have a negative impact on the japanese market. the figures today suggest that japan has been largely able to ride out those effects. >> yes. we've only really seen the data or the impact of the sales tax on the tokyo numbers. the national numbers don't reflect that yet. that will come next month. i think that we're seeing some wage rises in japan. we're seeing some positive moves. i think the market is rather concerned we're not seeing more impact coming through. that will be a concern. certainly on monday when we get the retail sales numbers, that will give us a key indicator as to whether or not the japanese consumer is feeling like they have more money and they're going out and spending or whether they're being much more

cautious, in which case, this stage of the abonomics is starting to falter. >> just reading the results of a recent survey suggesting that even though prices are no longer falling, economists surveyed don't believe prices will rise as fast as the bank of japan wants them to. also, that low inflation and price increases could outstrip wage hikes this year. do you think those concerns are valid? >> i think very much so. certainly if you're looking at the bond market, we're not seeing the bond market pricing in anywhere near the inflation rate the bank of japan is targeting. if the bond market isn't expecting inflation -- and the bond market tends to be quite smart about these things. the reality on the ground that they're probably reacting to also means we aren't getting that inflation drive due to demand. the current inflation has been largely driven historically by rising fuel cost which is feed into the cpi. as we go through this year, those are coming off the base

level we saw last year, fuel prices were quite high. we're not going to see that height coming through. without that, you know, there is real concern that the momentum drive there is faltering. people would want to see, you know, quite dramatic action, i think, out of the boj, which really isn't in their manner. they prefer to wait and watch the data and then react. i think the market would be far more confident if we had a draghi statement saying we'll do whatever is necessary. i don't think we'll get that out of the boj. >> many question though, the impact from this point forward from japan and say it's down to the third arrow of abonomics. there are question marks, the fact that the trade agreement wasn't pushed forward suggests perhaps that japan isn't taking on some of the heavy lobbyists. in this case it was agriculture. does that suggest there will be a tough road to traverse when it comes to the third hour of

abonomics? >> this has always been the concern. when the prime minister first came in, he came in with a mandate. but he was very -- it does show the strength of the lobbyists against this, that's very much the pharmaceutical industry, the agricultural industry. there's still this reticence within this japanese industry. these are structural changes that need to happen in japan. we aren't seeing any indication that it's moving that way. that's another reason people will be very cautious with regard to japan in the short term. >> i appreciate the perspective today. thanks for joining us. andrew sullivan. india's tough investment climate reportedly claims another victim.

japan's ntt docomo says it will unload its own tire 26% stake by june if the arm doesn't meet its financial targets. docomo bought the skate for 2.7% in 2009. and some hard facts for signer.com. it felt sorry and ashamed for lax monitoring. coming up on "worldwide exchange," we're on the ground as the ukrainian prime minister says russia wants to start world war iii.

welcome to "worldwide exchange," i'm karen cho. these are your headlines. s&p slashes russia's rating to one notch above junk, citing concerns over capital outflows. this as the war of words continues between russia and the west. >> let me be clear, if russia tens in this direction, it will not just be a grave mistake, it wilin an expensive mistake. microsoft shares are sent higher after the software giant

beats expectations. the cost of international expansion weighs on amazon after weakness offsets stellar performance in the u.s. home market. the french government says it is working on alternatives to a potential ge buyout of trainmaker alstom. the economy minister says he's worried about the loss of the firm. you're watching "worldwide exchange," bringing you business news from around the globe. if you're just tuning in, thanks for joining us here on the program. a bit of red on these boards today, a lot of concerns in the background around ukraine and russia again. you can see the negative tone on these markets. the close yesterday, interesting. the nasdaq showing broad based rise but this on the back of the apple effect. the dow unchanged. this was interesting turn of events because the last time the dow was unchanged in the session

was 12 years ago, back in december 24, 2001. the history of the trading patent on the dow it only ended unmoved 166 times in its history. a fairly big event for markets to have a flat line finish. let's move on to see how the ftse 300 index is faring. just down over a 0.1%. the xetra dax trading down by more than 0.9%. the sell-off accelerating in the last couple of minutes. the cac, the ftse mib also managing to stem some of the decline, down 0.17%. a weak session playing out. on bond markets, this is picking up on some of the caution. yields have been pushing lower on some of the trades. gilts, easily joining in on the push lower on that yield, bunds

3.5% on treasuries, 7.6%. a lot of these other trades being a bit higher. the euro, for instance, 1.3836. the australian dollar rallying over 0.1%. 0.9275. let's get out to sri jegarajah for more on the trading pattern there. it's been a cautious day for some of the markets, it seems. >> that's a good way of describing it. quite frankly, i don't think anyone in this region in the investment community wants to commit to big positions, heading into the weekend and heading into a weekend that could be fraught with headline related risk coming out of ukraine and russia. take a look at the magnitude of some of these declines, more than 1%, almost 2% in the taiex.

taiwan has been responding to some of its problems of its own and how it relates to the future of nuclear power in the country. that could be a referendum being held on its future. if there is -- if there isn't a nuclear power station built in the not too distant future in taiwan, the concern is that electricity usage could be crimped and that could affect economic growth. that's what the markets are trying to factor in. as for elsewhere, let's talk about the japanese market. the big story was the cpi present, tokyo cpi, 22-year high, signals a great deal of resilience arguably amid the sales tax hike. you strip that away and some would argue inflation remains quite modest and bank of japan still has work to do, needing to come to the party possibly later on this year with more stimulus. the other thing i want to leave you with, we need to see, still, meaningful increases in real

wages to really unleash the animal spirits among the japanese consumer. we hit the full stride in corporate earnings season. we'll wait to see what some of those numbers look like. that was another test for abonomics. as we head into the weekend and a new week and the fomc and the payrolls at the end of next week, a lot of risk on the table, macro risk, headline geopolitical risk and very few people wanting to take big positions or bets as we get there. karen, back to you. >> almost feels like playing chicken with the markets if you're willing to buy up with this volatility going into the weekend. >> absolutely. >> sri, thank you for that. president barack obama has been conducting his visit of asia, let me show you live shots now of what's been transpiring, coming up to a key speech. already the president has been talking about the south koreans, offering his condolences over the sinking last week of that

passenger ferry that left over 300 people dead or missing. one of the big events also on the agenda is security concerns, ongoing threat with north korea. this is likely to be raised. there's been more agitating, of course, on the border with north korea with french missiles and testing of military equipment. so the south koreans look for assurances from the u.s. that they stand ready to help in case there is an escalation of fears there. we are waiting for that speech today. but already the president has met with the south korean president, park hyun-hai. let's move on to some of the earnings news out overnight to recap some of the trading that's been dominating after hours, action microsoft reported a smaller than expected drop in its third quarter profit on back

of flat revenues. although both numbers did beat forecasts. its results were helped by lower operating costs and strong consumer sales. meantime, pc sales were down about 4% in the quarter but may be muted by microsoft ending support for windows xp. that may have been a catalyst to motivate people to buy a new computer. on the conference call, the new ceo says he sees a gold rush in cloud computing. microsoft added 1 million new subscribers for its office 365 cloud software. the shares up 3% after hours. in frankfurt, rising less than that, 2.73%. amazon's first quarter profit was in line with analysts forecasts but hurt by rising costs. as the online retailer spends heavily on technology and content. revenue jumped 23%, above estimates. international sales remand a drag as growth slowed to 18%. operating margins still razor thin at 1% and amazon expects a

second quarter operating loss. the company is encouraged about growth in amazon prime users, even after it recently raised the annual membership fee. of course a big challenge to amazon coming with alibaba taking on the u.s. market with the ipo, amazon shares on the back foot and frankfurt sliding just under 0.1%. let's bring in michael pervis, a chief global strategist. he joins us out of new york. a lot of after hours action there. weigh in on some of the numbers, amazon first up. we know the threat will be coming from alibaba. did you think the numbers suggest there is a tail wind behind amazon at this stage? >> well, i've invented the details of the note just yet. broadly, a lot of companies have come in thus far. you know, with pretty strong numbers. 75% of the companies that have

reported this season have beat on earnings there. and the average beat is 4%, sort of at the top end of the average beat range over the last two years. you've seen a lot of strong reports. halliburton, for example, came very strong. earlier this week. i think for all of the macro issues discussed a few minutes ago, one thing the table is getting set for is a resilient strong market here. unless the conditions in the ukraine and russia take a big step function forward in terms of risk off sentiment, i would be surprised if the market can't push higher here in the near term. >> i want to pick up on some of your comments first, how much of the growth is down to the u.s. market and how much is the international effect? >> well, you know, it really is

varied company by company. if you look at halliburton, for example, where their growth is coming from is their north american business. that's specific due to the shale situation there and where they are in the cycle. you know, in terms of the other companies, obviously, there's a lot of sensitivity and there's often a lot of fx sensitivity, especially with exposure to emerging markets. >> it does seem that there's a fair amount of caution, even with the dow finishing on the flat line yesterday, symbolic of the fact that there was tension on both the buying and selling side. what's the capitalist for these markets to drive north? >> well, you know, a few things. you know, the economic data in the u.s. is really sort of emerging from what i would call sort of a snow cloud hanging over the data, a lack of

visibility. the glass tended to be considered half empty, not half full. if you look at a lot of the economic reports we've been getting over the last three or four weeks, a lot have been surprising the street to the upside there. so that's one factor that i think is going to be market constructive. you know, as we just talked about, earnings, you know, for the broad group of companies thus far, i think about 140 of the s&p companies have reported thus far out of the 500 in the s&p. those have been pretty strong. i also would argue that a lot of the positioning, a lot of the sentiment, in part because of the swaying in the ukraine and perhaps because of the banking concerns in china, it's not at all frothy, the way we've seen earlier here. we're not too far from lifetime highs in the s&p 500 but the sentiment, the positioning is not especially frothy. that can allow the mark tote grow, to rally further here.

again, if the geopolitical tensions don't increase. >> that is a big if, isn't it? michael, we'll delve into that in just a little bit. you're staying with us. what's coming up on today's agenda state side. the final report on april consumer sentiment is released at 9:55 eastern. ford reports second quarter results at 7:00 a.m. we get numbers before the opening bell from colgate-palmolive, moody's, state street and vf corp. the drought in california poses the risk of big increases in many food categories. we're talking beef, poultry and pork. alstom shares have been suspended in paris has reports suggest the french trainmaker is meeting today to discuss the potential $13 billion bid from

ge. reuters sources say alstom's board will meet this afternoon. but could the french government be trying to block the deal? france's economy minister says the government is working an alternatives for alstom. let's go to stephan for more on this. are there viable alternatives? who else would be interested in alstom's assets. >> the company is facing a sharp decline in new orders from utilities. there are concerns about its cash flow situation but it's not a company on the verge of collapse. alstom could find another partner, if it would like to find another partner. the french energy minister said basically that france is not ready to give its blessing for a takeover of alstom. they are worried about the potential loss of the company because it's a symbol of the french industrial strength. he met with ceo of alstom yesterday and is due to meet

with the management of general electric very soon. no exact schedule for the meeting has been announced to the press. he wants to find alternative solutions as you were saying. alstom is due to make a statement after their board meeting in the afternoon, that's according to reuters. the statement has been requested by the french market watchdog, which in the meantime has requested a suspension of the shares of the company. >> thank you very much, stephan. i'm taking a look at the wires. fresh comments coming through from putin, the russian president saying there's a possible break in cooperation that could be critical for ukraine's military. also putin saying russia should increase production of anti-missile systems. this is according to some local wires. the rhetoric has been amped up a little bit with the ukraine saying rushy's attempting world war iii. putin coming right back out and talking about some of the increased threats up there. we have obama in asia at the

moment. this situation with ukraine stealing some of the limelight away from what is meant to be a trade mission, talking about greater geopolitical security, no doubt will be asked to weigh in on the latest comments. the ukraine has been integral to asia. many people suggesting that how he reacts would be symbolic. there are a bunch of relations between china and japan, those have been souring. there's an ongoing threat with north korea as well. the official speech taking place as well with the south korean president kicking off some of the action there on the ground in south korea. coming up next, tensions in ukraine escalate as the country's prime minister says russia wants to start world war iii. we're live in ukraine, next.

you're watching "worldwide exchange." these are your headlines, s&p slashes russia's rating to just one notch above junk as ukraine's prime minister says russia wants to start world war iii. the nadella effect gives microsoft shaurz a shot in the arm.

and the french government may be trying to block a potential bid from ge to buy trainmaker alstom. rating agency standard & poors downgraded russia's credit rating to one notch above junk. we spoke in a first to standard & poors and asked what the key reasons were for the ratings cut. >> the reasons, as you pointed out, they relate to our concern about weakening of the external position related to the consequence of the financial outflows over the first quarter. we estimate those outflows at $51 billion, which is basically close to what the annual outflow was on average over the past couple of years. >> meanwhile, the ukrainian military has launched operations in the east of the country with troops taking back control of a checkpoint to north of slovyansk.

we are joined by michael pervez. you talked before about the caveat being the tensions. you are saying secular position has come back to more modest levels. we don't have a lot of shorts on the back of ukraine, do we? >> it's funny. for all of the headlines and, you know, for the weakening of the ruble and other classes -- asset classes directly related to this, if you look at the vix here in the u.s., it's really not showing any fear, either in the spot fix or the futures curve, in other words, volatility down the road. really equities thus far in the u.s. are really shrugging it off. there's obviously some companies that might have direct exposure to -- might be exporting to russia and there will be selected instances. but for the u.s. companies,

that's a relatively small percentage of the universe there. probably in the eurozone or in germany you'll have more direct exposure there. thus far we're not seeing that impacting u.s. equities. >> michael, we appreciate your views. michael purves, the chief global strategist at wheaton and co. in new york.

swedish bank seb has warned that events in ukraine could impact business sentiment across the region. seb did beat expectations with a rise in first quarter profits. joining us on the phone from stockholm is the ceo of seb, annika falkangren. total of more than 2 billion. how concern ready you about these exposures? >> these exposures, i'm not worried because those are

closely connected with our corporates, so they're related to that. i think more what can be worrisome is, of course, the change of activity overall. that could impact the economy, which might be impacted. >> how much impact has there been so far? this crisis has been beginning on for a little while. it looks like we're seeing stability come and then market. >> we've seen positive gdp numbers, driven by rising private consumption and increase exports. if this continued and the development worsens we'll have to see it impacted. of course it can be trade hurdles that will impact. i think there's an overall

sentiment. >> no doubt you've had a lot of discussions about managing these exposures. is it fair to say you won't be taking on any fresh exposures to ukraine or russia at this point? >> i think it's important for us, being the leading corporate bank of the nordics that we support our nordic companies and whatever their needs are. it depends on what kind of needs they have. >> let me ask you about germany as well. it's not just ukraine and russia that has seen a fallout from this crisis. what's been the impact on some of the german confidence sectors and confidence there? >> i think they are seeing recovery, we're seeing a much more german activity this quarter, much better than last year. we see more activity from german corporate. >> tell us about local demand in sweden as well. jut how much demand is there for

loans and how would you describe the backdrop as you see it? >> i think the first quarter, i think we alluded to that already after q4, early february that we see business picking up, that corporates are very active again. we have a higher corporate activity, higher capital market activity and also they want to invest again. we've had a high number of ipos. overall, a very good business sentiment from large corporate down to small smes. we hope that will continue. >> thank you very much for joining us today. annika falkengren, the ceo of seb. cnbc learned bank of america is in talks with the justice department to settle charges that it misled investors about the quality of its mortgage-backed securities. the settlement could cost the bank $10 million or more. jpmorgan paid $13 million to

settle similar yeshs. b of a reported a quarterly loss. here's a look at how the shares had been performing in frankfurt, trading lower to the tune of just over 2.5%. the rest of the market also lower in germany. plenty more to come on the show. microsoft gets the nadella effect. shares jump as investors buy into the vision for the tech giant. we'll leave you to look at how futures are trading ahead of the open on wall street. president putin is warning about fresh need for anti-defense missiles. more news also out of ukraine today.

welcome to "worldwide exchange," i'm karen cho. these are your headlines from around the world. s&p slashes russia's rating to one notch above junk, citing concerns over capital outflows, this as the war of words continues between russia and the west. >> let me be clear. if russia continues in this direction, it will not just be a grave mistake, it will be an expensive mistake. the nadella effect gives microsoft earnings a shot in the arm, sending shares higher in extended trade after the software giants beats expectations. the cost of international expansion weighs on amazon after

weakness in its china unit sets off a stellar performance in the home u.s. market. and ge works toward a potential buyout of alstom. the economic minister says he's worried about the loss of the firm. you're watching "worldwide exchange," bringing you business news from around the globe. if you're just tuning in, thanks for watching the program today. let me show you how u.s. markets are shaping up before the open. negative turn across these markets. ukraine with fresh concerns about the escalation of tensions. yesterday the markets had a choppy session. also on the back of these geopolitical tensions, the dow finishing unchanged. interesting finish for the first time since 2001. but the nasdaq getting some gains on the back of the apple effect. let's just take a look at how we're faring across on the global markets, the ftse cnbc

global 300, down 0.1% but off some of the lows of the session. on european markets, it is the german stock market that has been weathering the full brunt of fees of sanctions with russia, the german stock market has been down close to 1% in session. some of the losses have been trimmed or at least stabilizing on both uk and french markets today, down about 0.3%. the peripheral has been weak but stabilizing throughout the morning session. 0.75% lower for the italian stock market. microsoft numbers beat the street in the third quarter, thanks to strong consumer sales. the report sending shares higher in german trade. josh lipton sent us this report. >> microsoft reporting and rising as results best expectations. wall street, remember, was

looking for 63 cents on revenue of 20.44 billion. microsoft reports 68 cents on 20.4 billion, drilling into report, commercial revenue clocked in at 12.2 billion, office 365 and ager revenue both up over 100%. the consumer division, revenue at 8.3 billion, that did best forecast. windows revenue microsoft gets from pcmakers, up 4%. looking at hardware, surface revenue grew 50% and microsoft says it sold 2 million xbox consoles. investors have cheered the appointment of nadella since he became ceo on february 4th, that stock up about 8%, outperforming the nasdaq. microsoft investors want change and nadella is delivering it. he's stepped into microsoft with a different strategy and style, often appearing in a t-shirt, jeans and sneakers. the message is this is a

younger, hipper and more forward-looking company. he's forcing microsoft to break away from its pc centric focus. he talks about a new strategy that emphasizes mobile technology. this friday, microsoft will complete its acquisition of nokia. nadella is working hard to grow cloud developments. nadella faces a lot of serious challenges, including, of course, navigating a pc mark net sharp decline. analysts have quickly changed their views of the old tech firm and nadella is giving microsoft a fresh face for the future. josh lipton, cnbc, silicon valley. >> the latest on the earnings front there. there is more crossing now on russia. the central bank has taken action. it's raised key interest rates, up from 7%. 50 basis point increase has been the reaction from the central bank. it says it does not plan to cut

rates in coming months. spelling out the fact that rates will now stay at the slightly more elevated level. the central bank says the rate rise is due to the weak ruble. the reaction has been that the dollar is stronger now against the russian ruble. it says high inflationary risks also on its radar. don't forget we've had a ratings cut by s&p today as it's concerned about the growth outlook for russia. it's also talking about monetary conditions as one of the key factors if it continues to re-assess russia and whether there might be more downgrades down the track. this has been the instant reaction on the market as you can see. 30% firmer for the dollar versus the russian currency. let's come back to the microsoft numbers that we're flashing up for you. joining us on the phone from chicago is norman young, senior equity analyst at morning star. there was a lot to digest in the numbers from microsoft yesterday. it was also a big pr day out for the new ceo for nadella.

do you think the message he communicated about the growth strategy was enough for investors? >> i think so. i this i that combined with a few of the moves that he's made since coming into office, i think those are things that signify change, that the company is moving away from a windows first strategy more to a mobile cloud first strategy. >> the focus on cloud computing, how strong an advantage does microsoft have in this area that's becoming increasingly competitive? >> yes, that's a great question. the point is, the cloud really, at this point, is still a bit of a land grab, a gold rush if you will. the industry is going very, very quickly. there are a few key players. a company like microsoft does have the resources to compete. they're currently in the top three of public cloud providers. >> let me ask you about the computer, the pc market. it felt as though the numbers were just a little bit challenging to read, some of the declines seemed to be be ststemy

fact that some consumers were forced into this upgrade cycle as microsoft stopped supporting the xp system. was that a trigger or were there other effects in the system? >> that had something to do with it. really, though, the strength was kind of microsoft's traditional strength. that's in the commercial business or the enterprise business. that side of the business remains strong. those users are still heavily tied to pcs. if you looked at the consumer pc market, still pretty weak. that was offset by surface tablet revenues. all in all, it was the business side of the business that pulled up the market for them. >> give us your target price for stock. >> we're moving off our fair value estimate to $42 for microsoft right now. still, roughly fairly valued. this is a wide mode company. we think it's still a core tech

holding. >> appreciate the time. thank you for joining us. norman young, morning star with us today. we know president obama has been on the ground in south korea. he's been staging a press conference with the president of south korea. the latest is that obama has been reassuring south korea about military ties. he says the u.s. and south korean can reconsider its 2015 military operational control in light of security consideration. he's also talking about sanctions, i believe. this just coming through. we're bring you that in a few minutes. the president trying to battle two agendas, speaking directly to asia but battling the fallout between russia and ukraine. let's listen in to what he's saying. >> -- continually raise the cost

of rushy for their actions while still leaving the possibility of them moving in a different direction. and we'll continue to keep some arrows in our quiver in the event we see further deterioration of the situation over the next several days or weeks. as far as the middle east is concern, this is a problem that's been going on for 60, 70, 80 years. we didn't anticipate we'd solve it during the course of a six or nine miff month negotiation. i think it's fair to say one of my jobs as president is to worry about a bunch of different problems at the same time and not just pick and choose which problems that i have the luxury to worry about. it is still in the interest of

the palestinian people to see if we can resolve a conflict that is combustible. so far, at least, what we've seen is some movement on both sides take knowledge that this is a crisis, long running, that needs to be solved. what we haven't seen is, frankly, the kind of political will to actually make tough decisions. that's been true on both sides. and the fact that most recently president abbas took the unhelpful step of rejoining talks with hamas is just one of a series of chooses that both -- >> president obama there speaking about israel and fleshing out security concerns there. i mentioned two agendas. we should probably throw three

agendas into this as he fleshes out the situation on the ground in israel. also, we just heard a little bit more from obama crossing the wires a short time ago. obama says he will be talking to key european leaders this evening about events in ukraine and may be ready to impose sectorial sanctions if russia escalates actions. this has been a real threat on the market, what fresh sanctions could evolve against russia. we'll continue to follow those events. enormous reactions out there today, particularly for the german stock market and the ruble. we'll go for a break. coming up, ford motors expected to reveal bumps in the road today with results out before the bell. we'll give you a full preview, next. we needed 30 new hires for our call center.

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you're watching "worldwide exchange." these are your headlines, s&p slashes russia's rating to just one notch above junk as ukraine's prime minister says russia wants to start world war iii. the nadella effect gives microsoft shares a shot in the arm. shares move higher in after-hours trade. and the french government hints it's trying to block a potential bid by ge to buy trainmaker alstom.

google, apple, intel and adobe have settle ad a lawsuit with thousands of employees. let's get out to bertha coombs at cnbc's headquarters. very interesting class-action. tell us more about it. >> it is interesting, karen. we always think of silicon valley being so competitive. the class-action suit was filed in 2011, accusing the companies of conspireing to hold down salaries in silicon valley. the settlement comes weeks before a high-profile trial had been set to begin. the suit filed on behalf of 64,000 workers had been seeking $3 billion in damages, an award that could have been tripled to $9 billion under u.s. antitrust laws. reuters reports the companies have agreed to pay just $324 million to settle the case. they acknowledge entering into some no-hire agreements, they

dispute the allegation that he colluded to drive down wages. apple, google, intel, adobe agreed not to enter into no-hire deals in the future. intuit and disney's pixar and lucas film units agreed to a settlement paying a combined $20 million. the case was largely based on e-mails between apple's late co-founder steve jobs and former google ceo eric schmidt and other rivals who allegedly crafted plans to 30e s to poach sought engineers. jobs meantime forwarded the note to a high-level apple hr executive with a smiley face. i trust experts say the companies had an incentive to settle because the executive e-mails would make them look unsympathetic to a jury.

spokespeople for apple, google and intel decline comment. checking shears of the companies involved, trading in europe this morning, all of them are moving to the downside, adobe much more so, off more than 2.5%. it's one of those things, karen. when they are so competitive, they don't want to be driving up prices. but it's a market where good engineers are really highly sought after. >> right. so much for those monster salaries that the wall streeters are chasing in silicon valley. great story. we do have fresh comments from president obama, just to recap on this, obama will be talking to key european leaders this evening on ukraine. they may be ready to impose sectorial sanctions if russia escalates actions. let me just show you some of

this. the russian stock market has been trading weaker, down 0.18. the xetra dax is weaker in germany, down about 1%. some of the board suggesting that there are heightened concerns out there. the comments about whether there are fresh sanctions not escalating the sell-off, so it seems investors are ready for this event if it happens. while, this is a live shot now of president obama speaking in south korea. the agenda was very much meant to be on trade relations across asia and geopolitical tensions as south korea battles concerns with north korea, agitating on the border. but it seems the agenda has been hijacked by ukraine and the events unfolding as putin, russia's president has been talking about missile defense systems as well. and ukraine has been warning about world war iii. president obama having to respond to the latest turn of

events. we'll go for a break, but coming up, the dow closes unchanged. with every stay at hampton, enjoy our free hot breakfast options. you did a great job. it looks good! then fuel up with up to 9,000 hhonors bonus points on a long weekend stay. make every stay more rewarding and feel the hamptonality.

hot breakfast options. hampton, enjoy our free you did a great job. it looks good! then fuel up with up to 9,000 hhonors bonus points on a long weekend stay. make every stay more rewarding and feel the hamptonality. amazon's first quarter profit was in line with analyst forecast as the online retailer spent too heavily on tech knowledge and content. revenue rose 23% above estimates. international sales were a drag as growth slowed to 18%. operating margins remain at 1%. amazon expects their second quarter operating loss. the company is encouraged about growth in its prime users even after it recently raise the the annual membership fee.

starbucks' second quarter profit rose 9%, that was match forecast as customers continued to indulge in specialty coffees along with baked goods. revenue was shy of systems but same-store sales rose 6%, beating expectations. starbucks raising its full-year earnings outlack and expects revenue growth of 10% or more. the company is also rolling out carbonated drinks this summer along with an oprah chi spice tea drink, developed of course with oprah. it goes on sale in the states and canada next week. and visa's second quarter profit rose 26%. revenues fell slightly short of estimates. these are warnings that growth is slowing and u.s. sanctions against russia is hurting card transactions. shares fell 5% in after-hours trade. let me show you what's

coming up on today's agenda state side. the final report on consumer sentiment is due out at 9:55. earnings expected from ford, colgate-palmolive, moody's, state street and vf corp. and the drought risks big increases in many food categories, beef, poultry and pork. great to have you on board, bob. there's a lot of after-hours action. what do you think that suggests for the trading pattern today? >> i think the overall market could struggle. you could see technology get pulled up. i think personally microsoft, the beat on microsoft was expected. but satya nadella brings a jeff

bezos momentum, energy to microsoft. i think microsoft has a good chance of pulling technology up. amazon, you saw after the earnings report yesterday, some of the post-market activity. huge spike, collapse and virtually unchanged as we go into the day. the overall market may end up flat. it is a friday. you have weekly options expiration that will move amazon stock in a volatile fashion over the course of the day. the overall market should be flat. watch technology, though. >> investors here in europe seemed a bit -- having a push/pull effect concerned about ukraine but then looking at some of the earnings which have been decent. do you think that will be the case for the states today? >> you know, i don't think so. i think the russia/ukraine crisis, it shows itself in brent crude. if you watch the inventories of crude oil, especially wti have been massive. globally the oil supply is large. having said that, wti sold off

after the inventory numbers, brent did not. brent is sea-borne crude, the crude oil you watch to gauge where the crisis is. it's higher again after yesterday's trade. i think it's more worrisome for the other side of the ocean here. i don't think the u.s. will be affected. if this crisis grows into a global crisis, right now, the u.s. is taking the diplomatic role on this. if we take a larger role, which i don't expect with this administration, it could play out. otherwise, i don't think you see u.s. equities hurt by this. watch brent, though. if it rallies, it will pull the whole energy sector up and that could cause a problem for the global economy if it persists. >> not much pattern in the gold prices seems to be concentrated around the oil trades. bob, good to have you on board with us. let's wrap up with u.s. futures. we have a negative start anticipated for wall street today as you can see by the dow, the s&p and the nasdaq futures first up this morning. that's it for today's show, i'm karen cho.

thanks for watching "worldwide exchange." have a good weekend.

good morning and welcome to "squawk box." definitely wasn't sleepless in seattle. the big three all reporting after the bell, all on the same day, microsoft, amazon and starbucks. find out which emerald city favorite is moving higher today. the crisis in ukraine intensifies, secretary of state john kerry issues a new warning to moscow. and the dow does something it hasn't done in more than 12 years. it's friday, april 25th, 2014. "squawk box" begins right now. ♪

♪ oh he don't know so he chases them away ♪ good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew is off today. we have several big earnings reports that came in after the bell from amazon, microsoft and starbucks. amazon reporting profit of 23 cents a share or $108 million. that was in line with estimates. revenue jumped 23% from a year ago to a $19.7 billion figure. that topped expectations. amazon making large investments overseas while expanding its lineup of devices and services, including developing its own original shows and video games. margin remained a riser thin 1%. what about the price hike in amazon prime? the company says it is not facing resistance from customers but didn't give specific numbers. we'll talk more about amazon with an analyst in just a moment.