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Quest Means Business
US Treasury Secretary Meets With German Finance Minister; Spanish Bond Yield Relief; Italian Bond Yields Fall; European Market Rally; Crucial Summer for Europe; Draghi Delivers; Dow Flat But Still Over 13,000; More Olympic Tickets Available; Coca-Cola and the Olympics; Rule 40 Protests; China Takes Gold in Men's Synchronized 10M Platform Diving; Make, Create, Innovate: Speedo's Design Lab; Dollar Gaining Against Euro, Pound; Apple Vs. Samsung
Aired July 30, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: There's something afoot in Europe. The question is, what? Tonight, we'll look at all the behind-the-scenes movements.
It's not about sales. Coca-Cola's chief executive tells me the importance of the Olympics.
And from the corporate suit to the swimsuits. Speedo gives us the insight on their cutting-edge design.
I'm Richard Quest and, of course, I mean business.
Good evening. Europe's leaders are rallying around, and while they're doing the rallying, the markets are rallying with them. And what we're going to discuss tonight is what's going on. There's a whiff in the air that something is happening, but so far, no one can work out what and whether it means concerted action.
The eurogroup head Jean-Clause Juncker is the latest policy chief to add his voice to the cause for action. He says we are at a decisive point and there's no time to lose. Well, we may have heard that language before, but it does suggest intervention in the bond market may be imminent, and we are hearing it echoed tonight.
(RINGS BELL)
QUEST: If you join me over in the library, you'll see the sort of machinations. Let's start with the US Secretary Secretary and the German Finance Minister, Geithner and Schaeuble, meeting in Germany.
Now bear in mind, Geithner flew from the US to some remote island -- northern island to meet the minister to discuss what was going on. They have both stressed the need for global cooperation, not new there. But both said they are confident in the eurozone reform plans. And tonight, Geithner goes on to meet Mario Draghi.
Put this into context as well. With the Spanish bond yields, the ten- year bond is down to 6.61 percent. Now, this is despite today's showing -- numbers showing a Q3 GDP contraction and, of course, a 0.4 percent contraction. We're on par with what was expected, but it does show, and most people now expect, the Spanish economy will stay in recession for most of this year and next.
And the Italian bond yield also down. The ten-year -- this was actually at auction as opposed to in the market -- 6.7 percent, now below 5.9 percent, and they sold the best part of $6.7 billion worth of bonds.
So, you are definitely seeing the whiff of something taking place. The FTSE's up, the DAX, the CAC, and the Zurich SMI. They are now -- these two at their highest level since April of this year. Banking stocks to continued to rise.
Factor it all in, and bear in mind what we know from what Mr. Draghi said last week when he said nothing was taboo, he would do whatever he said. It leads us to assume that the next two months are going to be pivotal for Europe and the euro.
On Thursday, we have the ECB and Bank of England rates decision. It'll be interesting to see then whether that's the moment that Draghi announces some form of SMP, Securities Market Program, in other words, restarting the bond purchases.
On the 20th of August, the Greek bond has to be repaid, $4 billion. If they haven't got the money, if they don't get the money, we're back to the default situation with Greece.
We have another ECB rate decision on Thursday the 6th of September, but this is one to keep in mind. The 12th of September, the German constitutional court votes on the fiscal compact, the ESM, and the constitutionality of it. There's also Dutch elections on the same day.
If that isn't enough to put into the equation, on the 14th, then we have a eurogroup meeting two days later. This meeting's in Cypress.
So all-in-all, you've got a decided feeling that something is happening over the next few weeks, which of course, will ultimately been seen whether the Greek bailout terms are accepted.
There is something going on. The question is, what? Jim O'Neill is chairman of Goldman Sachs asset management. He says last week's statement by Mario Draghi was bold, and that's worth more than just throwing money at the problem. I asked him what the options were.
(BEGIN VIDEOTAPE)
JIM O'NEILL, CHAIRMAN, GOLDMAN SACHS ASSET MANAGEMENT: The reaction to Draghi's comments in stock markets around the world are absolutely fascinating, because I think it goes to the core, broader aspect of what you're asking.
What is missing is confidence -- around the world amongst private business people. And the fact the equity markets rallied so much Thursday, Friday, if I were a policy-maker, I'd think, hm, it doesn't take that much.
And then the substantive issues, I think the core of it, with this ridiculous mess in the eurozone is waiting for leadership. Draghi Thursday -- and I was sitting right there in the front -- gave the first real bold signs of leadership.
QUEST: We are older and wiser and we --
O'NEILL: Certainly older.
QUEST: And we know that they rarely follow through.
O'NEILL: It's all about leadership. He is the president of the ECB, and even if the Bundesbank objects, they're only one of the 17 member countries. Mario's got to somewhere turn around and say, "I understand, and I didn't think you'd like it, but we're going to do it." Because as he said in front of all those people, "We will do whatever is necessary to keep the euro going."
QUEST: And he justified it --
O'NEILL: Deliver.
QUEST: And he justified it under his own mandate, not on some spirit, "We must save the euro at all costs." He's actually saying this is part of his job.
O'NEILL: He was, indeed. That was the absolute key part of his statement. And coincidentally, I've written something that was published just afterwards arguing that European sovereign spreads have got to a stage where they are clearly impeding on the transmission mechanism of European monetary policy.
So, going back to your opening comment, European rate cuts are a complete waste of time if they don't contribute to a narrowing of spreads, and particularly in the likes of Italy and Spain.
QUEST: So, to narrow the spreads, and we're seeing it this morning, both Italy and Spain both comfortably now down. What would you like to see them do? A repeat of the SM -- SMP, the bond-buying? A change in the liquidity requirements? What would you like?
O'NEILL: I think something a little bit more creative and something more along -- maybe just further statements. If you look at some of the most successful interventions of my 30 years, usually the ones that are persuasive enough by the statements and a little bit of money end up going a lot longer than the ones where they say a little and then having to keep on coming back with different things.
So, if they are in a position to make it clear that they will ensure that sovereign spreads will not impair the ECB's monetary policy and all of them sign up to it, that is huge, in my opinion.
They've got to end up -- we also happened to write a paper last week arguing that the euro area in its design has only got two years left unless they can get persistently spreads -- or yields across the euro area to between 4 and 5 percent. So that yes, we've had a big rally, great, but they've got to make sure it's for real.
(END VIDEOTAPE)
QUEST: Jim O'Neill of Goldman Sachs Asset Management talking to me earlier. And the markets trading --
(RINGS BELL)
QUEST: -- and doing business at the moment. The Dow is just about flat, but we're still over 13,000, and as long as we're over 13,000, we'll keep you informed on that, 13,051. It is the earnings season. It's sort of drawing to a close, and in this program, we'll update you on the Q25 and literally pull the strands together on how the S&P have been trading.
There'll be no medals for attendance at the London Olympic Games. Coming up next, the message from Coca-Cola's chief exec, don't blame the sponsors.
(BEGIN VIDEO CLIP)
MUHTAR KENT, CEO, COCA-COLA: We have a very, very high usage of tickets from all the tickets that have been allocated to us as a partner of the Olympic Games.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
QUEST: Olympic organizers say 3,000 Games tickets have been reclaimed and put on sale to the public. The tickets were originally allocated to what they call "the Olympic Family." Like most families. It includes sponsors, officials and athletes.
The move is a response to a public outcry over empty VIP seats at the Games. The sports have blamed sponsors for not making use of their allowances. In an international exclusive, the chief exec of Coca-Cola, Muhtar Kent, told me his company's corporate tickets are being put to good use.
(BEGIN VIDEOTAPE)
KENT: We not only have drawn a great number of partners, customers, but also we have worked with youth in Britain and given the opportunity for those tickets to be used by people that are termed as future flames, young consumers, et cetera. Youth from the street games that we also support for the underprivileged, bringing sports to underprivileged youth.
So, we have a very, very high usage of tickets from all the tickets that have been allocated to us as a partner of the Olympic Games.
QUEST: And you would say to those -- to other corporates, to make sure that their tickets are being used, because the sort of things we've seen so far is really unacceptable.
KENT: Well, I'm not sure that the empty seats are solely the responsibility of sponsors and partners of the IOC. I think perhaps there may be other reasons that I would not know about.
QUEST: Why do you sponsor this so often? Why does it -- what does it give you that nothing else will?
KENT: Well, first, you don't think about it as a typical sponsorship. This is a long partnership that started in 1928. I couldn't see a better fusion of our ideals, values, and those of the Olympic Games of enthusiasm, of fair play, of excitement, of bringing communities from all around the world together. That's very much in line with our own values and our own beliefs and heritage.
QUEST: Very hard to quantify, and possibly you have to be very brave, since you can't amortize or actually put a dollar value on it.
KENT: Well, we can count the amount of mentions, of amount of positive basically relationships that are generated with our brands. We can count those. But I think it is wrong to quantify everything in the world of marketing, in the world of branding.
What you do, is you absolutely must ensure that you still create those positive moments and emotions with consumers through platforms like the Olympics, through platforms like the FIFA World Cup.
QUEST: How difficult are times at the moment?
KENT: They're not easy. I think it is wrong to assume that this current macro-economic volatility is going to go away soon. I think it's wrong to assume that life is going to get better in terms of unemployment figures going down.
I think it is wrong to assume that we will come out of this crisis as we've done traditionally in other crisis. And therefore, volatility, therefore uncertainty is the norm for the time being.
QUEST: Finally, your thoughts so far on how the Games are going?
KENT: I went to see some sports. I thought the organization is superb, and I thought the Opening Ceremony was a masterpiece.
(END VIDEOTAPE)
QUEST: Muhtar Kent, the diplomat and the chief executive of Coca-Cola on the question of sponsorship.
Olympic athletes are making their own social media protest. It's against something known as Rule 40, which I hadn't heard about until this morning. It's the Olympic rule that allows the crackdown on ambush marketing. It prevents the athlete from introducing another sponsor or participants from appearing in adverts in the run up to and during the Olympics. It prevents the ambush.
(RINGS BELL)
QUEST: Team US runner Leo Manzano writes on his Facebook page, he wrote, "Just had to take down my picture of my shoes and comments about their performance." He said -- he said the rule distracts athletes from their Olympic experience and their training.
The US runner Sanya Richards Ross, that's her, says, "Now headed to one of my fave sponsors BP for my appearance." Smiley. "I think I can tweet about them. Hash tag #rule40 so confusing." I suspect she's now found out whether she could actually do that.
And the US -- interesting the US are the ones who are all up with this -- US javelin thrower Kara Patterson has tweeted, "I'm honored to be an Olympian but hash tag #WeDemandChange of hash tag #rule40, I can't tweet about my only sponsor." She also throws in #WeDemandChange hash tag.
And the interesting thing, of course, is that she could probably drink as many as soft drinks or eat as many burgers from the official sponsors and everybody would be delighted.
It's been a busy day at the aquatic center. Earlier, China took the gold medal in the men's 10 meter platform synchronized diving. Mexico finished second, while the United States took the bronze medal. In a few minutes, the semifinals begin for the women's 200 meter freestyle.
Many of those swimming will be wearing Speedo outfits, and there's an incredible amount of technology that goes into the creation of a swimsuit. It's an itsy-bitsy, little teeny-weeny bit bikini. Or something like that, as the song used to go.
It all translates into an incredible success. At the last Games in Beijing, 92 percent of all swimming medals were worn by athletes wearing Speedo. So tonight, in our Make, Create, Innovate, Speedo shows exactly why it makes, creates, and innovates.
(BEGIN VIDEOTAPE)
JOSEPH SANTRY, RESEARCH MANAGER, SPEEDO AQUALAB: The Fastskin racing system is a system of products which is designed to work together to optimize the hydro dynamics of the swimmer.
FINA is the governing body for swimming, and where in 2009 and the Beijing 2008 Olympics, we had full coverage on athletes, so they could wear a suit which was from their shoulders to their ankles.
This time around, of course, the coverage has been reduced, and we wanted to look at its overall holistic solution. We look to the cap and the goggles together. And it's the first time that any company had ever done this with swimming.
The main advantage of the new suit is the fabrics. They've got fabric with Hydro-K Zone Compression Fabric. And what this does is it allows us to add in varying compression through the length of the fabric.
We work internationally with a whole host of experts, from CFD, which is Competition Fluid Dynamics, to 3D scanning, to the sorts of things you'd see in Hollywood films.
What I like to relate it to is it's a bit like a Formula 1 car. So, what you see on a Formula 1 car, you've got this large, aerodynamic spoiler at the front of the car. And what that does is, it sets up the flow across the whole of the car.
What we realized in swimming, we didn't have anything like that. So, we had very bulbous goggles, which actually caused a lot of drag. And this drag passed this down the body of the swimmer and actually reduces the effects of the suit.
In this -- the original sort of innovation stage for the project, we realized that a lot of female swimmers had a very large bubble of hair on the back of their head. And it's just like having a massive water break in the water, stopping you going forward.
So, what we did was create an inner cap, which would allow you to push your hair into the inner cap and create a very hydrodynamic form across the back of the head.
We need to keep the key innovations and key technologies we had developed in secret until their release. It allows us to keep a competitive edge against our competitors.
Aqua Lab obviously leads the swimming field in equipment and apparel, so we want to be the best equipment and apparel that any swimmer can buy.
It's a four-year process, and it's roughly 55,000 man-hours of time spent on this with experts externally and internally. Speedo's been in swimming for 80-plus years, and we've always had the best innovation every Olympics, and we've always put the most time and effort into those innovations.
And what we do differently, I guess, is we work very closely with all the athletes. It can really help us understand what the problems are facing swimmers and how we can improve equipment.
Ultimately, it's the athlete who wins the gold medal. It's their hours and hours of training in the pool and dedication to the sport which gets them on the podium. The goal for Speedo is to help them perform at their potential in the Olympic Games and help them meet their goals.
(END VIDEOTAPE)
QUEST: Fascinating. I knew the technologies and goggles and hair and things was important, but I never quite realized. And all those man-hours. Make, Create, Innovate, the series guiding you to the products, the industry, that keeps the economy moving. And that's what we're about here on QUEST MEANS BUSINESS. You can find all the episodes and comment at cnn.com/innovate.
Now, tonight's Currency Conundrum. The US dollar comes in $1, $5, $10, $20, and $50 denominations. What fraction of all these US bills are $1 notes? Is it a quarter, a third, or a half? I'll have the answer for you later in the program.
These are the rates. The US dollar is gaining ground against the euro and pound. A euro buys just over $1.225. Those are the rates --
(RINGS BELL)
QUEST: This is the break.
(COMMERCIAL BREAK)
QUEST: The patents battle between Apple and Samsung is moving into a courtroom in California. It'll be trial by jury. Apple filed a lawsuit against Samsung last year claiming the South Korean company have basically copied its iPhone and iPad, everything from the multi-touch user interface to the rounded, sleek corners. Apple's demanding $2.5 billion in damages.
Now, on the other side, Samsung says Apple's infringed some if its patents for wireless data transmission. According to court filings, Samsung's also expected to argue Apple's trying to stifle competition.
They've taken their fight to courts around the world. Judges have tried to push the two companies to settle, but to absolutely no avail. Dan Simon now joins us, now, live from San Francisco.
Dan, one thing is clear: it will be a very technical trial that's going to get into the nitty-gritty of patents and who -- and e-mails. A jury is going to get lost in this pretty quickly, aren't they?
DAN SIMON, CNN SILICON VALLEY CORRESPONDENT: Oh, no question about it. And we're in San Jose. I was just up in the courtroom listening to the judge field the list of potential jurors. It was pretty interesting.
She's asking all these people what kind of cell phones they have and most people are answering they either have an iPhone or a Samsung. It's really become clear that these are the two Titans when it comes to the SmartPhone industry.
In terms of whether or not these jurors can follow along, this is what these lawyers are equipped to do, this is what they're supposed to do in order -- sort of dumb it down, if you will. But it'll be interesting to see how they present the case in terms of making it understandable for these folks, Richard.
QUEST: The gist of Apple's claim is that they basically say the Samsung -- I mean, if I understand this right, the Samsung is a knock-off, to use the sort of language that we might get for grifting, that they basically copied it. It's a knock-off, it's a fake, it's a copy.
SIMON: Well, it's more than that. They truly believe that this is a stolen product, and they are willing to take this in every courtroom all over the world to essentially try to get Samsung from stopping to sell these products.
In fact, a judge here in San Jose, the judge who is presiding over this case, she's already issued a preliminary injunction telling Samsung they can't sell their new tablet, which is an iPad competitor, if you will.
And ultimately what Apple wants, here, and you mentioned it, $2.5 billion in damages. But they don't want these products sold in the United States and all over the world. That is what is at stake here. It is a big, big case, Richard.
QUEST: The two sides of resolutely refused to settle, even though the stakes are so high. Is there any feeling -- and I think I know the answer to my rather naive question even before I've asked it. Dan, is there any feeling that there's going to be a last-minute deal done?
SIMON: I don't think so. I think the time for that has already passed. Tim Cook met with his counterpart from Samsung here in the bay area. They tried to work out some sort of agreement in front of a judge. It failed, and I think both sides here are so clearly entrenched here, there's so much money at stake.
Really, the future of your SmartPhone is at stake here. Apple wants to be able to announce to the world that a competitor stole its product, that it basically copied its product, and Samsung is saying, no, we've been at this business, if you will, for a very long time. We've been making cell phones for a very long time. And Apple, you were late to the game and we've been innovating well before you did.
QUEST: And Dan Simon, there's only one fact of which I can be certain: you have may hours sitting in a courtroom ahead of you. We look forward to talking to you as you try and understand it and make sense of it for us. Dan Simon in California for us tonight.
After the break, austerity's biting in Spain. It is painful. Our correspondents there takes us to three generations of one family who are trying to cope with the current financial system -- situation and in danger of losing their home. QUEST MEANS BUSINESS, good evening to you.
(COMMERCIAL BREAK)
RICHARD QUEST, CNN HOST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
Syrian rebels are celebrating the capture of a military base north of Aleppo. This video posted online appears to show fires burning after the battle where elsewhere the U.N. says a convoy carrying members of its mission was attacked on Sunday. No one was injured.
The Saudi Olympic national committee has told CNN that a female judo athlete will -- on its team will be allowed to compete with -- wearing her hijab. Wojdan Shaherkani will be one of the first two Saudi women ever to compete in the Olympics. The Saudi authorities said Shaherkani would have to pull out if she did not obey Islamic dress codes.
It's been a disappointing day so far in Britain for the British Olympic team. The synchronized diving team of Tom Daley and Peter Waterfield finished fourth in the 10 meter platform competition. A Chinese team won the gold. Mexico took the silver. The U.S. team was third.
Power is being slowly restored in India after the country's worst blackout in more than a decade. Authorities say a power grid failure cut supplies to 350 million people overnight across nine northern states. Power was partially restored six hours later. India's minister for power and energy has vowed to investigate.
Health experts in Uganda are trying to track down everyone who came into contact with 20 people infected with the Ebola virus. Fourteen of those patients have already died from the outbreak. The Ugandan president is warning people to avoid shaking hands and having other physical contact.
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QUEST: It's rapidly becoming the slogan of the day, the week, the year, "Whatever it takes, whenever it's needed." This time, Mario Monti, the prime minister of Italy, and Angela Merkel have pledged to do everything to fix Europe's debt crisis. And that marks the start of the Italian prime minister grueling tour of duty.
He's going to four cities, six world leaders, and he's got one mission: he's going to save the euro.
Come and join me over at the CNN superscreen.
Saving the euro, the Mario Monti (inaudible). Well, first of all, you'll go to Paris. When he is in Paris, he will have a working lunch with President Francois Hollande. Then he moves on after that to Helsinki. From Helsinki, he's meeting with President Niinisto and the prime minister as well.
If that wasn't enough, remember, the Finnish meetings are really important because, of course, of their opposition to so many of the reforms, the bailout plans and what they particularly want. So keeping Finland on board is crucial, along with keeping Paris on board.
In Madrid, it will be a working lunch with Prime Minister Rajoy. Now remember, Rajoy and Monti ganged up together and led the way at the last Euro Summit. It was a Rajoy-Monti double act, which finally got that summit agreement.
He'll also meet with His Majesty King Juan Carlos and of course at some stage he will be back in Berlin, meeting with Chancellor Merkel. And although the two get on extremely well, they are -- the idea will be to somehow for Monti's save the euro campaign to prove that everybody is in the same boat together.
When he's in Madrid, he will need to look no further for how the recession in that country is deepening. The figures out today show output shrank by 0.4 percent in the second quarter, and the economy is 1 percent smaller, 1 percent than it was a year ago. And that's when other countries are growing.
What's worse, that decline is accelerating as the government has fresh spending cuts on the people at a time of unemployment record details.
Our correspondent, Isa Soares, is in Madrid and joins me this evening.
The numbers are terrible. The atmosphere is dire and in this environment, Isa, there's not a lot that seems to be done.
ISA SOARES, CNN CORRESPONDENT: Richard, you don't even need to look at those GDP numbers to see Spain is stuck in a recession. If you walk these streets of Madrid, they're looking you right in the face. Economic slowdown is everywhere you look. Companies are not hiring, people are not buying, yet they're all out shopping -- window shopping, rather. But they're not buying.
And on top of it all, people are losing their jobs and some of them, their homes. I met one family here in Madrid who can't make payment on their mortgages and now faces a very, very tough time come September.
(BEGIN VIDEO CLIP)
SOARES (voice-over): In Carabino Shalbaho (ph), one of Madrid's working class districts, three generations of women fighting a war on their very doorstep.
As her granddaughter plays with our pen and pad, Noemi, the eldest, 62 years of age, tells me she bought this three-bedroom apartment in 2007 for 255 thousand euros.
NOEMI SARANGO, FACING EVICTION (through translator): What I wanted was to rent. I did not want to buy because I thought, how am I going to pay so much money? But they put all those things in your head. They tell you, "You're going to have a flat. Pay little by little, like renting. And then you get the flat. It will be yours.'
SOARES (voice-over): Together with her daughter, Monica, they have worked hard to make mortgage payments of more than 1,000 euros every month. The economic crisis here in Spain and the job cuts that have come with it have turned a financial sense of achievement into a burden.
SARANGO (through translator): I stopped paying the mortgage because I could no longer afford it. I didn't even have money to eat.
SOARES (voice-over): As she wipes away her tears --
SARANGO (through translator): I don't wish this on anyone.
SOARES (voice-over): -- she tells me they will be evicted from their own home on the 29th of September. And if that weren't bad enough, she will be thrown out with 80,000 euros of debt in her name.
SOARES: Under Spanish law, home buyers cannot simply hand their keys back to their lenders and walk away. If the house does not sell for more than it's worth, they remain liable for any outstanding debt, leaving people like Noemi and Monica not only homeless but finally ruined.
SOARES (voice-over): There are 350,000 cases like Noemi's in Spain.
Vicente Perez runs a support group for those facing property repossessions.
VICENTE PEREZ, PLATFORM FOR PEOPLE AFFECTED BY MORTGAGES (through translator): We have cases of older people, some in their 80s, that lose their homes because they act as guarantors for their children. They weren't the ones buying; they were getting second mortgages to help their children out.
SOARES (voice-over): Noemi enjoys the last few months taking care of her home, knowing all too well that dreaded day will come.
SARANGO (through translator): I'm scared they'll come from the bank, open the door, take away my things, my bed, everything I have here.
SOARES (voice-over): Noemi may have lost this battle. Her granddaughter's generation will face economic challenges of its own. She can only hope they will live in happier times.
(END VIDEO CLIP)
SOARES: Richard, there are around 200 families evicted from their homes every day. That's 200 every day. But that's not even the end of their nightmare. As you heard there, in the case of Noemi, they then have a pile of debt to deal with, so homeless and with a lot of debt. So they're really the real victims of this economic crisis.
QUEST: Isa Soares in Madrid with the story of not only negative equity, but obviously what happens when you still have to pay the bill afterward.
Isa, good reporting from Madrid tonight.
We've heard from the chief executive of Coca-Cola earlier in the program. Next, the chief exec of Cisco. It's John Chambers. John Chambers tells us where his allocated Olympic tickets are going. And stopping (inaudible) jumping ship, we'll ask an HR specialist how to keep staff loyal when, frankly, it might often seem that the ship is going down with all hands. QUEST MEANS BUSINESS -- good evening.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
QUEST (voice-over): Time for the answer for the "Currency Conundrum," the question was what percentage of U.S. bills, the totality of printed bills, is made up of $1 notes. The answer is -- this is an interesting one -- about half. The exact number by -- printed by the U.S. Bureau of Engraving and Printing is 45.5 percent. It was number C.
(END VIDEO CLIP)
QUEST: As some of you make your way to the Olympics over the next few weeks or, indeed, myself with my tweeting from the Olympics and emailing, give a thought to all those extra messages, pictures and voices flying on the airwaves.
Cisco is the official network infrastructure supporter for the London Games. To borrow from the chief exec, John Chambers, he has a lovely phrase -- it's the wireless plumbing. Jim Boulden asked Chambers about that slightly touchy subject because when you look at all those empty seats, we have to make sure, are they sponsors' seats where people haven't turned up?
(BEGIN VIDEO CLIP)
JOHN CHAMBERS, CEO, CISCO: We're proud to be a sponsor here, and we will take a number of customers through the events. Secondly, we use all of our tickets. And third, I think as they pointed out in the press, it wasn't so much the sponsors. It was some of the families of the athletes and the Olympic infrastructure. I think they're going to come up with a better way to balance that, and that's just purely a mathematical type of approach.
So from our perspective, we wish we had more tickets. And we also give back to the communities. I think you'll like how many young people we have that may not come from a strong financial background that coming through Cisco House and being involved in the Olympics. We're proud of that.
JIM BOULDEN, CNN CORRESPONDENT: But you can -- you can understand the complaints, then, that --
(CROSSTALK)
CHAMBERS: Oh, I completely agree. I'm sitting there at the basketball game. I'm with the head of the NBA, from an I.T. perspective, the women's basketball league from I.T. perspective and from an overall management, and our area is completely full with all these sponsors. And the other side was completely open. And the stadium was full.
So there were probably several hundred seats (inaudible). And nobody's sitting in them. So I think it's something we have to change. And I think the logic behind it was originally good. But each Olympics, we have to continue to reinvent ourselves.
Let me, however, be very blunt. The London Olympics Committee has done the best job of any Olympics so far. It is world-class. You watch the excitement of the British citizens. It doesn't matter if it's the cab driver, your waiter or business executives, you can see their pride, and rightly so very proud of what they've done. It is the best ever.
BOULDEN: Why the Olympics? What does the Olympics give Cisco and what does Cisco, more importantly, give the Olympic movement?
CHAMBERS: Well, I think there are two elements there. We're honored to be the networking infrastructure sponsor. But what it really gives us is the most complex environment in the world for broadcasting. And how you bring networking to life to solve business problems, to make the fan experience different here, to broadcast with NBC to 4.2 billion people.
The ability to help the government can not only create a great Olympics, I think the best one ever in history, but also to help them really achieve their goals after the Olympics in terms of education legacy.
So bottom line to Cisco, gives us a chance to show what we can really do, not just from a networking perspective, being a plumber, but the ability to solve business problems, government problems and broadcast problems all in one.
BOULDEN: I think some people think a corporate sponsor inside the Olympics is someone who gives them money to put on the games. It's very different in Europe. You're a supplier as well. I mean, you are -- you are the reason things can work here or not work here.
CHAMBERS: I would agree, and thank you for wording it so bluntly. I'd -- we had the chief information officer of the Olympics Committee here, and the top systems person from NBC here. And when we were together, I asked them why did they pick Cisco.
Interestingly enough, they picked us because we know how to really make it work well, not just enable the Olympics to broadcast, but to solve their business problems. And they said they picked us also because we're so innovative and say how do we solve it together. This is the most complex Olympics by a factor of fourfold versus just four years ago.
BOULDEN: As a publicly-traded company, I know you're going to say that this is an investment. But there's -- does Cisco make money from something like this? Or is it more about showing what you can do?
CHAMBERS: Well, I think it's really a combination of all of the above. It's like corporate social responsibility. I realize I might be in the minority, but we're number one in corporate response, social responsibility in every major country in the world, from Russia to the U.S. to China to India. Interesting enough, we're the number one player in our industry as well. So it is showing about what you can do.
But we will have 11,000 customers through this Cisco House. We're an innovation company that knows how to take good business risk. And it is exciting. Is it finally rewarding for us? Absolutely. But it's also the right thing to do.
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QUEST: John Cisco -- John Chambers, the CEO of Cisco. (Inaudible) get the man's name and his company right. You get the idea.
Nokia is offering more company shares to key senior staff to keep them on board. The board of directors increasing the company's stock options program from $8.5 million to $11.5 million. Look at that. Top executives include the chief (inaudible) included in the deal. Nokia shares have halved in value over the past 12 months.
Roberta Matuson is an HR consultant and author of the forthcoming book, "The Magnetic Workplace: How to Attract Top Talent that Will Stick Around." She joins us now live from Boston.
Good to have you. Thank you for joining us. If you take the Nokia situation, it's got a whiff of desperation now, isn't it?
ROBERTA MATUSON, HR CONSULTANT: Well, I would tend to agree, because it's a little bit too late for what they're trying to do. Most organizations that issue stock options, there is a vesting period. And Nokia is no exception. Before any of these employees can even take advantage of the money that would come in from these options, it will be at least a year.
QUEST: But isn't that the point? You've got to balance between handcuffs to keep people here this week, next week and next month, and also carrots -- to mix my metaphors beautifully -- to keep them here in the long term. So you bribe them to stay today and you bribe them to stay for the next six months, five years.
MATUSON: Well, the problem is that right now the contest, really, for top talent is -- has already begun to heat up. And most employers will ask a potential employee what's on the table. And they're not going to think twice about buying out those options. So I'm not really sure how effective that's going to be for Nokia as a long-term strategy.
QUEST: So what would be your preferred way to meet -- to keep hold of good staff?
MATUSON: You really have to connect with the minds and the hearts of your people. I mean, there are no shortcuts. You can offer them all the money in the world.
But if there's no connection, if your people don't feel like they're making a contribution or it's not valued or they're working for lousy bosses, you know, it's not going to matter what you do. The end result's going to be the same. And that's going to be people are going to start stampeding out the door.
QUEST: We've got to be brief today. It's a very busy day. Roberta, thank you. That's the perfect point. You've got to -- you've got to connect and mere money won't just do it on its own.
The earnings season is coming to a close and it's a fascinating look. The last of the Q25 after the break.
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QUEST: So here we are, the Q25, the last day. And yes, you can see, we are absolutely even stevens in terms of the golds versus the reds. It's our exclusive look at the quarterly reporting season.
Felicia Taylor is with me this evening to go through them.
Felicia, I want to spend longer talking tonight about what it means rather than just go through. So let's go through the ones. We've got them from last week, because they were important ones and the Olympics got in the way.
Facebook, I think a green or a gold. Sorry, a red or a gold.
FELICIA TAYLOR, CNN CORRESPONDENT: Oh, it's a red.
QUEST: Thank you --
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TAYLOR: Well, it is no question about this one.
QUEST: Right.
TAYLOR: That stock has been down 12 percent --
QUEST: Yes, yes, yes, yes, yes, fine, fine --
TAYLOR: -- mobile apps --
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TAYLOR: OK, OK.
QUEST: Amazon was an automatic red when we saw its results. It only got one of the five criteria in its favor.
Starbucks, we also had a vote about this, it was a 2-5 debate, but we still gave it a red. Why?
TAYLOR: Because customer traffic has been slowing down. The CEO, Schultz, said that basically this is a global macro problem for them. Long-term guidance hasn't been very good. It's an easy red on that one, too.
QUEST: And on Merck, the old problem for the pharmaceuticals, drugs now out of patent and as they go out of patent, so they have guidance there. Yesterday it was on red and a bad one at that.
Finally Chevron Oil Companies -- I spent my life trying to work out what is happening with oil companies results. So you tell me, red or a gold?
TAYLOR: It's a red, but you know, I was a bit on the fence on this one because obviously there are seasonal things to consider here, obviously oil prices, which was the problem for them this time around . They still make money.
But going forward, you're going to have to worry about whether or not oil prices are going to go higher in order for them to realize any kind of gains. And their long-term guidance wasn't that good -- or it wasn't good at all.
QUEST: The last --
TAYLOR: So it's a red.
QUEST: -- thank you. The last of our 25, zooming, and you will enjoy -- it's a red.
So now let's pull the strands together. What do we make of it? As you can see, three, six 18, 19, 20 -- so there are a lot more reds now in this last bit than golds. Why is this the case, Felicia? What's going on with corporate America and the world?
TAYLOR: Well, as you remember, at the beginning of this year, the United States was meant to be sort of like, you know, the knight in shining armor. We had pretty good first quarter. Things got obviously slowly but surely worse and worse as time went on. And forward guidance from a lot of these companies continues to be pretty poor.
The thing that's interesting is that a lot of companies came out early and they reduced their guidance for the companies in the second quarter. So if there were any surprises, it was based on revision. That's a problem going forward. There's a global slowdown in the economies. And that's why. If you take a look --
QUEST: But just a second --
TAYLOR: -- the ones that actually met or exceeded --
QUEST: Just a second. Look at the -- let's pull the strands and look at the totality. And if you look at how many companies actually in all did, only 10 companies hit our target of 3 percent profits or better. Ten companies hit our target revenues of 5 percent or better. Nine percent -- nine companies actually lowered their guidance overall.
Nine companies, lower guidance and three companies, raised. So in this environment, Felicia, finally, can we say that it doesn't really matter what the companies do? They can -- oh, to a certain extent. They are battling against headwinds of macroeconomic proportions.
TAYLOR: Absolutely. There's no question about it. There's very little they can do. There is no growth here. I mean, when it comes to talking about, you know, are they going to start hiring, there's no question. They're not going to be doing that. There's nothing for these companies to necessarily look forward to in terms of a better quarter moving forward.
It's a global slowdown, whether it's China, Europe and obviously the United States. There's no question about it. Obviously, we've had a stronger dollar here. That hurts growth also, because it makes our products more expensive to sell in the open marketplace.
QUEST: Felicia Taylor --
TAYLOR: There's very little in terms of green shoots.
QUEST: Green shoots, green shoots. All right. Many thanks, Felicia Taylor with her green shoots. This is it. There's the results, 10-15 on this month's, this quarter.
Now the weather forecast. Jennifer Delgado's at the World Weather Center.
Felicia's talking green shoots.
JENNIFER DELGADO, AMS METEOROLOGIST: I heard.
QUEST: I want to know about blue skies.
DELGADO: Blue skies, dry conditions, you want it all. Yesterday, you had some bad weather for the Olympics with the lightning, the hail. Well, today, a lot better out there, Richard. Current temperature, 19 degrees. Our winds are -- been windy out there, winds of roughly about 24 kilometers per hour. But let's talk about some of the rain.
Well, right now things have been really quiet. You can see for London, virtually just dry out there. But rain coming in from the west, pouring in from Ireland. You can see into western parts of England. That means, yes, a chance for some rain to arrive, it looks like, once again for Tuesday.
Richard, look at the odds, a 50 percent chance you could stay dry or a 50 percent chance you could see some rain. (Inaudible) if you want me to be optimistic or not .
For Wednesday, a 30 percent of rainfall and then notice on Thursday, looks like a bit more sunshine out there. But temperatures haven't been so bad, a little cool last night, but after that, we're expecting high temperatures generally into the 20s. We'll send it back over to you, Richard.
How did you enjoy the weekend festivities, weather --
QUEST: I fully intend to. Many thanks indeed. Jennifer Delgado at the World Weather Center.
Of course there are rain and there's rain and a bit drop we don't mind. It's a downpour we don't want. Talking of downpours, a "Profitable Moment" after the break, QUEST MEANS BUSINESS. Good evening.
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QUEST: Tonight's "Profitable Moment," and it's not terribly profitable, but it hopefully won't last more than a moment. Fifteen to 10 is the Q25. And what it tells us, because these reds arrived late -- what it tells us is that no matter how hard companies are trying, they cannot weather against the storms coming from the macroeconomic environment. They're doing the best they can.
The companies we looked at this quarter are trying to move things forward. They're cutting costs. They're performing well. But they can't beat against what is otherwise a very difficult trading environment. And that's why we continue to give them reds, unfortunately, as we go into the rest of the year. We will be watching to see how those numbers change in the future.
So that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you tomorrow.
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QUEST: The news headlines at this hour:
Syrian rebels are celebrating the capture of a military base north of Aleppo. This video posted online appears to show fires burning after the battle. Elsewhere the U.N. says a convoy carrying members of its mission was attacked on Sunday. No one was injured.
(Inaudible) have filed formal charges against the man suspected of the mass theater shooting in the U.S. state of color. James Holder (sic) faces 24 counts of first-degree murder, two counts for each of the 12 people killed in the July 20th shooting. He also faces 116 counts of attempted murder, two for each wounded.
The Saudi Olympic national committee has told CNN a female judo athlete on its team will be allowed to compete with her hijab. Wojdan Shaherkani will be one of the two first Saudi women ever to compete in the Olympics. They said she would have to pull out if she did not obey Islamic dress code.
France's men continue to dominate the Olympic swimming. In the last quarter of an hour, Yannick Agnel is taking gold in the men's 200 meter freestyle. His victory follows another French victory in the former 100- meter relay, upsetting the favorites, which was the United States.
You are up to date with the news and the stories we're watching for you on CNN. Now live to New York and "AMANPOUR."
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