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Quest Means Business
Apple Sells Record 10 Million New iPhones; Dow Down 100 Points; Ericsson Changes Strategy; European Markets Down; Alibaba's IPO World's Biggest; Yahoo! Cash Rich and Ready to Spend; Tesco Reports $408 Million Error; 130,000 Syrians Flee to Turkey
Aired September 22, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: The start of a new week, the market is down, off a century, more than a hundred points. Economic news, geopolitical issues,
they're all worrying investors.
Oh. And that's the first time I've seen the gavel actually hit that way. It is Monday, it is September the 22nd.
Tonight, bigger is better. Apple's new iPhone, it smashes sales records.
Clean up in aisle three. Yes, Tesco shares tumble after a massive accounting mistake. Every little helps.
And a Wall Street takeover. Climate change protesters swarming on the New York Stock Exchange. We'll take you there.
It's a Monday. I'm Richard Quest, and of course, I mean business.
Good evening. Is this the phone -- the bigger phone that could be Apple's biggest revenue raiser for years? It's one of the rare ones, we've
got our hands on it. It's the iPhone 6, and tonight, Apple's proving that it's still a force to be reckoned with, and the iPhone still has the power
to thrill customers, and I mean, literally in their millions.
Don't take my word for it. Look at the numbers. In three days alone, the iPhone has sold a staggering 10 million models of its new larger phone
and setting a new record. The achievement is made all the more remarkable by the fact that this number does not include large parts of the world,
including China.
Demand for the new gadget's been insatiable. You all saw the long lines outside stores on Friday. Perhaps you were even in them. Apple's
own website crashed as people tried to pre-order the phones, and recent problems like the celebrity phone scandal and the backlash over the U2
album that's already pre-loaded, unless you've already gotten them to take it out, they seem like distant memories.
So, 10 million. To discuss this further, I'm joined by Gene Munster, managing director and senior research analyst at the investment bank and
asset management firm Piper Jaffray. Gene, 10 million is an extraordinary number even for a company that has raised the art of marketing and
aspirational desire to new levels.
GENE MUNSTER, SENIOR RESEARCH ANALYST, PIPER JAFFRAY: It absolutely is. And to try to put some perspective around what that 10 million number
is. So, I come from more the financial perspective, but that was a 45 percent year-over-year growth when you kind of normalize for some of the
things you talked about, like China.
So they grew units 45 percent this year versus last year, and the previous year, they grew at around 20 percent. So, to take these huge
numbers like 10 million and to be accelerating those by 45 percent, I think, really speaks to how big of a hit this is.
QUEST: And we've chosen to lead our program tonight, amongst all the other business news around, simply because to have this sort of margins --
I was reading your report about this -- not only is this a vast number, but Apple makes more money because, as I was reading your views, people are
buying the bigger version with more memory.
MUNSTER: Exactly. Typically going into this cycle, we'd expect that about 30 percent of the units would've been the 6-Plus, the bigger version.
But what we've measured in the lines on the opening weekend is that's been about 60 percent. So, it's been about double the amount of people getting
the more expensive ones that have a higher margin.
On top of that, when you upgrade that flash from 16 and 64, 120, when they ask you that question, how much capacity do you want, Apple makes an
absurd amount of money on that flash, and particularly about 97 percent of each dollar you spend on that extra capacity goes right to their bottom
line. So, that is a powerful way that they can increase their profitably.
QUEST: So, bearing in mind Android still has the largest sector of the smartphone market in terms of operating systems, Apple, perhaps, with
its iPhone platform has the aspirational side. What's driven this particular demand, do you believe?
MUNSTER: It's just simply the bigger screens. And if you look back at survey work over the last couple of years is that the reason why people
would shift from iPhone to Android typically were two. Number one is price, it's cheaper to get an Android.
And the second reason is that Apple didn't have anything that was addressing that larger screen size, that 4.7 and up, and obviously, they
have two of them now. And so, that's been the big reason why this is off to such a fast start is they're really tapping into a market that's been
starved for an Apple product, and that market is larger screens.
QUEST: Gene, thank you. Good to have you on the program, sir.
MUNSTER: Thank you.
QUEST: Please come back. We need your analysis to understand these trends and this sort of market.
If you look at the US stocks, they closed the day lower. Take a look at the market. Not quite the lowest. The lowest was around 3:30. It
recovered a bit. It was existing home sales numbers fell in August after a strong summer.
There was also the demonstrators which staged a sit-in and blocked traffic in New York's financial district. They're protesting against the
links between Wall Street and business they say cause climate change. We'll talk about that. Alison Kosik is down on Wall Street.
Pulling this all together, if we've looked at what these machines can do for Apple, what runs these machines and the operators? It is companies
like the Swedish giant Ericsson. It was seen as a competitor of the hand phone manufacturers, but it's now moved well away from hardware, deeper
into software and the Cloud.
(BEGIN VIDEO CLIP)
(NASDAQ OPENING BELL RINGING)
(END VIDEO CLIP)
QUEST: Now earlier, the chief exec of Ericsson, Hans Vestberg, rang the opening bell on the NASDAQ just as news emerged that Ericsson had
bought a majority stake in a Cloud computing company.
The deal with San Francisco-based software startup Apcera is expected to help Ericsson boost its cloud computing business. It's a further sign
that the company is changing track. Just last week, Ericsson shut down its loss-making modem business. It led to the loss of hundreds of hundreds of
jobs. The chief exec of Ericsson, Hans Vestberg, joins me now. He's in our C Suite
HANS VESTBERG, CEO, ERICSSON: Hi.
QUEST: Good to see you.
VESTBERG: Good seeing you, sir.
QUEST: Right. We start with this.
VESTBERG: Yes.
QUEST: I don't mind whether it's Nokia, which is now Microsoft, whether it's iPhone 6, Android, you don't mind, really, do you? Because
all the operators who run these things use your systems.
VESTBERG: That's correct, but the more advanced, of course, a smartphone is, the more advanced we need the network to be. And we see a
clear increase of smartphones in all around the world, which of course are using the network in a total different way.
And of course, the size of the screen is always very important, because the bigger the size is, the more capacity you need in a network.
These type of things are very important.
QUEST: And the bigger the capacity, the more use, the more video, the Cloud, all these sort of things, which all puts more demand and more
requirement for services of the sort of thing you operate.
VESTBERG: Yes, that's correct. And of course, we see a shift in the whole industry from basically having one service, which was voice and SMS.
And of course, what is happening is data now, and then the screen and the video becomes enormously important for a network.
QUEST: So, where are you gearing yourself? You just bought this company particularly for the Cloud. But we've had -- people are worried
about security issues with the Cloud, and I don't just mean risque photographs that celebrities take.
VESTBERG: Now, we -- you need to remember, we come from a telecom sector, which has always been a very robust networks because we have up
time 99.99 percent. You can have down time five minutes a year on the switch.
What we're now doing is, of course, that we're bringing the latest technology from the idea side, which is, of course, the Cloud and the sort
of data centers into the new servers on the telecom side. And that's why the Apcera acquisition today is a next step for us to get even more
portions and parts in that delivery.
QUEST: But where is all this going? Because the consumer uses the iPhone and wants to watch videos and whats to put things on the Cloud. But
are you really interested in the consumer like me with my phone, or are you interested in the business, in the big corporate customers using vast
amounts of data?
VESTBERG: I think that what we're seeing right now, first of all, it's 7.6 billion mobile subscriptions in the world. It will continue to
grow. But what's really happening is by 2019, over 90 percent of the Earth's population will have mobile coverage. We're going to see a lot of
mobile broadband.
Basically, we're going to have three times as many people on the Earth having access to internet. This is going to be the most transformative
digital platform that we have ever had.
QUEST: So, what do you have to do in terms of -- as Ericsson. Do you have to build more network? Do you have to add more broadband? Because
your relationship to the consumer is several steps removed, isn't it?
VESTBERG: Yes
QUEST: You have to take the operators happy.
VESTBERG: Yes, what we do is, of course, first of all, the networks need to be there for all. But what is in the network is media, video, and
that's why we're going into that work. And then you need to Cloud-ify your network in telecoms, and that's why we're doing this.
So, what we are doing, we're really trying to be the supporter for the carriers to be able to deliver all services for enterprises and for
consumers.
QUEST: But are we getting ahead of ourselves when we end up with hacking on supermarkets and we end up with Cloud security issues? Do you
think we are giving proper importance to -- as a society to cyber security, to Cloud security?
VESTBERG: I think to answer yes on that is really hard on a world like this.
QUEST: Ah!
VESTBERG: But we spend a lot of time -- and we come from an industry where robustness is enormously important. We spend a lot of time in order
to design the networks, design the products with security in order to see that they are robust.
So, we will continue to do that even though we're going into the Cloud world, where we're going to create data centers of our products, which we
haven't done before. The telecom industry is about to get into that world right now.
QUEST: Finally, pull the strands together for me if you will, because the iPhone 6 is part of the story. The Cloud is part of the story. The
Apcera acquisition is part of the story. What's the whole picture?
VESTBERG: The whole picture, what we want to achieve is, of course, that internet, media, and telecoms goes together. And Ericsson should be
the leader in seeing that that combination comes together. We should lead that transformation.
Being number one on networks and the team in media, as well as seeing that all the services they are doing on top of a network actually can be
delivered to you as a consumer or to an enterprise, or to a car that is connected. That's what we are doing with the $5 billion US in research and
development that we do every year.
QUEST: Leave this phone here. Don't touch it. Good to see you.
VESTBERG: Good to see you.
QUEST: Thank you very much, indeed.
VESTBERG: Thank you.
QUEST: European markets, they finished the day lower, with shares in London leading the losses. The FTSE closed down nearly one percent.
Shares in Tesco -- every little helps -- they fell more than 12 percent. We'll tell you about that in a moment.
Concerns about growth in China hurt the big mining companies and car markers. In Frankfurt, shares in Merck gained almost 4.5 percent after it
agreed to buy American biochem company Sigma-Aldrich, $17 billion.
Now to Alibaba. Let's pull this -- what Hans was just saying a moment, this idea of networks, this idea of larger scale. Well, Alibaba is
one of those companies, the Yahoo!-eBay-Amazon, if you like, of China. Down now 4 percent, 4.25 percent, on the first complete day of trade in New
York at the New York Stock Exchange.
It comes after Friday's gains of 38 percent, when the Chinese shot up 68 on its IPO -- that was 68 percent --dollars, I beg your pardon -- on its
IPO price. The IPO now ranks as the biggest in the world, $25 billion.
Shares in Yahoo! followed Alibaba downwards. The execs probably not too upset. Tonight, they're sitting on an extremely large pile of cash
thanks to the sale of the chunk in Alibaba. Yahoo! had a large part of Alibaba, that has now gone into the bank.
Now, of course, they have to decide what to do with the money. The company got around $5 billion. The question as Samuel Burke reports: what
do you do with all that money?
(BEGIN VIDEOTAPE)
ROBIN WILLIAMS AS THE GENIE, "ALADDIN" (singing): You're gonna love this guy! Prince Ali, fabulous he, Ali Ababwa.
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT (voice-over): Just like the magic lamp in the movies, Marissa Mayer will get her three wishes as she
sells some of Yahoo!'s massive stake in Alibaba. Along with stock buybacks and dividend payouts, analyst Colin Gillis says Mayer will have the money
to go on a shopping spree.
COLIN GILLIS, ANALYST, BGC PARTNERS: Obviously, she wants to focus in on where the industry is going, which continues to be that mobile
landscape. But one target that could be interesting that we've written about is AOL, right? And this is very much an old-school company.
But it gives them that video inventory that they want, it gives them the network effect that they want. And the two businesses have so much
overlap that there could be a fair amount of cost efficiency, and it would drive their top line.
BURKE: Yahoo!'s relationship with Alibaba began nine years ago when it sunk $1 billion into the Chinese startup. An incredibly savvy move --
(RINGS BELL)
BURKE: -- by co-founder and former CEO, Jerry Yang. Now, Mayer is reaping the benefits. Alibaba is a big reason shares are up more than 35
percent the past year.
GILLIS: There's a lot of negative metrics in the core company. If it were not for Alibaba, Yahoo! itself as a core business would be under a lot
of pressure.
BURKE: Trying to turn that core business around is a thankless task, says billionaire tech investor Peter Thiel.
PETER THIEL, AUTHOR, "ZERO TO ONE": She's doing a great job, again, in a very difficult situation. I think you have to think of Yahoo! like
AOL. It's actually an old media company, even though we still think of it as a new media company.
And it's in a very tough space for old media companies. So, I think Yahoo! has a lot of challenges.
BURKE: And despite those challenges, there may still be compelling reasons to invest in Yahoo! even after the company sells its stake.
THIEL: The reality is is that they're still going to have 16 percent of Alibaba. They're going to be a very large shareholder. And so,
Yahoo!'s shares will still be, to a degree, a tracking stock for Alibaba.
BURKE (on camera): So, it's going to be the gift that keeps on giving?
THIEL: It is, it s the treasure.
BURKE (voice-over): Investors have been patient with Mayer so far. That may all change if three wishes go to waste.
Samuel Burke, CNN, New York.
(END VIDEOTAPE)
QUEST: Still to come, Britain's biggest retailer has been know to use the phrase, "Every little helps."
(RINGS BELL)
QUEST: Unfortunately, it's just given investors a big reason to worry. It's QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Now it's exactly the sort of major discount that the UK retailer, the supermarket chain Tesco wasn't counting on. It's the world's
third-largest retailer, and it says that it has overstated its profits for the first half of the year by $400 million -- yes, you heard me right --
$400 million.
It's the latest issue to hit Tesco, and it has analysts questioning how the company is being run and how on Earth this error in its reporting
wasn't spotted either by the company or, indeed, by its auditors. CNN's Jim Boulden in London explains what went wrong.
(BEGIN VIDEOTAPE)
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Tesco was once the British retailer which could do no wrong. Now, the world's third-
largest food retailer has had to admit it mistakenly booked an extra $400 million in expected profits in the first half of the year.
Four executives, some believed to be from Tesco's UK food division, have temporarily stepped aside while an outside auditor and law firm
investigate.
Tesco CEO Dave Lewis has been in the job for a grand total of three weeks. He says he was told about the irregularity on Friday after an
employee alerted senior staff that something was terribly wrong.
DAVE LEWIS, CEO, TESCO: To be disappointed would be an understatement. It's not what I would have expected. I don't think it's
what anybody would have expected. But I will deal with it.
It's a challenge for us as a business, and it's part of leading a business like ours that I have to deal with any issue that comes, whether I
expected it or not. It doesn't take me away from what it is I think we can build with Tesco, not at all.
UNIDENTIFIED MALE: Tesco, every little helps.
BOULDEN (on camera): In this case, a little extra profit has not helped. Tesco grew out of Britain to be one of the world's largest
retailers by focusing on building huge stores and cutting prices.
But now in the UK, it's been undercut by even cheaper rivals and spent more than a billion dollars revamping UK stores and cutting back on
international expansion, including closing its operations in the United States. It has had three CEOs since 2010.
The retailer has also issued numerous profit warnings. Now, it's shares fell heavily in London trading on Monday, closing down 11.5 percent,
and now faces the possibility of a massive financial scandal hitting the one-time British darling.
Jim Boulden, CNN, London.
(END VIDEOTAPE)
QUEST: As Jim was explaining, the $400 million error is the latest in a long string of problems that the chief exec, David Lewis, will have to
get to grips with, and sooner rather than later. There is, of course, the first question of the falling market shares.
And that's why in the UK at the checkout, customers are turning to low-cost rivals, such as Aldi and Lidl. It's squeezed by competition at
the upper end -- so you've got Lidl and Aldi at the lower end, and at the upper end, you've got Marks & Spencer's and Waitrose, part of the John
Lewis Partnership. Now, in 2012, it launched an effort to rehabilitate its brand, its refurbishment, its stores.
Then you've got profit warnings. This is the third in three months. At least we know the reason for this. But unfortunately, the error could
be larger once the investigation finishes.
And finally, at the checkout, the board room confusion. The chief exec took over early after the predecessor was ousted. The finance
director, McIlwee, has resigned in April, still employed in a emeritus position. Wasn't involved in the latest error. And the new replacement
for the finance is not arriving until December.
You get the idea. Tesco, which was the bastion -- and by the way, where did the name "Tesco" come from? I'll tell you. It was the wife of
the original founder, whose name was Tessie Cohen, and that's why the name was called Tesco. The legend of the British retailer.
When we come back in just a moment, more than 100,000 Syrians have crossed into Turkey. They're fleeing from ISIS militants. It's a
displacement unlike anything we've seen so far. We'll be in Turkey after the break. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Hundreds of thousands of Syrians have left their homes, fleeing a wave of ISIS violence. In just the past four days, as many as
200,000 people have abandoned the area surrounding the Syrian Kurdish city of Kobani, as you can see from the map and you can see where it puts it
into perspective, particularly with Turkey in the north and then Iraq down to the south.
The United Nations is estimating 130,000 refugees crossed into Turkey over the weekend to escape ISIS. Turkey is struggling to deal with the
refugee crisis. It's already feeling the strain from the thousands of refugees who've poured across the border since the beginning of the civil
war in Syria, and that was three years ago.
CNN senior international correspondent Arwa Damon is now live for us in Gaziantep in Turkey. Arwa, the -- if possible -- if possible -- the
situation just goes from bad to worse, not only for Syria and for the refugees there, but for Turkey and dealing with it, closing of the borders.
What is happening?
ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, the country most certainly is struggling to deal with this massive influx, the largest
from Syria since the war began there well over three years ago. The UN estimating, as you were mentioning, 130,000 refugees. The Syrian
Observatory for Human Rights putting that number up to 200,000.
This really beginning on Friday, and at that point, Turkey opened up about eight or nine border crossings to allow for these refugees to come
through. It has since then reduced that number to two. A lot of the families arriving, understandably despondent, terrified, exhausted.
Turkey trying to maintain a certain level of control over the situation, registering everyone who's coming across, giving the children
vaccinations. But it and the various aid organizations really struggling. Temporary housing being provided for these refugees in various schools
whilst the government and other aid agencies setting up more camps here in this country.
The number of refugees here, Richard, estimated to be around 1.6 million, and as you say, there is at this stage it would seem no end in
sight.
QUEST: And the awful part about this, because as we look at the numbers and as we bear in mind, not only the Syrian civil war, but the ISIS
fighting and what Erdogan says about creating a buffer zone towards the north, these refugees, Arwa, will be there for the foreseeable medium --
dare I say? -- long-term future.
DAMON: That is the sad reality of what we're seeing unfolding, especially with this ISIS onslaught into these various different areas. A
lot of us who were covering the beginning of the Syrian uprising remember when the first refugees came across to Turkey, initially believing that
they would only be here for a short period of time.
And three years on, they're still living, sheltering in tents, barely scraping by. It's not a life to even begin to speak of. Right now, the
great concern, though, is over the future the fate of the town of Kobani.
The Kurdish fighting force has up until now managed to keep ISIS outside of the town, but fierce fighting taking place on multiple fronts as
ISIS swept through the various villages around Kobani, really swarming its forces toward this very strategic area that would potentially open a direct
logistical line from the Turkish border to the ISIS stronghold of Raqqa.
Some reinforcements coming in as Turkish Kurds went across the border to try to join, that helping in morale, according to a Syrian Kurdish
official in the town of Kobani that CNN spoke to.
One also has to remember the artillery, the military equipment that ISIS now has at its disposal, much of which it obtained when it took over
huge swathes of northern Iraq. This Kurdish official saying look, for now, the town of Kobani is holding out, but we're up against tanks, cannons,
artillery. We don't have the equipment necessary to try to hold out for the long term.
Great concerns, one Syrian Kurdish activist was saying, over the fate of some 50,000 people at least still inside Kobani itself, Richard.
QUEST: Senior correspondent Arwa Damon putting it perfectly into perspective the problems, the challenges of Turkey and the region. Thank
you, Arwa.
In a moment, hundreds of global leaders are in New York. It's the UN's summit on climate change. Hundreds of thousands of activists are on
Wall Street with a clear message: do more to protect the environment. We'll bring together the issues that have brought the protesters to the
heart of the financial district.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment. This is CNN, and on this network the news always comes
first.
As many as 200,000 people have fled their homes in Northern Syria in the past few days according to the Syrian Observatory for Human Rights.
Many are heading across the border into Turkey. ISIS militants have recently overrun dozens of Syrian villages.
Afghanistan's new President Hamid Karzai has hailed the nation's first democratic transfer of power. The president-elect spoke today for the
first time since agreeing to a power-sharing agreement, but the man now termed the chief executive of Afghanistan, Abdullah Abdullah.
In Eastern Ukraine, government forces are preparing to pull back from the front lines under a new cease-fire deal. The agreement backs the
original truce signed earlier this month and calls for troops on both sides to withdraw from a proposed 30-kilometer buffer zone. Ukrainian military
spokesman says he had made the decision to move after noticing that artillery attacks from pro-Russian rebels have subsided.
Kenya is marking a full year since the Westgate Shopping Mall was attacked by al Shabaab militants that claimed 67 lives. Memorials are
taking place as the country mourns the victims of the deadly four-day siege.
It is one of the most famous names in American capitalism. The very name itself adorns one of New York's iconic buildings - Rockefeller Center
at the heart of the rock. And today the family fund makes a historic pledge. It was the Rockefellers who not only built the center, but built
it from a fortune made from oil - Standard Oil. And now they say they won't use investments in fossil fuels to make money for their charitable
fund. Now that's bound to please those protestors who are staging a sit-in on Wall Street at the moment. They say fossil fuels industries are
profiting at the expense of the environment, that there's a relationship between global capitalism and global warming. The protestors have promised
to shut down the New York Stock Exchange on Wall Street. It doesn't appear that they did shut - managed to shut down the Exchange. The protestors are
still there. Capitalism equals climate chaos. Alison Kosack is with the protestors and joins me now. Alison, what impact have they managed to
make?
ALISON KOSIK, BUSINESS CORRESPONDENT FOR CNN BASED IN NEW YORK: You said that their goal was to shut down the New York Stock Exchange. They
didn't shut down the Exchange, but what they did do is shut down the street that leads right to the Exchange. The Exchange is right there. Here's the
street - this is Broadway and Wall Street. All days it's been about, what, I'd say four and a half hours this street has been closed all day. They
staged a massive sit-in. Most of the day it was peaceful. They sat, they sang, they played limbo, they danced and they talked about issues. And
then suddenly, minutes before the closing bell would ring, they got up and they marched right here to the front of the New York Stock Exchange and
this is the first time we saw police actually interact with them because what happened was police went ahead and - rather --- protestors were trying
to push through the barricades here, and as you see, the police lined up here alongside the protestors trying to keep them out. Because ultimately
these protestors are trying to storm the New York Stock Exchange to get their message across -
QUEST: Right.
KOSIK: -- that big business is - oh, go ahead.
QUEST: Alison, I mean, --
KOSIK: Go ahead, Richard.
QUEST: -- whether it's out on Wall Street, activists on Wall Street - whatever it is - is this climate related, is this the -- anything against
capitalism - what's the cause, the root of what this protest is about?
KOSIK: What this protest is doing is trying to shine light on big business. They're saying that big business is contributing in a big way to
global climate change through what they do in business - through investing in fossil fuels, I'm talking about oil, coal, fracking. They want to see
cleaner alternatives being used and being invested in. And you top that off with what you were talking about - you know - go ahead, go ahead.
QUEST: No - finish please. Sorry I was just listening.
KOSIK: No, and, you know, you are seeing some of that with the Rockefellers. They're Rockefellers who built their wealth on Standard Oil.
And now you see what they're doing - they're divesting. And they're not the only ones. There are others who are divesting as well. But the thing
is it's not making enough of an impact. What these folks are hoping is that by shutting down Broadway, by ramming into these barricades here at
the New York Stock Exchange, that their voice will be heard. And it's good timing too because you have to think about what's -
QUEST: Right.
KOSIK: -- happening this week. The U.N. General Assembly is happening this week, and the big climate summit is happening tomorrow,
Richard.
QUEST: Alison, thank you. Alison's down on Broad and Wall Street --
KOSIK: You bet.
QUEST: -- now where the activists are flooding Wall Street. We shift our focus to the high seas and a man who is calling on the United Nations
to do more to protect them. It's Trevor Manuel. He's the former South African finance minister, the co-chair of the Global Oceans Commission.
Good to see you, sir.
TREVOR MANUEL, CO-CHAIR, GLOBAL OCEANS COMMISSION: Good to see you, Richard.
QUEST: Good to see you. You have written the ocean is a victim of and a fundamental part of climate change and the solution to it. You are
disappointed that the latest U.N. declarations on climate change leave the ocean completely unspoken.
MANUEL: Completely unspoken about. There's a summit tomorrow - it's a once-in-a-lifetime fundamentally important summit, and the matters of the
ocean don't even feature in the breakaway groups in the afternoon.
QUEST: Why not?
MANUEL: You know, I mean it's strange because the U.N. Secretary General received the report. A number of U.N. agencies including UNESCO,
IOSCO, the International Maritime Organization and the IECN have also part of the call. But the member states are not going in that direction.
Perhaps it's out of sight, out of mind. We should not allow this to happen.
QUEST: Right, because it's extraordinary and people like yourself and the other members of the Commission - the leaders of the Commission -
Miliband, Jose Maria Figueres, yourselves - you've obviously been raising this. Is it because oceans - it's not dry land. We don't perceive it,
it's not sexy in that sense.
MANUEL: Look, a number of states have moved. I know that President Obama in June moved in respect to the exclusive economic concern of the
United States. So there's a consciousness about it, but there isn't a linkage. And given the importance of -
QUEST: People don't think - people - oh, I'm sorry?
MANUEL: -- given the importance of the high seas to maintaining climate change, it absorbs CO2 and releases oxygen. That's why we need it
- it's the lung of the earth. We need it -
QUEST: No! That's the rainforest we've been told. Trevor, we've been told it's the rainforest in Africa -
MANUEL: No, no, no. You can't - you can't ignore the ocean as part of the overall ecosystem, and you can't prefer (ph) decisions, you can't -
you've got to reverse degradation now or whatever else you're trying to do on land is going to be severely constrained.
QUEST: We need to talk to you about one of the major issue of course, and that is the Ebola crisis in Western Africa. It goes from bad to worse,
the Sierra Leone - there's a lockdown that took place and in some other countries - now over. But obviously the economic - I mean, besides the
loss of life which is dreadful and awful, but the economic impact on this continent is going to be long lasting.
MANUEL: Look, the number of deaths now exceeds 2,800 - that's very worrisome. The key is to - is of course - that people aren't responding
because what medics are saying is that once you understand that the disease is spread by body fluids, you need to arrest that and you need to change
conduct. It's very difficult to do this in the middle of an unfolding tragedy. People are deeply affected by death and separation, and that is
of course a concern. It'll be interesting to see what emerges from the lockdown in Sierra Leone.
QUEST: Is the rest of the world doing enough? I mean, it's one of these things that we all think, 'Well, I'm not going to that country,' and
the chances of the person coming here and even if they do, let's face it, somebody turns u in New York with Ebola. They'll be into a major hospital
like that. So it's not going to necessarily mushroom in the West?
MANUEL: No, the - I think the one - one of the problems is of course that given what has happened to a lot of pharmaceutical research, it's all
in private sector hands, and so there's more advance where it's likely like to be a return in the short-term. There's virtually no research capability
in biotech in public hands. And so, a disease that impacts on poor people, is unlikely to have a vaccine in the short-term. That's part of the
tragedy that confronts us.
QUEST: The Hep C pills that can cost $1,000 a day in the U.S., there's a market for. Ebola -
MANUEL: Nada. That's the crisis. Thank you, Richard.
QUEST: Thank you. When we come back, International Labor Organization says creating decent and productive jobs is an urgent
priority. Our urgent priority is to hear from the Director-General Guy Ryder who'll be sitting here - well once Trevor Manuel leaves the seat --
QUEST: -- after the break.
(COMMERCIAL BREAK)
QUEST: Let me update you with some breaking news in to CNN. The French government has confirmed that one of its citizens has been abducted
in Algeria. Video claiming responsibility has been released by an ISIS affiliate. It's called the "Soldiers of the Caliphate of Algeria." And
unfortunately, I must tell you militants are threatening to kill the hostage who is shown in the video. We'll watch this very closely to find
out more details, and as soon as we do, of course we'll bring more information to you. And while we do that, we continue.
The time's come, says the International Labour Organization - the ILO - to convince the world that fulfilling and productive employment is at the
heart of sustainable development. You might well say, 'Well, yes, we'd all agree on that.' But unemployment is high, the recession is barely over,
and new jobs are being created at an appallingly slow rate. Well, on Tuesday, on the occasion of the U.N. General Assembly, the ILO's to launch
a campaign promoting decent work. And Guy Ryder, who's now joining me in the C-Suite is the director there. Good to see you, sir.
GUY RYDER, DIRECTOR-GENERAL, INTERNATIONAL LABOUR ORGANIZATION: Thank you.
QUEST: You're calling for sustainable jobs, social protections, long- term employment prospects. Everybody wants that.
RYDER: Well that's the first point. Everybody wants it. And I think that's not something to be neglected. There was a poll in 160 countries
the other day, citizens around the world - what's your number one objective in life? Jobs for me, jobs for the kids. I think the big problem is can
we really believe today that it can be done? Or is the problem so great - more than 200 million out of work around the world?
QUEST: But what's the barrier here? Because if I listen to politicians, particularly in the West, they talk about it's all job
creation, it's all job creation.
RYDER: It doesn't happen, does it?
QUEST: So, why not?
RYDER: Well, I think the problem is we've relegated employment to a residual. That is to say, 'let's get the financial system sorted out,
let's get public finances in order, the jobs will come. Let's deregulate labor markets.' There was a time - there was a time - it's not that long
ago, when governments made full employment the center of their policy objectives. And, frankly, if they didn't, they won't get elected. I think
we've now - well that's the objective of the meetings in New York this week. We've now got to remind the international community, make the case
to governments that it's possible to do this - to get jobs back at the center of the agenda.
QUEST: What does it require? What does it require? Because I read the documents on this, and indeed I'll be sharing the panel tomorrow -
RYDER: Great.
QUEST: -- what we're going to be talking about. But what does it require from governments in terms of implementing these policies?
RYDER: Well, it requires a whole series of things. It requires the macroeconomics to be got right, we've got this famous struggle - sort of
tug of war - between austerity on the one hand, job creation and growth on the other. We've got active labor market policies, we've got the problems
of education, we've got enterprises sitting on massive piles of unvested money. You got to get investment moving again. So it requires a whole
series of things. I actually think confidence is one thing. It's got to be a statement of intent that we're going to get the world back to work.
QUEST: OK -
RYDER: That matters.
QUEST: We've also see in Europe at the moment, some strikes.
RYDER: Yes.
QUEST: We've seen strikes at Air France, KLM - one of the airline strikes. We've seen strikes at Lufthansa. Now, this is the opposite side
of that employment situation. These are high-paying jobs admittedly with airlines and the restructuring. So what's going wrong?
RYDER: Well, we're not going into the merits of the individual -
QUEST: Yes, absolutely.
RYDER: -- (inaudible) which I wouldn't want to do.
QUEST: Yes.
RYDER: You've clearly got a situation where enterprises are under pressure - Air France is an example. Restructuring process is underway -
the question is how do you do that? Do you sit down and talk to people and work out a solution that's going work - the social dialogue option? Or do
you just try and push something through? People are going to react - even if they're relatively well off today, --
QUEST: Right.
RYDER: -- if there's a threat to their - you know - what they've got, they're going to react negatively. So they actually got to find, I think,
a greater consensus in our societies, in our enterprises, in our work places - about how to make things better. I think starting to talk again
is a big deal. That's been out of fashion.
QUEST: You're talking to me.
RYDER: That's in-fashion. (LAUGHTER)
QUEST: Thank you very much indeed. Guy Ryder joining me from the ILO. Good to see you, sir. Now, world leaders at the U.N. J have plenty
to discuss. We've talked about climate change. Now, Tom Sater is at the World Weather Center. We talked about climate change, we've talked about
the oceans, but you're talking about living with climate change.
TOM SATER, METEOROLOGIST FOR CNN INTERNATIONAL: Yes, and we're talking about some new information that was just released, Richard, in the
last 24 to 48 hours that we know these world leaders will be discussing at the summit. And this has to do with the carbon footprint of the earth. If
we go back to the last year, what countries have done well? What countries have to do more? And what countries have to do a whole lot more?
Watch this - when it comes to greenhouse gasses, last year globally carbon emissions increased 2.3 percent. But follow along because at a
slightly lower than the average of the past decade of 2.5, emissions in the European Union fell 1.8 percent. That's great news and a pat on the back
for a significant decrease for the United Kingdom, for Italy, for Spain. However, coal consumption went up for Germany, coal consumption went up for
Poland, but there's other countries that have to do a whole lot more.
Look at this - the U.S. emissions grew 2.9 percent - that's above the 2.5 average. China and India - look at these numbers - up 4.2 and 5.1.
China emits a new record now at 10 billion tons of carbon dioxide annually. We cannot go forward in the world until China starts to do its part. But
the U.S. - look at this. China's carbon emissions are twice that of the U.S. but lower per person. That means in the U.S., individuals produce
more of these of course greenhouse gasses.
Also what they're discussing - every color you see here on this global map tells you where people were dispersed from natural disasters, from
weather phenomenon. In fact, an alarming rate - 22 million people - just in the 2013 last year. That is three times more than by any war or
conflict and all of them put together. Just amazing number. So the data shows that the displacement of people - twice as many - since the 70s. So
we're getting a warmer ocean as you mentioned, Richard. We're getting a warmer atmosphere - it holds more water. The droughts are more intense.
But look at this - developing countries account for 97 percent of displacement. Asia is the worst affected region with 81 percent of the
global total. In fact, if we even break it down, more exposure, more people, more vulnerability, and you can see how the numbers relayed here -
Europe .3 percent. But there is more to discuss.
When you look at some of the events of last year, and this is just last year doesn't include Typhoon - Super Typhoon Rammasun - this year, or
the terrible flooding we had in Pakistan or India this year. This is last year. Remember Super Typhoon Hainan 4.1 million, floods in China 1 and 1/2
million people. Even tornados just in the state of Oklahoma alone in the U.S. So as the pictures come in and of course the people protest - not
just today but yesterday as well - from Sydney to Berlin, to Colombia. In fact in Berlin here, they're saying, 'Hey, how about just a 2 centigrade
maximum.' As you look at these numbers, keep in mind five years ago global leaders met and they put a limit on the earth's temperature and we are at
those upper limits now. We need to do something as everyone you can see here on this man's face, they're trying to say 'Let's do it now.'
One more quick note - when it comes to just how warm it was, here's the global picture from 2013. A couple of cool spots - Russia maybe a
little bit, North American, but overall just January to August - third warmest. We are on pace, Richard, for the warmest year on record. It
seems like we say this year after year after year, we got to take care of this as it's the only one we have. Back over to you.
QUEST: Tom Sater. Thank you, sir. Thank you.
SATER: You're welcome.
QUEST: In a moment on "Quest Means Business," some say imitation is sincerest form of flattery, and what better way to immortalize something
than by reliving the experience day after day. We will look (afashing) dancer in New York's Central Park. In a moment.
(COMMERCIAL BREAK)
QUEST: It's 20 years since the American television series "Friends" was first on TV and the legacy still lives on. On Friday, we featured a
pop-up in New York Central Park. It's a replica of the famous Central Perk Cafe from the series. Well, it turns out it isn't the first time the
cafe's been copied. Fans across the globe had already beaten Americans to the punch as CNN's David McKenzie reports from Beijing of all places.
(BEGIN VIDEOCLIP)
DAVID MCKENZIE, INTERNATIONAL CORRESPONDENT FOR CNN INTERNATIONAL BASED IN BEIJING, CHINA: I'm in a generic Beijing high rise, and this is
probably the last place you'd expect to see a piece of American sitcom history.
DU XIN, "GUNTHER": So you see the same couch (ph) -
MCKENZIE: The famous --
(CROSS TALK)
MCKENZIE: Du Xin is the owner of the Central Perk. It's a clone of that coffee shop where six famous friends hung out for ten seasons on NBC.
The question is, why?
XIN: Obsession, Addicted to it.
MCKENZIE: You're addicted to "Friends" (ph)?
XIN: Yes.
MCKENZIE: So addicted that he changed his name.
XIN: My friend call me "Gunther."
(CLIP FROM "FRIENDS" SHOW)
GUNTHER: After you've delivered the drinks, you take the empty tray -
RACHEL GREEN: Sure, Gunther, please.
(END CLIP FROM "FRIENDS" SHOW)
MCKENZIE: That's Gunther, the surly manager who everyone loved to hate. Gunther Xin took months to create the Central Perk, a shrine for
"Friends" fans. There's another reason "Friends" is such a hit in China - it's literally a way that people learn how to speak English. Here's season
2 in Chinese and English. But this place takes obsession to a whole 'nother level. The WiFi password is iloverachel.
(PATRONS RECITING SCRIPT FROM "FRIENDS")
Male: You make me happier than I ever thought I could be.
YIN ZHIHUA, "RACHEL": And if you let me, I will --
(Male/ ZHIHUA): -- spend the rest of my life trying to make you feel the the same way.
(END SCRIPT RESCITATION FROM "FRIENDS")
ZHIHUA: Boyfriends, girlfriends come and go, but this - my friendship - is forever.
MCKENZIE: Friendship's forever.
ZHIHUA: Yes.
MCKENZIE: Like all the waitresses, Yin goes by "Rachel" in the Central Perk. She says "Friends" shows up her idea of America - different
from a China driven by discipline.
XIN: A customer here - maybe you call it "Friends" here - must know how to love each other and how to make friends with the heart.
MCKENZIE: Gunther Xin hopes his obsession will inspire others and hook many more "Friends" pads in China. David McKenzie, CNN Beijing.
(END VIDEOCLIP)
QUEST: I have a confession to make - I never liked "Friends." I'll have a "Profitable Moment" (RINGS BELL) after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment" - or in the case of Apple and the iPhone, the very "Profitable Moment" as 10 million of their iPhone 6s,
the larger phones, got sold. Well this evening I want to bring together two of our top stories. The iPhone record sales along with the issue of
capitalism, climate change and the protestors on Wall Street. Are these two issues in direct contradiction with each other? After all, think about
it. The protestors that we've seen talking about climate change again and again say capitalism is the - is responsible. Capitalism is the culprit.
Capitalism has caused the issues. But they're the same people who want capitalism to present the iPhone 6. They're the same people that require
China to have such fast growth. They're the same people that require the whole business of industry to generate more product. Are the two in
conflict? No, they are not. All it requires is decent leadership with integrity and principles. If you've got, you can have your iPhone 6 and
still have a clean planet. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead,
(RINGS BELL) I hope it's profitable. Let's get together tomorrow.
END
