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Quest Means Business

Ukraine Cease-Fire Deal Agreed; Ukraine Gets New $40 Billion Lifeline; Ukrainian Reaction to Cease-Fire; Ukrainian Currency Sinks Further; Priorities for Ukraine; Greek Debt Talks Break Down; Ukraine, Sweden Boost European Markets; Publicis CEO Talks Strategy; Make, Create, Innovate: Hospital on Your Smartphone

Aired February 12, 2015 - 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: That's my boss ringing the closing bell on a day when the market goes up 106, Turner Broadcasting and Time Warner, parent

company of CNN. And we're waiting for the man, the president, hits the gavel three times to bring trading to a close. Thank goodness that all

worked out according to plan. It is, it's Thursday, it's the 12th of February.

Tonight, Ukraine has a cease-fire deal, it has a bailout deal, and now the finance minister tells me the hard work for Ukraine really begins.

It's a bailout bottleneck in Brussels. Two days of talks and still no agreement for Greece, although very nice family photos.

And we give you, tonight, lessons in leadership from three top chief execs. You're going to hear from Cisco, Publicis, and Rio Tinto.

I'm Richard Quest. I mean business.

Good evening. We begin tonight, Europe is facing a crisis on two fronts. In the case of Greece, the divisions look deeper than ever with

the eurozone, and in Ukraine, to be sure, there was progress towards peace and financial stability. It's in Ukraine that we begin tonight.

Because after the Minsk talks and so-called Minsk 2 agreement, a cease-fire has been agreed after the marathon discussions. The cease-fire

will begin on Sunday, and both sides are to pull back. That's the pro- Russian separatists and the Ukrainian forces are to pull back their heavy weapons.

Separately, there's a new $40 billion bailout package for Ukraine. It replaces the old IMF loans from last year. But putting it all together,

the managing director of the IMF, Christine Lagarde, said the success of the bailout depends on the cease-fire.

(BEGIN VIDEO CLIP)

CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: Discussions on difficult issues are difficult discussions and they take

time. We very much hope that they will be conclusive, that they will be satisfactory, that they will help restore peace and more certainty.

Because one of the risks over the potential success of this program is obviously of a geopolitical nature. And the sooner it is peaceful, calm,

and people can focus on turning the economy around the better.

(END VIDEO CLIP)

QUEST: The issue, of course, is the conflict in Ukraine has claimed more than 5,000 lives. The cease-fire under Minsk 2 looks very similar to

the proposals of Minsk 1, which of course didn't go very far.

But if it does hold, then it will provide a much-needed respite from the fighting. Fred Pleitgen has this report from the Ukrainian capital in

Kiev.

(BEGIN VIDEOTAPE)

FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: There are still candles for those killed and pictures of the victims here on the Maidan

Square in central Kiev. This is where the revolution in Ukraine started, and we asked people here what they think of the Minsk agreement, and we

really got a mixed bag of emotions.

There are people who simply think this is a bad deal for Ukraine, but there's also people who think that the deal simply won't hold. We spoke to

one young man who's just signed up to join the fight against the pro- Russian rebels.

"I don't believe in the agreement at all. We've signed agreements in the past," says 21-year-old Sergei, "and all of them were breached. I

don't have any trust in any agreement with the Russians."

"I think we should try everything to show our humanity," this man says, "and do everything to come to an agreement. But I just don't think

this one will hold."

Even in light of the fact that this agreement was signed by the Ukrainians, the Russians, the Germans, and the French as well, there are

still battalions that are fighting on the front line that are collecting money to continue fighting. And there's one that's even criticized the

fact that this agreement was signed at all.

So here in Kiev, in Ukraine, there is skepticism as to whether or not the cease-fire that was signed will actually bring peace to this country.

Fred Pleitgen, CNN, Kiev.

(END VIDEOTAPE)

QUEST: That's that skepticism of the people on the street, also perhaps followed by what was seen in the markets for the Ukrainian hryvnia

versus the US dollar.

Having been relatively -- and that's a relative phrase in itself -- stable over the end of last year, with a bit of a wobble at the beginning,

it's fallen very sharply over the last few days in February and it weakened further on Thursday, sinking 2.6 percent against the US dollar. It's been

losing strength rapidly as the violence has escalated.

With this scenario -- but also, now knowing that the country was going to be the recipient of up to $40 billion in international aid, I spoke to

Ukraine's finance minister, he joined me from Kiev. I asked her, now bailout funds are on their way, what are her priorities for Ukraine.

(BEGIN VIDEOTAPE)

NATALIE JARESKO, UKRAINIAN FINANCE MINISTER: The priority for us to stabilize our financial and banking systems, so to restore confidence in

the banking system, to rebuild the reserves of the central bank, and to ensure that we are able to meet our obligations.

QUEST: How close is the country to failing to meet the obligations. Obviously, this money was -- this money was necessary, but just how

desperate has the situation become?

JARESKO: We're not desperate. We've met -- we're meeting all of our current obligations, and with this package, it's not even a question

anymore.

QUEST: The managing director of the IMF, Christine Lagarde, as she outlined the various reasons why they've given -- or they're hoping to give

this facility, she said there are risks. She told them there are some very serious risks. She's right, isn't she?

JARESKO: Of course there are always risks. The package is based on our own reform program. The reform program of this government and this

president. There were structural reforms that are difficult that will be hard to implement that we will need parliamentary support for through and

through, and the support of our nation.

But that said, this is something that we need to do, something that we are absolutely determined to do, and something that the war in the east

makes absolutely necessary at this time. The only way for us to maintain or sovereignty and territorial integrity is to build and rebuild our

economy and renew it.

QUEST: The war in the east is a large part of the issue facing Ukraine, but there are many issues which are very firmly domestic and very

firmly in your own bailiwick. For instance, the measures to root out corruption, to implement more transparency, to put in place the rule of

law, both for civil litigation and for corporations. These are measures the government has to deal with.

JARESKO: There's no question. These are the critical issues, along with some structural economic reforms, for which I'm responsible on the

fiscal side. I would say that the anti-corruption, the judicial reform, the fiscal reform, and rebuilding and renewing an investment climate that

attracts both domestic investment and foreign investment are the absolutely critical reforms.

QUEST: And how are you going to balance the inevitable austerity that's going to arrive on your doorstep? Let's face it, if you are

effectively restructuring an entire economy from the ground up, that is going to involve the sort of structural reforms that has led Greece to a

quarter -- contraction of its economy. How are you going to balance that with calls for growth?

JARESKO: Well, I think the interesting thing is, our people have, unfortunately, been suffering from a recession for nine quarters, now. And

so, I think that everyone's been suffering through what might be the result of austerity even before this.

But I think the Ukrainian people not only are demanding these reforms, they understand that a small amount of additional pain, a small amount of

additional patience, will be required for us to turn this around.

QUEST: So, how long have you given it before people will see an improvement?

JARESKO: I think this year is the year where we stabilize the system, and I think they'll see an improvement if we can stabilize the banking and

financial system. But next year is the year that we should see growth, the beginning of growth in the economy again.

With regard to the war, first of all, I hope that today's renewed Minsk agreement is, indeed, implemented and we see peace. But regardless,

I want to say that war is on 7 percent of our territory, and 93 percent of the country is open and operating for business, and 93 percent of the

country, despite the problems of the past, is ready for these reforms.

(END VIDEOTAPE)

QUEST: That's the finance minister of Ukraine. In Brussels, an agreement on renegotiating Greece's debts looks further away than ever.

This is the other crisis that the euro -- European community is facing at the moment.

There's no bailout deal for the eurozone, no road map after the finance ministers' meeting, so not only is there no bailout agreement,

there's no agreement on who to blame. There are reports that Greece dropped agreement at the last minute to have an interim bailout loan

afterwards.

Channel 4 news in the UK says Germany vetoed such a deal for Greece to leave its bailout without having anything in place. EU leaders meeting in

Brussels, the prime minister, Mr. Tsipras, and Angela Merkel met for the first time since the election.

These are all the familiar faces that we are used to seeing -- David Cameron -- at EU summits of one description or another. There's Jean-

Claude Juncker, of course, is the president of the Commission. The Finnish prime minister, Alex Stubb, says talks are back to square one.

(BEGIN VIDEO CLIP)

ALEXANDER STUBB, PRIME MINISTER OF FINLAND: I think time is running out. I think all 18 euro countries were discussing with the 19th, Greece,

and I think the key is to try to find a continuation of the program post February, but that entails structural reform. So, in many ways, we are in

square one.

I think in the past five years, we've done everything we possibly can to keep Greece in the eurozone, and we'll continue to do that. But

commitments are commitments, and we must all stick to them.

(END VIDEO CLIP)

QUEST: Whoa. "We've done as much as we can, but we must continue to do what we can." Mohamed El-Erian is the chief economic advisor at the

financial group Allianz. He joins me now. That was a lukewarm endorsement of whatever comes next if ever I heard one.

MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: It was, and it came from a rather hawkish member of the eurozone, so it is to be expected,

Richard.

QUEST: We look at Ukraine and we look at Greece, now, these two issues. Which for you is the most pressing at the moment?

EL-ERIAN: They both are, and it's interesting, because the international community was tested this week. Tested on problems that have

been festering for a while, and that got really acute. And in both cases, what we see is a desire to simply kick the can down the road.

So, I am among those who are worried that the Ukraine cease-fire will not hold, and therefore, Ukraine will continue to implode in terms of its

economic development. And importantly, tensions will arise between Russia and the West.

At the same time, what you see happening in Greece is a typical cycle. First you had the public tantrums. Then yesterday you had the tough

negotiations. Then today, both the German and the Greek leaders have started to provide the political air cover for some sort of compromise.

But it's only going to be a short-term compromise.

QUEST: Right.

EL-ERIAN: So, think of it as we are -- the international community is pausing -- pressing the pause button, but it's not fast-forwarding to a

happy ending on either of these cases.

QUEST: OK, let's stay with Ukraine, and then we'll do Greece in a second. On Ukraine, do -- this $40 billion, this new renewed -- I mean,

Ukraine has already had $4.5 billion, add in this, add in what the Europeans have given, and the $40 billion, are they about to waste that

money, do you think?

EL-ERIAN: Well, first of all, they're not going to get the $40 billion. In order for them to get the $40 billion, they have to come up

with first stabilization, economic stabilization, and secondly, structural reforms. They're not there yet, and there are no signals of medium-term

financial viability, which is a condition for disbursement.

So, I don't think they're going to get the $40 billion. But they're going to get words of support that may help stabilize the currency.

QUEST: Right. And on Greece, finally, Mohamed, with Greece -- everybody says that a deal is going to be done, and we all -- I mean, I say

it, you say it, we all say it with an air of certainty about it. So --

(LAUGHTER)

QUEST: -- let me put it this way: is a deal going to be done?

EL-ERIAN: A short-term funding deal will probably be achieved. That will not be enough to deal with the fundamental issues. It will be very

hard to get agreement on the three other aspects, which is to lessen austerity, to deepen structural reform, and to provide additional debt

relief. And the one thing that we should all be watching is what happens to bank deposits in Greece.

QUEST: All right.

EL-ERIAN: That is the key issue to watch right now.

QUEST: Is Grexit still on your agenda?

EL-ERIAN: It is a possibility, and if it happens, it will not be because of a conscious political decision by either side, it will be

because the two sides lose control of the situation whereby residents are so fearful that they pull out their money, they pull out their bank

deposits, and the process accelerates. Just like happened in Argentina in December 2011 -- 2001.

So, it will not be a conscious political decision. It will be something forced by circumstances on the ground if it happens.

QUEST: And we'll talk about it as and when and before and after. Thank you, sir. Thank you.

EL-ERIAN: Thank you.

QUEST: Mohamed El-Erian making sense and helping us understand and navigate the pathways of this.

News of the cease-fire in Ukraine did lift the European stocks. In Sweden, there was a $1.2 billion stimulus, which was received positively by

the government. Interest rates are negative. Shares in Total were up nearly 1 percent, and you can see the market -- the Stockholm market, the

best of the day, when you put it all together.

As we continue our look on QUEST MEANS BUSINESS this evening, the chief exec of Publicis is talking strategy and saying in the advertising

business, you have to adapt to be forward-looking. My interview with Maurice Levy is after the break.

(RINGS BELL)

(COMMERCIAL BREAK)

QUEST: It is the earnings season, and tonight, you're going to hear from two chief executives who say survival, for them, their companies, in

fact, for all corporations is all about change.

(RINGS BELL)

QUEST: John Chambers later in the program is going to tell me this issue is crucial. And right now, Maurice Levy, who runs Publicis, says

change or be "Ubered." That's the phrase he uses.

The Publicis Group says if you are not willing to think differently, to do things with a new set of eyes, then the "Uberization" of your company

is upon you. And his company's promising better growth after a disappointing year. He spoke to me from Paris.

(BEGIN VIDEOTAPE)

MAURICE LEVY, CEO, PUBLICIS: If you are not changing your business model and your marketing model, you are running the risk of being "Ubered,"

which means that you will be out of business.

And with the addition of Sapient, we have the possibility of offering to our client a combination where we have creative strategy, consulting,

digital, e-commerce, and technology together, which is the right combination to help our client changing their business model.

QUEST: You talk about the "Uberization," the "Uberization" and you might be "Uberized." But what does that mean? Does it mean somebody comes

in and takes over, or, as Uber is having many difficulties today, the whole thing doesn't work as well as it should?

LEVY: I think that Uber is a great success by itself, and Uber will continue to have a lot of success. And I believe that there are some

conservative forces who are trying to decelerate its growth, which is fair.

But the key question is that you have in this new world a newcomer which can come in the game and put your business out of model. This is,

for example, the case for the taxi drivers. These are the case for the travel agencies. These are the way people are looking for going for

reservation for hotels or travel expenses.

And when you look at all this, there is a lot of businesses which have disappeared. And this can happen to any kind of business if they are not

caring about their own business model and changing their business model.

That is what we are offering to them, is the help to go to multichannel, to change the business model, to change the marketing model,

to have something which is much more effective, much more efficient, up-to- date, and ready for the future. What we are, in fact, doing is being a forward-looking company with a vision --

QUEST: Right.

LEVY: -- which is taking into account all the transformation that is brought to us by the innovation in technology and by all the inventions

that are created by the kids in the internet field.

QUEST: You are now saying how not only do your clients have to adapt with their media strategy, but you have to adapt how your company provides

that strategy. It's this concept of change, the Uberization, if you like, that goes to the heart of it all.

LEVY: Absolutely. This is exactly what's happening, and if we don't want to be ourselves Uberized, or Ubered, we have to change ourselves and

to make some dramatic changes that we are doing.

And with this new organization that we are putting in place, we can help quite fantastically and with dramatic solutions, our clients, and

helping them to win market shares and to growth their business.

(END VIDEOTAPE)

QUEST: Love the phrase, the verb, the new verb, to be "Ubered." You'll hear it more in the weeks and months ahead.

Now, when we come back, it was a case of spurred by personal tragedy, inspired by TV fantasy. You're going to meet the innovator who wants to

make your healthier as part of Make, Create, Innovate.

(COMMERCIAL BREAK)

QUEST: Technology companies like Apple and IBM have been lobbying the US government to let them bring health care to your mobile phone. Apple

Health is due to launch on Apple's iWatch. The US Congress is trying to force the FDA, the Food and Drug Administration, to cut regulation.

The goal all remains the same: to make it as accessible as possible. And as Nick Glass tells us in this week's Make, Create, Innovate, one

inventor believes the smartphone can be more than just a gadget.

(BEGIN VIDEOTAPE)

NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Have you ever sat in a hospital waiting to be told what's wrong with you? It can be

unbearable. Your health, out of your hands.

GLASS (on camera): What if we could monitor our health ourselves, be it on the beach, at home, in the office, wherever? I'm here in Northern

California to meet a Belgian inventor who's come up with a device to allow us to do precisely that.

WALTER DE BROUWER, CO-FOUNDER, SCANADU: We invented devices that put the diagnostic capabilities of a hospital on your smartphone.

GLASS (voice-over): Walter De Brouwer is a mathematician and entrepreneur who's run several successful companies. But in 2005, his life

changed forever.

W. DE BROUWER: We'd been to MGM Studios because our five-year-old, he was obsessed with Spider-Man. When we came back, we went to his room, and

before we knew it, we heard like a big -- we thought he'd thrown something out of his window. And so, he had jumped out of the window, I think, or

fallen out of the window. And this was 11 meters, very, very high.

So, my wife rushed us to hospital, and so, yes, we were there almost - - it was, I think, 10 or 11 weeks in a coma. We had, let's say, a total immersion in very intimate knowledge of how hospitals work and how they

don't work.

GLASS: De Brouwer and his wife, Sam, decided to use this experience to do something positive. They set up a company, Scanadu, to develop a

medical device for our personal use. And as it happens, he drew inspiration from one of his favorite TV shows, "Star Trek."

LEONARD NIMOY AS MR. SPOCK, "STAR TREK": I assure, you, Doctor, I am quite all right.

GLASS (on camera): You as a kid remember the tricorder.

W. DE BROUWER: Yes. Yes. All the intelligence was in the device. So, if all the intelligence is in the device, you can give it to consumer.

GLASS (voice-over): And after ten years of work, this is the result, the Scanadu Scout.

SAM DE BROUWER, CO-FOUNDER, SCANADU: The Scanadu Scout will measure your vital signs in seconds. It's full of sensors. There's one that is

covered by your index fingers. The others are in the front window, it's touching your forehead, and everything is sent to the phone in real time.

Here you go. So, it happens in seconds. You have your blood pressure, your heart rate, your temperature, and your SPO2, which is the

oxygenation level in your blood. And here you go.

GLASS: This is De Brouwer's unique algorithm. It makes it possible to convert our vital signs into a simple readout on our smartphone.

W. DE BROUWER: I've come to believe that we are just vessels of data, and data you can change with action.

GLASS: A young and expanding team assemble and test the devices. Biochemists in masks are working on the next product, the ScanaFlo.

W. DE BROUWER: It's a full urine analysis in one minute. It gives you if you have UTI, you have gestational diabetes, are your kidneys OK?

Inflammation, like all these things. Very binary.

GLASS: We are increasingly monitoring our own health using our smartphones, and pending FDA approval, Walter and Sam hope their devices

will be available imminently.

W. DE BROUWER: I think we're all a bit afraid to know our health. Of course, at a certain age, they tell you, you are in good shape, you're not

in great shape. It's like, all right, I'll settle for good.

(LAUGHTER)

(END VIDEOTAPE)

QUEST: The amazing world of health care technology in Make, Create, Innovate.

We'll be talking about how CEOs need to change their companies or face obsolescence and extinction. More from the chief exec of Cisco in a

moment.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in a moment. When Cisco chief executive John Chambers will tell

me how the company is refocusing in the future.

And a Korean Air executive heads to prison, all over a bag of macadamia nuts. Before all of that, this is CNN and on this network the

news always comes first.

Ukraine has a new $40 billion-dollar lifeline, replacing the IMF bailout of last year. Kiev's promised to slash energy subsidies,

restructure its banks and work harder to tackle corruption. Speaking to me earlier, the finance minister said structural reforms are crucial.

(BEGIN VIDEOCLIP)

NATALIE JARESKO, UKRAINIAN MINISTER OF FINANCE: This year is the year where we stabilize the system and I think they'll see an improvement if we

can stabilize the banking and financial system. But next year's the year that we should see growth -- the beginning growth in the economy again.

With regard to the war, first of all I hope that today's renewed Minsk Agreement is indeed implemented and we see peace. But regardless, I want

to say that war is on 7 percent of our territory, and 93 percent of the country is open and operating for business.

(END VIDEOCLIP)

A court in Egypt has ordered the conditional release of two jailed Al Jazeera journalists, Mohamed Fahmy and Baher Mohamed, have been told they

must undergo a retrial on charges of supporting the banned Muslim Brotherhood. Both men were ordered to be released on bail where they'll

remain in custody until the paperwork is completed. The next hearing is set for February the 23rd.

The United Nations Security Council's unanimously adopted a resolution calling for action to deny funds to ISIS. It says there shall be sanctions

against anyone who buys smuggled oil from the terror group or its affiliates. It also wants to shut off other means of financing, including

ransom pay for hostages and the trade and antiquities from Iraq and Syria.

Funeral prayers have been held today for three Muslim students who were killed in the United States in a college town. They were all shot and

killed by a neighbor. Police say the violence originated in a dispute over parking. Members of the victims' families are calling it a hate crime.

The market in the United States rallied very sharply on Thursday. At the Super Screen you'll see exactly what I mean. They came out of the gate

with a very positive move right the way up. And we'd just about ended at the best of the day, maybe off just a tad up over half a percent - 110 and

we're just now once again within a whisker of 18,000. This triple-digit gain for the Dow (ph).

There were lots of good corporate earning. Tech stocks were the big movers with Cisco leading the charge.

On the question of two shares to note, two high-profile companies were absolutely in different directions. Cisco stock was up over 9 percent as

the company reported an increase in revenue, and the chief exec tells me Cisco is back in vogue - reformatting the company for the next generation.

Tesla, the makers of those high-performance electric vehicles, they were down as much as 7 percent - 4.6 at the close after a surprise loss and

low sales. And Elon Musk of course has been saying and talking about the issues he faces.

Now as for Cisco, the Cisco has undergone major changes in recent years, hence the reason up 9 percent. The company that grew fat in the

1990s - it supplied the gear used to power the internet. That company has shifted focus.

It mostly now deals instead of routers (ph) and boxes, it deals in network switching. It's a technology that manages huge data centers.

The chief exec, John Chamber, who's one of the most energetic and enthusiastic in corporate America, says the key has been the willingness to

change before the market leaves you behind. Leadership is the key he told me earlier today.

(BEGIN VIDEOCLIP)

JOHN CHAMBERS, CEO, CISCO: Businesses either succeed or fail, first because they stay with what they were doing - the right thing - for too

long or they failed to get market transitions right, where they failed to reinvent themselves. And as leaders, you've got to have the courage to say

here are the transitions coming and here's how you're going to reinvent yourself as a leader and your company.

The exciting part is it is like the 90s again. We've reinvented ourselves, we've restructured the whole company, we've focused on speed and

innovation using our own technology to do that and now we can work with every country, every city, --

QUEST: Right.

CHAMBERS: -- every company in the world to say, `Here's what Cisco has done, here's how we can do it together.' And we suddenly can become

their strategic business partner. It really gets exciting in terms of what's in front of us.

QUEST: But it takes - but it's a bit like jumping in the deep end. You're told the water will be fine, but it takes a leap of faith to believe

that.

CHAMBERS: It really does, Richard. And this is what leadership's about - not just as a CEO but our whole company, and I'm very proud of what

our team has done. We jumped three and a half years ago. We started to transform our company. Twelve months ago, we reorganized engineering from

62 different business units to focus on customers and outcomes (ph).

And when you do that, a lot of people second guess you, and at first it always gets tougher before it gets better. We disrupted markets, we

also disrupted ourselves, but you do have to have the confidence, you have to take good business risk. But the option is not good. It's about

survival.

And as every company becomes a digit or a technology company, they're going to have to do the same thing. So this is kind of a unique role that

Cisco's in again, and I've got to be very candid with you - it's fun again.

QUEST: The White House has obviously - is having a summit meeting on hacking. I mean, hacking's a dreadful word - we could call it computer

security. Are we destined and doomed - the reason I say this, John, is because I look back - I've had all me credit cards have been hacked, me

bank account' s been hacked, my - two of the stores I shopped in, my healthcare company - time and again I'm getting e-mails from companies

telling me, `Sorry, but your data may have been at risk.' Is this inevitable?

CHAMBERS: No, it's not inevitable, Richard, but it does speak to the present time, the bad guys whether it's nation states or organized crime or

just people - hackers - that enjoy disrupting things - are ahead of the game. We have to get back ahead of them, and this is where I think going

back - you always tease me about never missing an opportunity to sell for Cisco -

QUEST: (LAUGHTER).

CHAMBERS: -- you've got to think about this from an architecture - like the human body. You've got to be able to resist all these attacks that come at you different ways during the course of the day, and it's the

exception when you take an aspirin or go to the doctor. That's the transition we're trying to make. To your real question, nothing will stop

the digitization of every company, every country.

The payback in terms of job creation, healthcare education, productivity is just too strong. But security needs to be the top worry of

both CEOs and board of directors because the brand damage, it - when you get into trouble, if you haven't got somebody that can help prevent it,

minimize it and help you recover, it can be disastrous for your company.

And so it is an issue and it's very real and on everybody's mind from government leaders to business leaders around the world.

(END VIDEOCLIP)

QUEST: That's John Chambers. Now Elon Musk of Tesla is bullish about the future of his electric company even though a lot of people were very

disappointed in its latest results. Tesla is currently worth around $25 billion. Musk says he thinks it'll be worth around $700 billion, well by

2025. Apple's already a company - the only company - to be valued that high in the stock market.

Predicting the 2,700 percent surge is bold for a chief executive whose company stock is now 30 percent down from its all-time high, and it's just

reported a loss. We need to put this in perspective. Paul (CLEARS THROAT) - excuse me, a bit chesty today - Paul La Monica is with me. Good to see

you, sir.

PAUL LA MONICA, CNNMONEY DIGITAL CORRESPONDENT: Good to see you as always.

QUEST: Digital correspondent for CNNMoney. Now, what's gone wrong? Well, no, I'm being unfair - I was going to say what's gone wrong with

Tesla? They have one bad set of numbers - one loss and everybody's sort of writing them off.

LA MONICA: Well I think one of the things that you have to keep in mind is that oil prices have plunged obviously over the past couple of

months, and that is one reason why people are skeptical because will mainstream consumers - because Tesla wants to make a cheaper car to come

out in a few years - will your average consumer go electric if gas prices remain as low as they are.

QUEST: But that assumes the beauty of the Tesla is in its electric nature and no gas prices as opposed to sort of the vehicle itself - its

looks, its speed, its performance.

LA MONICA: Oh, without question. And right now Tesla the model, people love it.

QUEST: Right.

LA MONICA: It is a highly-reviewed car, you have the insane button that people are salivating over - you go in that rapid acceleration. I

think people right now are wondering though, is Musk getting the insane button with a prediction to go to $700 billion in ten years? That's just a

very bold call.

QUEST: And the whole thing of China and the whole question of sales and whether he's going to make management changes.

LA MONICA: Yes, there has been speculation because China's sales were weaker than expected in the last quarter and clearly China is a huge

market, a lot of potential for Tesla. They really need to get it right if they're going to come anything close to his prediction of how high this

company can get.

QUEST: And at the same time, he's just of course got this new factory that's going to - I've forgotten the name -

LA MONICA: The Giga Factory.

QUEST: -- the Giga Factory. He's got the Giga Factory that's getting underway. So there's a lot of fronts upon which there can be huge success,

but huge risks at the same time. And those risks - I don't want to sound too pessimistic - but do you think those risks are coming home to roost?

LA MONICA: I think they are in some respects. You know that what Musk needs for Tesla to go from beyond just a niche car company to

mainstream like GM, Ford, Toyota is to sell a cheaper car. The Giga Factory will get them there because they're going to sell the model 3

probably in a $35,000/$40,000 range. But it's not as if other car companies are asleep at the wheel if you were.

GM has the Bolt already - I'm sorry, the Volt - and they're going to be coming out with another cheaper electric car, the Bolt. So a lot of

companies do realize the potential of electric and they're going (inaudible) Tesla.

QUEST: No, but they haven't got the sexiness of the Tesla.

LA MONICA: They definitely don't. But $700 billion - they got to sell millions of cars to get there - not tens of thousands.

QUEST: Thank you.

LA MONICA: Thank you.

QUEST: Let me update you on the news conferences from Brussels that've been taking place this hour. Live pictures from the European

Commission headquarters. Angela Merkel and Donald Tusk, the president of the Council, both say Greece is not high on the agenda at the E.U. leaders

summit today.

The Eurogroup meets again on Monday. Chancellor Merkel also said she does not exclude the possibility of further sanctions for Ukraine if the

Minsk Agreement - the one that they've just agreed - Minsk II, if you like - does not hold.

When we return, how does a bag of macadamia nuts end up with an airline executive in prison?

(COMMERCIAL BREAK)

QUEST: It was the story when the bag of nuts which should have been on a plate, have finally ended up with an airline executive in prison.

Think of it as the butterfly flapping its wings in Brazil which starts a tornado in Texas. Now we have the nuts on the plane sending the executive

to jail. Heather Cho of course is the daughter of the Korean Air chairman, and she was found guilty of violating aviation law.

She ordered the plane that she was on that was taxiing out to the runway to return to the gate at Kennedy. Why? She was in a rage because

her macadamia nuts had been served in a bag when she believed they should have been on a plate. She felt to anything else was unworthy of first

class.

Now she's gone from first class to a prison cell. CNN's Paula Hancocks has more from Seoul.

(BEGIN VIDEOCLIP)

PAULA HANCOCKS, INTERNATIONAL CORRESPONDENT FOR CNN INTERNATIONAL, BASED IN SEOUL, SOUTH KOREA: Guilty as charged. Korean Air's former vice

president at the heart of the so-called `nut rage trial' sentenced to one year in prison.

Heather Cho's lawyer mobbed by media as he left court says Cho hasn't decided yet whether to appeal. He says she is currently reflecting. The

case against her started in December when she ordered the flight from New York's JFK Airport back to the gate to kick the chief steward off after she

was served macadamia nuts in the bag and not on a plate.

Three judges find Cho, the daughter of Korean Air's chief executive, guilty of violating aviation law and changing the flight path.

Comedy shows have had a field day with this case, as have nut-sellers. One online shop telling CNN sales in the nuts have soared more than 300

percent from this time last year. But behind the satire, there is anger in South Korea that yet another member of a powerful family-run business has

behaved badly.

The father and Korean Air's chief Cho Yang-ho was convicted of tax evasion in 2000, before receiving a presidential pardon. The former head

of Samsung and the current CEO of Hyundai Motors, among others, also convicted of white-collar crimes. Both men also received presidential

pardons.

But will a one-year prison term for Cho be enough to quell some of the public resentment?

JUNG YONG-HYUN, INTERPRETED BY HANCOCKS: This man says, "I hope that this builds momentum to change the mindset of corporate owners and their

children as well as to encourage companies to genuinely care about their employees."

BYUN JAE-SEONG, INTERPRETED BY HANCOCKS: But this man isn't happy, saying, "She should get more than one year in jail so that she can

sincerely repent and prevent further victims from these kind of cases."

HANCOCKS: Cho appeared teary in court, saying she didn't know how to find forgiveness. And another Korea Air executive was also found guilty

for interfering in the investigation - forcing the chief steward to change his story and deleting files. He was sentenced to eight months in prison.

Paula Hancocks, CNN Seoul.

(END VIDEOCLIP)

QUEST: We're going to continue looking at how companies weather tough times when your company digs raw materials out of the ground, everything's

going beautifully. Then commodity prices slump. So, the chief executive of Rio Tinto has to respond.

(COMMERCIAL BREAK)

QUEST: On tonight's "Quest Means Business" we've been getting lessons from the chief execs throughout the program. The CEO of some of the

world's biggest companies telling us what they've learned and how they're seeing the results in this earnings seasons. Publicis' CEO Maurice Levy

said, "If you are not changing your business model, you are running the risk of being ubered."

John Chambers of Cisco declaring, "Businesses either succeed or fail - because they fail to reinvent themselves." Now Sam Walsh who runs Rio

Tinto - he has a slightly different perspective, believing it's all about focusing the business on what is best for the shareholders. Arguably, a

narrow definition.

Shares of the huge mining company rose in London and on Wall Street. Rio's profits topped the estimates for last year. Nino dos Santos asked

him how Rio had coped with the slump in commodity prices.

(BEGIN VIDEOCLIP)

SAM WALSH, CEO, RIO TINTO: It's the way, Nina, that we've positioned the business. We've reduced our debt by $9 and 1/2 billion in the last

year and a half. We've reduced our costs by $4.8 billion, we've halved our capital. All of these actions have actually put us in a really strong

position that probably right now we've got the strongest balance sheet for the major mining houses.

It was that plus a forward outlook that gave our board the confidence to announce a 12 percent increase in dividend and a $2 billion-dollar

buyback.

NINA DOS SANTOS, NEWS ANCHOR AND CORRESPONDENT BASED IN LONDON FOR CNN INTERNATIONAL: Isn't it reality though that you have to fee shareholders

because you wouldn't want them to tender their shares to another company that's trying to court you? You've already had suitors like Glencore

coming after taking over your firm. Have you had any more approaches and how are you positioned to try and fight off those kind of approaches?

WALSH: It's not a matter of positioning the business for competitor action. It's really about focusing the business with what is best for our

shareholders. And that's really been my focus all the way during my working career. But since I became CEO of Rio, I've made it very public

that shareholder returns are the highest on my agenda. And that's what we delivered today.

DOS SANTOS: How high will those shareholder returns continue to be here if, of course, the iron ore price continues to lag well behind the

peak? Now I'm just looking at iron ore prices. They're down from 2011 when they were $200 per ton and we're now talking about a price of barely

$60 per ton.

WALSH: Yes, today's price is $62 a ton and I announced today that if you're taking into account the current exchange rates and energy costs, our

iron ore for costs to produce - cash costs - is $79 per ton. So $79 to $62 - there's a pretty attractive margin there for us.

And it's these sorts of things that have enabled us to announce the increase in shareholder returns that we announced today. It's all about

positioning the business, it's all about having a very strong balance sheet, it's all about having tier 1, low-cost assets.

DOS SANTOS: If you look at the recent Chinese data on imports, on manufacturing there, just on the GDP top level, growth really isn't

forthcoming. How is a company like yours which markets most of your coffer to China managing to cope with this new reality of growth well under 7

percent for China?

WALSH: (Inaudible) growth has gone from 7.4 percent last year to - we're expecting it'll be around 7 this year - but on a much larger base.

The economy really has almost doubled in the last ten years. In terms of our iron ore - high-quality iron ore, high-grade copper - if you look at

proximity to market we're very, very well positioned. And that places us in a privileged position in that market.

Remember we've been around for 140 years, we have very strong supplier relationships and that has always been important to us. That's what you

need to weather times like this.

(END VIDEOCLIP)

QUEST: Some sage advice from a chief exec of a company that's been `round more than a century. And Rio Tinto isn't the only one in the

privileged position in China. CNN's David McKenzie's been speaking to two entrepreneurs in Beijing who've been able to make the most of the Chinese

people's changing tastes.

DAVID MCKENZIE, INTERNATIONAL CORRESPONDENT FOR CNN INTERNATIONAL BASED IN BEIJING, CHINA: Unlike most of us, Kristian Lee (ph) and Alex

Zacker (ph) like to drink at work. Checking their brews for clarity, carbonation and taste.

MCKENZIE: Do you have to taste them quite often?

Male: Yes, of course that's part of the job.

(LAUGHTER)

Male: No, we started off very much as a hobby and it came from a deep sort of passion and love we have around beer.

MCKENZIE: Friends in China for a decade, they brewed nights and weekends, but they soon ditched their day jobs in the high-tech sector for

the mash tun and the brew kisser.

Male: Well, I mean it was a risk, but I don't think either one of us has looked back.

Male 2: No.

Male: I think it's the way we feel - we're living the dream here. I also think there's an opportunity to brew beers here in China that people

haven't really had before. I mean, using completely unique ingredients.

MCKENZIE: At Jing-A they use locally-sourced ingredients like pudgy rice and watermelon to brew beer with Chinese characteristics. Chinese

beer consumption is still around half that of the sozzled citizens of Britain and Germany, but it's rising fast.

In fact, the world's best-selling beer is from here in China. It's called Snow Lager. It sells even more than Bud Light. This is an

increasingly thirsty country.

As Chinese get richer, they're turning to premium products like craft beer. But brewers like Kristian (ph) and Alex (ph) are also tapping into

huge cultural changes.

MOLLY HUANG, IT RESEARCHER: Way that where I was brought up, we were not encouraged to have - drink beers or even have any kinds of drinks -

were just considered a bad woman. But now is, you know, it's - you can do anything that you want.

MCKENZIE: So the profits keep flowing in for their handcrafted brew. And even more Chinese say cheers to beers. David McKenzie, CNN Beijing.

(END VIDEOCLIP)

QUEST: There's a "Profitable Moment" after the break. (RINGS BELL).

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment." It was fascinating to hear two chief executives talk about the significance of being able to change the

companies with the times -- not to avoid being "ubered" in the words of Maurice Levy. In other words, you have obsolescence built in if you're not

prepared to think things differently.

And that maybe is why Cisco's doing so well and Maurice Levy of Publicis can recover from the failure of the Omnicom takeover. Not being

"ubered" means survival in the 21st century. Now 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