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Quest Means Business
Philip Morris Campaigns for a Smoke-Free Future; Tech Stocks Slide on U.S. Decision to Blacklist Huawei; White House Blocks McGahn's Testimony on Capitol Hill. Aired 3-4p ET
Aired May 20, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ISA SOARES, CNN INTERNATIONAL CORRESPONDENT: The U.S. crackdown on China tech has investors spooked this Monday. It is May the 20th. Google cuts
off Huawei in a major blow to the smartphone maker's ambitious plans. Donald Trump's relationship with Deutsche Bank is now under scrutiny, and
we say goodbye to the "Game of Thrones," but no spoilers here. I haven't watched it yet.
I am Isa Soares, in for Richard Quest and I, too, mean business.
I don't have a chair, so I'll just stand up. Now another major blow to China's Huawei, this time from Google. The Silicon Valley giant
restricting Huawei's access to its operating system, Android.
Google says it is complying with the U.S. government which blacklisted the Chinese firm last week, the ban threatens Huawei's supply chain and could
fraught its bid to become the world's biggest smartphone maker.
It is currently number two ahead of Apple, and just behind Samsung. Now Huawei is hugely dependent on export to other countries. Have a look at
this pilot earlier on, half of it sales are made in China, according to research firm, Canalys, Russia, Mexico, Saudi Arabia, and Italy as you can
see, there were its next biggest markets in the first quarter of 2019.
So what does this all mean? Samuel Burke is here for more. And Samuel, when I heard the news, the first thought was, what does it actually mean
for consumers more importantly, because we're not just talking about people who are in the United States who have Huawei, right around the world.
SAMUEL BURKE, CNN BUSINESS TECHNOLOGY CORRESPONDENT: It's an incredible turn for U.S.-China tensions because now you don't need to be in the U.S.
or China to be affected, any country in between the two largest economies in the world are now affected, because anybody with a Huawei device is
going to feel the pain here in all likelihood, because this device is really going to be a brick according to some analysts.
Let me just put up on the screen exactly what I'm talking about here, because it uses the Android operating system. Of course, the vast majority
of phones are Android. So number one, Huawei users may not be able to upgrade to the latest version of Android. You're stuck in the past.
Number two, cut off from apps and services like Google Maps, Gmail, and YouTube. Imagine any millennial wanting a phone without YouTube.
SOARES: I don't know what my son will do without YouTube.
BURKE: And number three, frozen out from apps like ride hailing services and food delivery apps because they use Google Maps. So if that service is
cut off, even if you have a Huawei phone that is functional, you can plug it in, and you can talk on it. If you can't find out where your Uber
driver is, or where the Uber Eats guy is, why do you want to use a phone like that? These are all potential problems for any Huawei user.
SOARES: Okay, what does that mean for Huawei, because as you clearly just pointed out, that's clearly -- it sounds very damaging, indeed? What does
this do to Huawei's business structure -- business model?
BURKE: This is a huge blow for Huawei. Almost half of the company's income comes from these types of consumer devices. And this may be just
the tip of the iceberg. We don't know what Microsoft is going to do, maybe they won't be able to use Windows on their laptops, think about their
watches that use Android operating system.
So all of this may be rendered useless. Yes, in China, people don't use these apps and maybe they'll use their own operating system in different
services. But outside of China, all of these apps, this is an entire ecosystem that basically mobile internet is built around.
SOARES: Can something good come out of this because didn't Huawei say for some time that it was working on its own operating system? So perhaps this
is the time to do it.
BURKE: Okay, so they could be more self-reliant, and they're likely going to become on chips, it could make the company stronger in the long term.
And they could build their own services, which could be successful.
But keep in mind, lots of other comes companies like Microsoft and Blackberry have tried and failed. Anytime you see a BlackBerry device
these days, that somebody's using Android because they weren't able to build their own app store to become successful enough that the world wanted
it.
SOARES: I want to get your opinion on this because I was looking at a pretty damning survey on European firms and technology transfers in China.
I want to bring this up for the viewers so they can see.
The E.U. Chamber of Commerce says 20 percent of companies felt compelled to hand over technology in exchange for access to the Chinese market that is
up from 10 percent two years ago.
BURKE: Amazing, except I'm not surprised at all, because I talked to the CEOs all the time of American and U.K. tech firms that are trying to do
business in China. And this is what they tell me all the time.
I mean, think about how crazy it is that Huawei is so desperate to get into the United States, but basically have so many American companies like
Facebook, Twitter, and Google which can't even get into China and companies like Apple have had to comply with these types of rules, like making sure
that all data of Chinese clients is stored in China and that's where people get worried about having to have their systems, their technology, their
patents, and what it means if the Chinese government wants access to it.
[15:05:07] SOARES: And very quickly, it's not a kill switch for Huawei in any sense?
BURKE: It's not a kill switch because the Chinese are very good at thinking long term, that's classic China with the tech companies that I
cover. So without a doubt, they've already been planning for this day. But if they can be successful, well, that's a very big hurdle to overcome
outside of China without Android.
SOARES: Samuel Burke, I have no doubt we'll be talking about this throughout the week. Thank you very much.
Well, Wall Street is feeling the pressure from Huawei fallout as you can expect. U.S. stocks are heading -- if we can bring that up for a lower
exposed, as you can see they are led off -- led by really a tech selloff.
The Dow Jones down half of a percent, S&P almost 1 percent, NASDAQ over one and a half percent. As you can imagine, Tesla, Apple and Qualcomm all
having a pretty rough session. They've had a rough day all day.
Qualcomm down the most as you can see, down more than 6 percent; Apple, over three and a half percent and Tesla almost 4 percent.
Of course, Qualcomm used to be the Huawei supplier until the Chinese tech giant was blacklisted by Washington. And I want to show you these shares
because Sprint and T-Mobile are two of the day's big winners. There are some big winners, some green arrows here.
Sprint surging as much as 22 percent. As you can see T-Mobile down up 3 percent, Sprint up 16 percent, in fact. That is after top U.S. regulator
said he would recommend that multi-billion dollar merger and I have to say both sides seems have made concessions.
Now o want to bring in Mohamed El-Erian, chief economic adviser at Allianz. He joins us now live from New York, a very well-known face here on the
show. Mohamed, very good evening to you. Good to see you.
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: Thank you.
SOARES: If we can start, Mohamed, with the U.S.-China trade talks or trade war. Well, it seems that the talks I think it's clear to say that that
have stalled. But yet the tit-for-tat continues, Mohamed. How worried are you at this stage about this becoming a protracted trade war?
EL-ERIAN: That's the way it's heading right now. Because I think China made a strategic mistake in not realizing that it should do what Mexico and
Canada did last last year, which is diffuse the issue.
Instead, China engage in this tit-for-tat. And today's major news, as Samuel said, is that the U.S. can make life difficult for China, not only
in the U.S., but in third markets.
So we see an intensification and the only way this thing gets resolved is if China makes concessions to the US.
SOARES: But it seems at this point Mohamed that neither side are prepared to make concessions that both sides clearly wanting to show themselves to
be the winners here. So where do we go from this?
EL-ERIAN: So that's correct. But both sides aren't on a level playing field. The U.S. economy is in a better place than China, the U.S. markets
while down are down very little compared to China.
So the is sense in the U.S. is that we can win this war. And I think that that's what China has to realize that the U.S. will continue because it's
no longer, Isa, an issue of just economics. It's now also an issue of national security.
So the longer this continues, the harder it's going to be to resolve.
SOARES: And do you think like Samuel was saying that China is playing the long game? You think that the U.S. can continue playing this game? You
think the economy -- the moment it continues to chug along, but do you think that say in six months or so that might have some sort of impact on
GDP, Mohamed?
EL-ERIAN: So I think it will have an impact. It will have an impact on prices, it will have some impact on GDP. It will have a bigger impact on
markets. The U.S. economy isn't as open to the external world as the market saw. Half of the revenues of the S&P come from the rest of the
world.
So it will have an impact, but it seems so far that the U.S. is willing to tolerate some pain for greater gain. In terms of China and the longer
game, that's normally their game. But remember, they are a developing country in the hardest transition, the middle income transition. They need
the global economy as a tailwind. They don't need it as a headwind.
SOARES: I was listening to Angel Gurria, the Secretary General of the OECD, and he said today that basically, the trade tensions are stalling a
global recovery of continuing to endanger investment and growth. And it seems pretty dramatic to me. But do you agree with this?
EL-ERIAN: So I certainly think that it makes the growth outlook more difficult, especially for small emerging economies. But what's holding
back growth is not just trade.
In Europe, that's paralysis when it comes to pro-growth policies, whether it's Brexit in the U.K., a political transition in Germany, the yellow
vest, so there's a lot more in the way of growth, but certainly these trade tensions are not helping.
[15:10:06] SOARES: Let's switch if we can, Mohamed to oil, the Saudi Oil Minister speaking ahead of the June OPEC meeting basically signaled that it
will maintain output cuts.
How much does this decision of pretty much if I can call it this, kicking the can down the road, have to do with uncertainty on the lost number of
barrels, be it from Venezuela and from Iranian U.S. sanctions, you think?
EL-ERIAN: So you're right, it's all about supply and the old market is looking at lots of uncertainty -- Venezuela, Iran, Libya -- lots of
uncertainty. And when it was hoping that OPEC would reduce some of the cuts that they've taken, i.e. increase output, but it seems that OPEC
believes they can keep oil prices here.
Now we need to see what Russia -- how Russia is going to react. That's going to be really important. But my sense is that they're going to stick
to what they are producing now and supply is going to remain an issue.
SOARES: Mohamed El-Erian, always fascinating having you on the show. Thank you so much. We've covered so much ground, but I could speak to you
for the entire show. Thank you Mohamed. Good to see.
EL-ERIAN: Thank you.
SOARES: Now Donald Trump is hitting out at the "New York Times" after the newspaper reported that Deutsche Bank employees flagged concerns over
transactions connected to the President and his son-in-law, Jared Kushner.
Now in a series of tweets, President Trump said he has so much cash, he doesn't need banks, you can see there. But if you did, Deutsche Bank, as
you can see in your screen would be there.
The reporter who wrote the story, financial editor of the "New York Times," David Enrich, joins me now. David, thank you very much for taking the time
to speak to us here on CNN. Let's take our viewers back if we can.
You interviewed and correct me if I'm wrong here, David, you interviewed five current and former bank employees. When you spoke to them, what did
they tell you? What did you uncover?
DAVID ENRICH, FINANCIAL EDITOR, "NEW YORK TIMES": Well, a number of employees I spoke with current and former said that starting in the summer
of 2016, they found quite a few transactions involving Trump and Kushner entities that appear to be suspicious and they did what employees in an
institution do in those scenarios, which is they typed up what's called suspicious activity reports which generally are sent to the United States
government and they proposed that these be sent alerting the government to these suspicious looking transactions.
And Deutsche Bank managers when they reviewed these reports before having them sent to the government decided that the employees' concerns were
unwarranted and that they did not need to be sent. And so the government was never alerted.
SOARES: Okay, but why did they say it was suspicious? Was it the actual nature of the transaction or the fact that the bank just didn't flag it?
Or both?
ENRICH: Well, they were considered suspicious for a variety of reasons. And it's important to emphasize that I don't know all of those reasons.
And in the case of Jared Kushner's company, and Jared Kushner, of course, the presidential son-in-law and senior adviser, his company, which is a big
real estate company, especially in New York was seen, there's money moving from Kushner companies to Russian individuals.
And for obvious reasons, I think that raised some red flags inside Deutsche Bank and not least because Deutsche Bank recently had been -- was being
investigated, actually for having laundered money for Russians.
And so that raised a lot of concerns internally and the employee in question, a woman named Tammy McFadden, flagged these to her superiors in
writing and she was rebuffed. And McFadden is now speaking publicly about this, which is quite unusual and I think quite powerful.
And in other cases involving Trump transactions, it had nothing to do with Tammy McFadden, it was other employees who are highly trained anti-money
laundering specialists at the bank saw money moving from various Trump accounts, including his charitable foundation to overseas accounts.
And that is often a sign of something that is worth investigating further. I don't have the information that allows me or you to really understand in
detail what was actually going on with these transactions. All I know, is that employees who are highly trained in spotting suspicious activity
regarded these transactions as worth reporting to the Federal government.
SOARES: And that might be the case of it, but of course, it doesn't mean, I suspect that transactions were improper, because I believe this is the
case. But correct me if I'm wrong, sometimes banks choose not to file suspicious activity reports even if they find -- because they do their own
research and investigation, if they find it's not warranted, is that right?
ENRICH: Yes, that's right. And these are -- the banks are required to file suspicious activity reports for transactions that raise red flags, but
they have a lot of leeway in making this objective decision over what actually constitutes suspicious activity.
It's not unheard of for banks to overrule their own employees in these reports, and that's what bank -- some of the bank officials are telling me
happened.
[15:15:10] ENRICH: These -- that the concerns were just unwarranted unfounded and they made the right decision not to report these to the
government. That's not the opinion of the employees on the ground who were involved in this who say their impression was that the bank chose to
basically quash these reports because they're trying to maintain a very lucrative relationship with Trump and Kushner.
And so I don't know the truth of the matter, to be honest with you.
SOARES: Let me ask you very quickly, you're talking about the relationship. This is not the first time that Deutsche Bank has been
connected to President Trump. You were writing about that very relationship. What strikes you is odd? What stands out to you, David?
ENRICH: Well, this is a relationship between Trump and Deutsche Bank that dates back about 20 years. Over the past two decades, Deutsche Bank has
been virtually the only mainstream financial institution willing to consistently do business with Donald Trump. It's made over two and a half
billion dollars of loans to him over that period and he currently has more than $300 million to the bank, which makes Deutsche Bank by far his biggest
creditor.
And the relationship over the years has been marked by difficulty and Trump twice has defaulted on loans that came through Deutsche Bank. And twice
the bank has vowed never to do business with him again and yet the relationship has persisted.
And now we're seeing a whole another chapter to this, which is that employees inside the bank were raising really serious concerns about some
of the activity that was going on in the Trump and Kushner accounts and yet the bank for right or wrong, chose to do nothing.
SOARES: Dan Enrich there. Thank you very much. Appreciate you taking the time to speak to us here on CNN.
ENRICH: My pleasure.
SOARES: Now Deutsche Bank has rejected the claims made in that "New York Times" report. In a statement, a spokesman said the following, "At no time
was an investigator prevented from escalating activities identified as potentially suspicious. Furthermore, the suggestion that anyone was
reassigned or fired in an effort to quash concerns relating to any client is categorically false."
And the Trump and Kushner organizations have also responded. A spokeswoman for the Trump Organization said they have no knowledge of flagged Deutsche
Bank transaction. The group currently holds no account with the lender. While a spokeswoman for the Kushner company said the allegations were
completely made up and totally false.
Now, Ford is cutting cost by cutting hundreds of jobs. We will have a live report outside the car makers' world headquarters. And why one class of
college graduates had more to celebrate than most this weekend. A billionaire's generous gift. That's coming up. Do stay right here at
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[15:20:21] SOARES: Welcome back to QMB. Now shares of Ford are lower. The auto giant is cutting about 10 percent of its salaried global
workforce, so their stock is down almost half a percent or two tenths of percent or so.
Our Vanessa Yurkevich is at headquarters, Ford headquarters in Dearborn, Michigan. Vanessa, talks to us about these cuts. From what I understand,
these are mainly white collar jobs. So management positions, how many of these job cuts though, are in North America?
VANESSA YURKEVICH, CNN BUSINESS CORRESPONDENT: That's right, it's about 10 percent in cuts for their global salaried workforce, that's about 7,000
people. Of those cuts, 2,400 will be here in the United States.
The majority is actually going to be overseas in Europe, China and Latin America, and as you mentioned, these are white collar jobs. These are
management positions, not people who are actually making Ford cars. And this was a concern, because GM, Ford's biggest rival here in the U.S.
announced last year that they would be closing five factories here in North America.
So definitely a different way that Ford is sort of attacking their personnel in terms of the way that they're cutting their workforce. It's
going to be white collar, not the people making the actual vehicles.
SOARES: Vanessa, I remember Ford saying last year they would spend roughly $11 billion in terms of reshaping its business. Has it said until now, how
exactly it's going to spend this money?
YURKEVICH: Right. These cuts are part of that, about streamlining their management roles, but they're also going to be investing a lot of their
money into autonomous vehicles and electric vehicles in order to meet consumers where they are.
Another point of interest though, our tariffs, you know, the company said that these cuts had nothing to do with the trade war. But it'll be
interesting to see whether or not the steel and aluminum tariffs have any effect on the company.
The President just last year -- the President of Ford, rather just last year, saying that he projects that the tariffs on steel and aluminum could
cost the company upwards of a billion dollars, Isa.
SOARES: And I'm guessing, Vanessa, they probably face competition from tech companies interested in the likes of Tesla and Alphabet's Waymo. This
is some competition -- more competition from them, too.
YURKEVICH: Yes, that's right. We know that Tesla is a big earner and we know that Tesla is very much moving into the tech forward position on cars,
electric vehicles, autonomous vehicles. And this is what consumers want. They want these types of vehicles. So we know Ford and GM is moving away
from more of the sedans and moving into that electric vehicle market and into that SUV market. And as you mentioned, Tesla is sort of leading the
way on that front -- Isa.
SOARES: what about when it comes to new technology, Vanessa? Are they are they planning -- are they looking in many ways like Tesla -- are they
looking to a world full of self-driving cars? What's their vision if they have outlined their vision?
YURKEVICH: You know, I think that they're moving in that direction. You know, it's unclear right now, whether or not you know, factories like GM
and Ford are going to be dedicating a ton of resources right now. But we know that a lot of this -- a lot of these cuts that are coming to these
U.S. automakers are for that very reason.
They want to be moving forward with technology, obviously keeping up with what consumers want, what they're willing to pay for. So I'm sure in the
next couple of months, years even, we will definitely see companies here in the U.S. very much looking into that direction -- Isa.
SOARES: Vanessa Yurkevich, thank you very much. Thank you. Live there for us outside Ford headquarters.
Now, Tesla shares have been sinking today hitting their lowest level in two and a half years after Webush, Dan Ives slashed his price target in the
stock saying he has major concerns about this company's growth. Here is speaking on "The Express" earlier.
(BEGIN VIDEO CLIP)
DAN IVES, ANALYST, WEDBUSH: Part of the issue here is that now, investors continue -- they are going to need to raise more capital along with I think
numbers that at this point look very steep.
I mean, I think these are what I'll call, you know, Kilimanjaro-like, an uphill battle with these numbers in the second half of the year. That's
the big concern for this year, and that's why the stock continues to be pressured here.
(END VIDEO CLIP)
[15:25:00] SOARES: And still to come right here on QUEST MEANS BUSINESS, winter has finally come for HBO. "Game of Thrones" ended last night.
Later, a spoiler-free look at the landmark series and its impact right around the world. Do stay right here with QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
Hello, I'm Isa Soares. There's more QUEST MEANS BUSINESS in a moment.
When we look at how Huawe's struggles are spilling over to impact other tech giants, and we meet two students whose lives were changed by one
billionaire's big promise, but before that, the headlines this hour.
U.S. President Donald Trump says Iran will have to take the first step if it wants talks to end the current standoff. Meantime, Iran says it has
dramatically increased its capacity for enriching uranium, but it's still in compliance with the international nuclear deal.
Indian exit polls suggesting Narendra Modi could win a second term as Prime Minister. Official results are not expected until Thursday. Mr. Modi's
National Democratic Alliance coalition appears likely to win a clear majority. Voting in the world's largest election ended Sunday.
Lawmakers for former South African President, Jacob Zuma want revived corruption charges against him dropped. They argue that Zuma's lack of
popularity would make a fair trial impossible. Zuma who resigned last year faces 16 charges of fraud, money laundering and racketeering.
Climate change protesters are blocking entrances to oil and gas giant BP's London's headquarters. The Greenpeace activists arrived early in the
morning here in London one day ahead of BP's Annual General Meeting. The police say four have been arrested for aggravated trespass.
Now, the tobacco giant, Philip Morris is pushing for a smoke-free world. It wants more than one billion people stop smoking or to switch to
alternatives like electronic cigarettes if they don't quit. The U.S. government says e-cigarettes also known as vaping increased 78 percent
among high school students from 2017 to 2018. Although the long-term health effects aren't clear, and Philip Morris has received heavy criticism
over its campaign.
But the strategy could be a financial life-line to the company with shares up around -- let's have a look, around 30 percent or so this year. Moira
GilChrist is Director of Scientific Communications at Philip Morris, and she joins me now from New York. Moyer, thank you very much for joining
here on the show. Plenty for us to talk about.
I was reading about your campaign which is I believe is called Unsmoke. Trying to create to get people to move away from smoking. How much more is
this about diversifying because nicotine devices are stealing market- share from traditional cigarettes, let's say?
MOIRA GILCHRIST, DIRECTOR OF SCIENTIFIC COMMUNICATIONS, PHILIP MORRIS INTERNATIONAL: Well, thank you first of all, Lisa, for having me on the
show. So really the Unsmoke campaign is a call to action and it has three very simple messages. If you don't smoke, don't start, if you do smoke,
quit, and if you don't quit, then change.
And we're doing this campaign because there are better alternatives to continue smoking that exist today. And we believe that men and women who
smoke around the world deserve access to them and also information about them.
SOARES: How much though, going back to my first question, Moira, how much of nicotine device is stealing market-share when it comes to traditional
cigarettes? Is that how you're seeing the market shift somewhat?
GILCHRIST: Well, we've been developing and assessing a range of smoke-free alternatives for way more than a decade. So we've anticipated --
SOARES: Yes --
GILCHRIST: This and we've made a deliberate decision to transition and transform our entire business away from cigarettes. And this is something
that we want to happen as quickly as possible.
SOARES: Well, investors clearly like the strategy. The stock I believe was up roughly about 30 percent. And I hope you don't mind me asking that,
saying this with all due respect. Many viewers won't want a tobacco company lecturing them on health, especially where there have been alarming
uptick as we said in our introduction of high school students hooked on smoking. So how do you pass on that message and be -- and really be
trusted for it?
GILCHRIST: Well, let's be clear. These products are only for men and women who otherwise would continue to smoke. I mean, youth should not be
using tobacco or nicotine products at all. And I think we're very clear about that.
But no matter what you think about my company, no matter what you think about the tobacco industry, I think we can all agree that men and women who
otherwise would continue to smoke actually deserve access to these products and deserve to be told about what they are and how different they are to
continuing to smoke.
SOARES: And these products you're talking about, the -- correct me if I -- IQOS, which is --
GILCHRIST: One of them, yes --
SOARES: Which is an acronym for I quit ordinary smoking.
GILCHRIST: In fact, no --
SOARES: They still contain -- no, is that -- is that not -- is that not correct? Go ahead --
GILCHRIST: No, that's an apocryphal tale --
SOARES: Go ahead. What -- I was going to ask you, do they -- do they still -- they contain 95 percent or so, Moira, of fewer toxic compounds
than cigarettes, is that correct?
GILCHRIST: Well, a heated tobacco product, IQOS and we've done a lot of science over the last decade, and all of that science points in the
direction that this is a better product than continuing to smoke cigarettes. And we believe that that's something that smokers should know
about.
SOARES: Right, but it still -- it still has toxic compounds.
GILCHRIST: Absolutely, it's not risk-free. And I think we're --
SOARES: Right --
GILCHRIST: Also clear about that. It's addictive, it contains nicotine, and that's why it's an adult product for men and women who already are
smoking. But we do know that it's a better choice than continuing to use cigarettes.
SOARES: And you've been very open here talking to me about -- that -- saying, this is not -- this is for adults, this is not for teenagers
because your company recently had to hold a campaign because a 21 -- using a 21-year-old influencer. What lesson did you learn? Because the concern
of course is that, that would appeal to teenagers. Isn't it?
GILCHRIST: Well, the first thing, we have standards for marketing and sales of our -- all of our products that go above and beyond what the law
requires. But unfortunately, in this instance, we failed to meet our standards and I'm not proud of that and certainly the company is not proud
of that.
But I am proud of the immediate action that we took on the moment that we discovered that this is -- this had happened. And that was to suspend the
entire program. And I think that shows --
SOARES: Yes --
GILCHRIST: Our commitment to do things in a responsible way.
SOARES: Moira, finally, looking at Philip Morris as a business, do you believe its future is smoke-free? How do you -- how do you see it? Is that
the way it's going?
[15:35:00] GILCHRIST: Absolutely, and we want that to happen as quickly as possible, and we're asking for a conversation to be had amongst smokers,
amongst friends and family of smokers, amongst public health and regulators to define how can we make this happen as quickly as possible.
SOARES: Moira Gilchrist there, fascinating. Thank you very much for taking the time to speak to us here --
GILCHRIST: Thank you --
SOARES: On QUEST MEANS BUSINESS. Now U.S. tech stocks are under pressure after Google's move to partially break with Huawei as you can see there.
Shares down at two-tenth of a percent or so, investors are waiting to see if other tech firms will follow suit.
Our Clare Sebastian is in New York with more. And Clare, tech stocks really feeling the pressure today on the back of Huawei, which really goes
to show what a tangled supply chain is in place. Talk us through those companies bearing the brunt of it today.
CLARE SEBASTIAN, CNN REPORTER: Yes, it's a really -- it's a semiconductor industry that's caught in the middle of all of this. Many U.S. companies
are suppliers to Huawei. I think we can pull up some of their share prices today, the likes of Qualcomm, Broadcom, Micron, Intel.
Qualcomm in particular badly hit the stock price today. They are seen as some of the most exposed to Huawei. But it's not just about direct
business to Huawei which say -- which the company itself said it bought $11 billion worth of products in the U.S. last year. It's about the context
overall, the trade talks has stalled with China.
The U.S. move against Huawei escalates that even further. And the likes of Qualcomm, they do -- they take 67 percent of their revenue from China last
year. Intel, 25 percent. These companies are heavily exposed to China and have a lot to lose if this economic relationship worsens. Still, analysts
over the weekend even wrote that they expect some of these companies to start updating their guidance for the June quarter over the next few weeks
--
SOARES: Wow --
SEBASTIAN: So this is a serious situation for these chip makers.
SOARES: And while some of U.S. companies -- you said some of those chip makers will lose out, I would guess, Clare, that European tech companies
would be preparing to offer alternatives here in Europe.
SEBASTIAN: Yes, absolutely. The ones that we're looking at in particular is Ericsson --
SOARES: Yes --
SEBASTIAN: And Nokia, no longer of course players in the smartphone market --
SOARES: Yes --
SEBASTIAN: But they are big players in terms of wireless technology, direct competitors to Huawei in that. So they very much have been
benefitting today. But it's not just about wireless technology itself, it's about 5G. Really, globally, there are only about four players when it
comes to 5G.
Huawei, ZTE and Ericsson and Nokia. And with Huawei, ZTE effectively shut out of the U.S. under pressure, the U.S. has put pressure on other
countries to do the same, Ericsson and Nokia can really step up here, and I think that's why we're seeing investors piling in today.
SOARES: Yes, when you said no longer the leading mobile, I remember when they were at that time, that's probably revealing too much in my age,
Clare. Before you go, let's talk about the merger between Sprint and T- mobile because that move is a step closer to approval. With both, it seems making concessions -- do we know, looking at the share price now, Sprint is
up 18 percent or so, Clare, T-Mobile up almost what, 3.5 percent. Do we know at this stage what those concessions were?
SEBASTIAN: Yes, it was not a done deal yet, Isa, first of all, I should point out the share prices --
SOARES: Yes --
SEBASTIAN: Have come off --
SOARES: Exactly --
SEBASTIAN: Off the highs of the day, off the back of a report from "Bloomberg" that the DOJ might be leaving against to proving this. So far,
just been recommended --
SOARES: Wow --
SEBASTIAN: By the head of the Federal Communications Commission. They are -- Federal Communications Commission has to approve it, and then the DOJ.
So it's not done yet, but there are key concessions and a couple of smaller ones. Sprint is going to offload one of its smaller prepaid brands.
They're going to freeze prices or commit not to raise them for the next few years.
And they're going to help bring Broadband into less-served rural areas. But the absolute key to understanding this deal is that beyond all of that
is 5G. The bulk of the --
SOARES: Yes --
SEBASTIAN: Release today from the head of the SEC was about these companies committing to build a 5G network that will serve 97 percent of
the U.S. over the next three years, and the context of what we see with Huawei, the U.S. very much trying to stop China becoming a leader in 5G.
That is a significant point about this deal today. This really looks like the U.S. government really trying to accelerate its own push into 5G.
SOARES: Yes, which begs the question when we started talking about how Huawei and the decision by the U.S. and Google, how arbitrary it was in the
first place. Clare Sebastian there, thank you very much, good to see you.
Now, up next, many college graduates get gifts this time of year, but one billionaire investor has given a group of graduates in the U.S. state of
Georgia the gift of a lifetime. I am not kidding you, you have to watch this after a short break.
[15:40:00] (COMMERCIAL BREAK)
SOARES: Welcome back to QUEST MEANS BUSINESS. A strict no-spoiler zone. The watch has indeed ended for "Game of Thrones", a series record of 19.3
million of people tuned for the finale on Sunday. As the show often reminds us all, all men must die and with the end of "GoT", many are
hailing the death of Moana culture. It may well be the last show truly considered appointment viewing. Paul Vercammen has more now from
"HOLLYWOOD VIEW".
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Dracarys.
PAUL VERCAMMEN, CNN CORRESPONDENT (voice-over): The show that reigned over fantasy drama for nearly a decade is finally laying down its sword.
UNIDENTIFIED MALE: The night king is coming.
VERCAMMEN: With the last ever episode of "HBO's" hit series "Game of Thrones", an era of television history closes.
UNIDENTIFIED FEMALE: Stand your ground!
VERCAMMEN: Since its debut in 2011, "Game of Thrones" had shattered records around the globe with dozens of wins. It is "HBO's" most awarded
show and most watched. Drawing viewers from over 200 countries last season, it was seen by more than 32 million in the U.S. alone.
UNIDENTIFIED FEMALE: It's exciting, it's thrilling, it's dangerous and you never know what's going to happen.
VERCAMMEN: It's also become the most licensed program in "HBO" history. Inspiring countless ads, products and accessories from companies looking to
cash in on the massive global hit.
UNIDENTIFIED FEMALE: You know, we're not American, we're not European, we're a world that anybody can belong to.
VERCAMMEN: Over its eight seasons, the show became a cultural phenomenon, parodied in late night comedy.
UNIDENTIFIED MALE: I just need to know, do people hate me?
(LAUGHTER)
VERCAMMEN: Referenced by the U.S. president and his former opponent.
UNIDENTIFIED MALE: Which is closer to reality of life in politics? Which TV show?
HILLARY CLINTON, FORMER SECRETARY OF STATE: Probably "Game of Thrones".
(CHEERS)
VERCAMMEN: And in European politics as well.
UNIDENTIFIED MALE: Today, United Kingdom looks like "Game of Thrones" on steroids.
VERCAMMEN: From politicians to pop stars to the press.
ANDERSON COOPER, CNN: I am obsessed with "Game of Thrones".
VERCAMMEN: "Game of Thrones" funfair knows no bounds.
COOPER: I'm Anderson Cooper, Winter is coming.
VERCAMMEN: "HBO" invested heavily at its epic battle scenes, creative storytelling and stunning visuals, reportedly spending an average $15
million per episode in the final season. The result was a series with a devoted, but often outspoken audience.
Hundreds of thousands of people have signed a petition demanding a remake of the final season, claiming the writing and plot twists were subpar.
BRIAN LOWRY, CNN MEDIA & ENTERTAINMENT WRITER: This is a franchise people are extremely invested in, they've had a long time to think about where
they see the story going.
[15:45:00] And when it goes in a direction that they don't like, they are not shy about expressing as much.
VERCAMMEN: While some may be disappointed, others are downright distraught. One company is offering therapy sessions for those grieving
its end. Although that may not be necessary, "HBO" has already confirmed at least one spin-off series and rumors of others abound.
So the fire, drama and fantasy may continue for years to come. Paul Vercammen, CNN, Hollywood.
(END VIDEOTAPE)
SOARES: Brian Lowry is in Los Angeles with more. And Brian, do no spoilers, please, because many European viewers haven't seen the finale
including myself. After the show, I shall be going home to watch it. We just learned that 19. 3 million people watched the finale. Your thoughts,
how well received was it, do you think?
LOWRY: Well, I think the finale, the reaction was very mixed as were -- was the season in general in a lot of ways. By crunching the show into six
episodes, even though several of them ran well over an hour --
SOARES: Yes --
LOWRY: There was a sense in a lot of circles that they raced through plot. And I think that did end up causing a lot of people to complain as well as
some of the flourishes involving some characters which have built up to the finale. But you know, this was an enormous franchise and obviously those
final numbers merely reinforce that.
SOARES: Yes, and then -- and I have heard even colleagues telling me, you know, the writing has been subpar, especially in the last couple of
episodes. People have really had the time, as Paul Vercammen sent his piece, to really think about these characters.
The kind of character development and expectations as well of what was coming. With some even wanting a different -- even a different end to
scenes, wanting a different retake, didn't they?
LOWRY: They did. This was really -- in a lot of ways, this mirrors what happened with "Star Wars: The Last Jedi" --
SOARES: Yes --
LOWRY: Which is that people get very invested in these franchises, and they have a lot of time to think about it. They have a lot of time --
SOARES: Yes --
LOWRY: To think about scenarios that they think that it will follow. And when it doesn't go the way they expect it to, they often have a tendency to
be disappointed. Some people are just disappointed and moved on. Some people are disappointed and they go straight to Twitter to vent and lash
out --
SOARES: Yes, and very quickly, is this the end -- is this the last appointment do you think in terms of mega series?
LOWRY: I don't. There will be more appointment --
SOARES: OK --
LOWRY: Viewing. I think the marketplace is getting much more fragmented. That's true. I think these kinds of shows are going to be rarer, they're
going to be fewer and farer between. But we'll still have communal viewing experiences. They're just -- you know, you can go five, six years between
finding something that connects like this and finding another one.
SOARES: Thanks very much, Brian Lowry there from L.A., thank you, I look forward to seeing it today.
LOWRY: Thank you.
SOARES: Thank you. Now if you're just joining, we have some breaking news to bring you. Former White House counsel Don McGahn will not appear before
the U.S. House Judiciary Committee on Tuesday. He is considered one of the most important eyewitnesses in the probe into obstruction of justice in the
Russia investigation by President Donald Trump.
The White House is blocking his testimony, that's according to a letter sent by the White House to Judiciary Chairman Jerry Nadler. So White House
blocking McGahn's testimony on Capitol Hill. It's a story we'll keep on top of as more develops in that breaking news. Of course, we shall bring
it to you here on QUEST MEANS BUSINESS.
Now, a story that we were talking to you about was coming. Surprise graduation gift that delighted students right around the world. We'll tell
you what that is when we come back. Do stay right here with QUEST MEANS BUSINESS.
[15:50:00] (COMMERCIAL BREAK)
SOARES: Welcome back. Now, they are the graduating class of one of America's elite historically black colleges about to enter the workforce
and start paying off their college debt. American students now own more than a trillion and a half dollars in loan.
So just imagine the thrill felt this weekend at Morehouse College in Atlanta when the class of 2019 got a graduating gift beyond their wildest
dream from billionaire Robert F. Smith who said he'll pay their student loans. Take a listen.
(BEGIN VIDEO CLIP)
ROBERT SMITH, INVESTOR: On behalf of the eight generations of my family who have been in this country, we're going to put a little fuel in your
bus. And my family is making a grant to eliminate their student loans.
(CHEERS)
(END VIDEO CLIP)
SOARES: Well, to get a better idea of what this exceptionally, generous gesture means, one Morehouse graduate Ernest Holmes joins me now from
Atlanta. Ernest, thank you very much for joining us here on CNN.
ERNEST HOLMES, MOREHOUSE COLLEGE GRADUATE: Thanks for having me --
SOARES: When Robert Smith announced it, we just played out a snippet of it. Did that hit you straight away? Did you understand what it actually
meant?
HOLMES: You know, Atlanta is known as "Hotlanta", so we're sitting there in that heat and we're listening to his words, I mean, we all hear it, but
we had no idea what he really said. So it took like maybe five seconds and then the entire class stood up, started cheering, crying, hugging. And
then we actually all started cheering MVP because we were just so happy. Like we're still stunned to this day.
SOARES: Well, I'm not surprised, Ernest, because you know, just graduating is a huge moment of celebration and congratulations, by the way.
HOLMES: Thank you very much.
SOARES: And this was probably really the icing on the cake. Was it not?
HOLMES: You have no idea. Like, my parents can't stop crying, I know my friends' parents can't stop crying. This is a gift that no one expected.
Like I fortunately, many of us had a lot of scholarships, so we had $10,000 of debt, but I had brothers with hundreds of thousands in debt because
Morehouse College costs about $50,000 a year. So this is truly a blessing --
SOARES: Wow, so $50,000 a year, and how much did you have in debt, Ernest, just to get a sense of --
HOLMES: Ten thousand.
SOARES: Ten thousand, and give me a sense of how some of your friends -- university friends, how indebted were they?
HOLMES: On average is around $50,000 to $60,000. So I was --
SOARES: Wow --
HOLMES: On the lower end of that --
SOARES: Stunning, yes --
HOLMES: I have some friends with like $120,000, $130,000. So like, this is something that's like literally life-changing. And --
SOARES: Absolutely.
HOLMES: Robert Smith was talking about paying it forward. So I actually want to do something real quick. I'm actually going to challenge the rest
of my class, so I want to start paying it forward as well. So we're going to start by --
SOARES: Kudos to you, yes --
HOLMES: We're going to start by making a book scholarship for the class of 2023 of Morehouse College. And I'm challenging each of my brothers to add
in$100. So that would come out to a total of around $40,000.
SOARES: That's wonderful. That really is that it's paying it forward and you're doing it. Good deeds do go around, and I think that's exactly the
message for everyone. But I want to ask you this, Ernest. This is a huge burden that has been lifted. How does this change your career path? If you
hadn't had this burden lifted, what would you be doing? What would you need to consider?
[15:55:00] HOLMES: I mean, financial burdens are always something that you really need to sit down and think about and really plan out in order to
become successful through them. I think this is going to allow opportunities for students to give back in ways that they couldn't before.
Now that we are going to be $30,000, $40,000, $50,000 without debt, we can add this money to various of other opportunities afford graduate school,
afford going to different countries and to actually really make a difference in the world.
SOARES: Yes, and you probably would have time -- you don't -- you know, you can have time to actually look for a job or continue your degree or
perhaps, you have time to get on the property ladder. This gives you --
HOLMES: Exactly --
SOARES: More breathing room, does it not?
HOLMES: It definitely does. But that's why not only do we want to better ourselves and the people around us, but we definitely want to better the
students coming after us. So we definitely want to make sure that we're pouring back in just like my brother Robert Smith said, make sure we're
giving back to our community.
SOARES: Ernest, thank you very much. It was a wonderful deed, of course, and I think that you're an incredible role model. Thank you very much and
congratulations --
HOLMES: Thank you, thank you very much --
SOARES: Importantly, thank you for being here. Now, there are just moments in fact away from the -- left on the trading day on Wall Street.
We'll have the final numbers of course and the closing bell right after this.
(COMMERCIAL BREAK)
SOARES: And let me bring the last few minutes of trade on Wall Street. They're bringing the big board down as you can see, expected to finish in
the red, down almost three-tenth of a percent. U.S. stocks really coming under pressure right throughout the day as Washington ratcheted up trade
tensions with China.
In terms of the biggest losers, we saw the likes of Apple, the likes of Intel and Microsoft all falling. Look at that. Some of the main losers on
the day, tech sector really selling off, of course feeling the uncertainty off the white -- after the Trump administration White House blacklisted
Chinese giant Huawei, the largest -- the world's largest telecom's equipment maker.
This of course is all because of the U.S.-China tit for tat trade war. Speaking to Mohamed El-Erian here today on the show, he's saying that the
U.S. has the most -- China has the most to lose and will play the long game. And that does it for me, that's QUEST MEANS BUSINESS, I'm Isa Soares
in London, and the news continues here on CNN. I'll leave you with the closing bell.
(BELL RINGING)
END
END
