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Santander Expands Into U.K.; Wall Street Earnings in Spotlight

Aired January 11, 2010 - 14:00:00   ET


MAX FOSTER, HOST, QUEST MEANS BUSINESS: Banking on a change. Santander brings a new look to the British High Street.

Wall Street put earnings in the spotlight. Will it be boom or bust, though, in 2010?

And an Internet that doesn't cross the earth: The head of Alcatel- Lucent tells the show, computing has to stop sucking up energy.

I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.

Good evening to you.

Now, if you live in the U.K., get used to this logo. Soon, it will be everywhere. Some of the oldest names in British banking are disappearing, to be replaced by the name Santander. The Spanish bank has accumulated 1,300 U.K. branches by taking over a number of second-tier lenders.

Formula One racing star, Luis Hamilton is the figure head for a $50 million rebranding campaign. The head of Santander in the U.K. has been speaking about the changes.


ANTONIO HORTA-OSORIO, CHIEF EXEC., SANTANDER, UK: The competition is fierce, and it will get tougher. And the economic conditions are tough and will continue to be so.

However, we start in a strong position. The rebranding to Santander marks the culmination of the first phase of our transformation program. Today we start the next phase. In addition to a new name, and giving our customers access to 1,000 branches, and 1,300 branches later on in the year as we rebrand Alliance & Leicester, this we see as rewarding our 25 million customers and giving them a compelling reason to do more business with us.


FOSTER: Now, Santander is one of the few European banks to have come through the credit crunch relatively unscathed. Alison Brittain is the bank's head of retail, here in the U.K., I put it to her that Santander is cashing in on it's good fortune.


ALISON BRITTAIN, BANCO SANTANDER: It has been a safe haven for people's money. You are absolutely right. And I think it has speeded up the process. What has also speeded up the process, is that we have three brands now in the U.K. And what we want to be able to present in the U.K. is one face to those customers, so that they know they access us through any of the outlets that we have. So, having 1,300 branches on the High Street, that is four times as many as Alliance & Leicester had.

FOSTER: But what you've also done -

BRITTAIN: And they are all now accessible.

FOSTER: Yes, but what you have also done is had three competing banks now taken under one umbrella, and they are not going to be competing anymore. So, you are taking away competition on High Street. You are not actually introducing competition.

BRITTAIN: Do you know, I think there is a different way of looking at that. And you would expect me to say this wouldn't you?

FOSTER: Yes, interesting.

BRITTAIN: But in terms of challenging in the U.K. and being a challenger or our own (ph) in the U.K., what you are really talking about is challenging the big incumbents, aren't you? And the really tiny organizations probably don't challenge those incumbents quite as effectively as they could.

Now, what we have and we do consider ourselves a challenger brand in the U.K., is now all of the strength of a global business, a global retail bank, strong and secure. But with this idea that we have some reach, we have coverage f 1,300 branches so we can get to customers. But absolute imperative to challenge the status quo in the U.K. banking. So, I think that is great for the High Street.

We are going to offer customers things that other incumbent banks will not be able to offer and challenge the status quo that way. Which is far more effective than three small entities trying to compete with each other.

FOSTER: The other impact is where there are High Streets, where you have now three branches, where you would have had one in the past, you are promising to keep all three open?

BRITTAIN: That's right.

FOSTER: But what business sense is that? Surely you'd only keep one open?

BRITTAIN: Well, what we have is-take a High Street, take a -where do you live?

FOSTER: Well, where do I live? In Barkshire (ph), near Redding

BRITTAIN: OK. So, if you took Redding then, and let's say we have three branches, one of each brand in Redding. We might even have four. And what we have done an analysis of is, how many customers do we have? How many transactions do they do? How many sales and service calls do they make upon us? What is our square footage in that town? How many tills do you need? How many sales points? How many conversation points? How many advice centers do you need? And what we found is we need all of the branches. So, we need that number. Our issue in Abbey, we needed to grow. We had to have more branches through which our customers could transact.

So we found we need actually, probably, our growth strategy we'd have more than 1,300 long term. So, those branches will all turn over to Santander, and they will operate on the High Street. And customers will choose which outlet is the most convenient for them to visit.

FOSTER: OK, finally, you've actually got an investment banking side to your business or Santander has, I know it is not your department.

BRITTAIN: Very small.

FOSTER: It's small but it is so incredibly well. And your side of the business has benefited from that. So, it is not necessarily that the consumer side is much stronger than all the other banks, it is that you have actually manage to juggle it quite well.

BRITTAIN: Yes, I think our results, if you look at our U.K. results, our retail results, as a stand-alone basis, far better than our peer group. The peer group is. So, a significant revenue uplift, year on year, and extremely efficient operation. We are now the most efficient bank in the U.K. And of course that is important when you want to offer the best products to customers.


FOSTER: Alison Brittain, there, of Santander.

Well, this rebranding exercise stamps the name of a Spanish port all over the British High Street. Santander was founded in 1857, in the town it is now named after. And grew to become the largest bank in the Euro Zone by the end of 2008. Al Goodman takes a look now at how Santander made its name.


AL GOODMAN, CNN INT'L. CORRESPONDENT (voice over): Spain's Banco Santander Chairman Emilio Botin bringing a new banking language to London.

Introducing the first bank named Santander in the United Kingdom, but not the last, Santander is putting its name onto more than 1,000 offices of the storied Abbey and Bradford & Bingley Banks which it bought in recent years.

EMILIO BOTIN, CHAIRMAN, BANCO SANTANDER (through translator): We've never done a rebranding change so important and so quickly and efficiently as what we are seeing now. Santander's brand is already on the McLaren Formula One team, whose star is British driver Lewis Hamilton.

BOTIN: We'll see you soon.


GOODMAN: No wonder he showed up. Hamilton also stars in a new Santander ad for the British market. The TV commercial especially pushes the name.

IGNACIO CANTOS-FIGUEROLA, ATLAS CAPITAL (through translator): I think Botin wants to keep Santander as his premier brand because it is the name his family made about four generations ago.

GOODMAN: The bank's official headquarters are still in Spain's northern port of Santander, where it started 150 years ago. But the operational center is this sprawling campus in Madrid. From here the bank pushed its way to the top tier of global banking. It started by dominating the home Spanish market. Then bought its way into Latin America, where it is the biggest bank, branding everything Santander. Next came the push into Britain and the United States, with Chairman Botin as the driving force.

DAVID BUIK, BGC PARTNERS: They have been on the acquisitive trail now, for a period of about 10 to 12 years. And this wouldn't have been done without some serious soul searching and very, very major investigation. I don't think he's a man who likes to throw away his money.

GOODMAN (On camera): Analysts say Santander's formula is focusing on retail and commercial banking, the old-fashioned way, taking deposits from customers and making loans and staying away from exotic products.

(Voice over): A Santander unit lost $3 billion in the Bernard Madoff Ponzi scheme. But Santander offered compensation to its private clients. And thanks to cash reserves has weathered the economic crisis. The next frontier? Analysts say China, India, or Eastern Europe. More room, perhaps, for Santander's big name. Al Goodman, CNN, Madrid.


FOSTER: Let's join Jim now, or Jim can join us, because you've been watching the British High Street change unrecognizably, really, over the years.

JIM BOULDEN, CNN INT'L. CORRESPONDENT: Yes, I've lived here only 20 years, Max, and I feel nostalgic for some of these missing names. You would know a lot of these. But this is to remind ourselves some of the names that have disappeared inside of Santander over the years.

Bradford & Bingley, which is actually named after two northern towns, Bradford and Bingley. And Abbey, believe it or not, started in London, it is Abbey Road, as well, just like the Beatles, which I didn't realize, then, Alliance & Leicester.

But inside of all of these, as well, because these have all been merging over the last sort of 60 to 70 years. There are some 60 building societies that used to be here in the U.K. that -

FOSTER: We should explain a building society for people who don't know that much about it.

BOULDEN: Yes, these started in parallel with banks, where banks are owned by the shareholders, building societies are owned by the people who put their money into them. Many of them started in the north, many of them were there, Victorian times, or as early 20th century, for people who couldn't necessarily get a loan anywhere else.

And they were mutualized, in the `90s a lot of them demutualized. They went to that Russian - a lot of people like Halifax, they went and got the money from a lot of shareholders so they could become -you know, with shares, under the markets. And then they got absorbed.

Others, let's look at some of the others that got absorbed as well. We might remember Cheltenham & Gloucester, there are some 25 building societies in there. And Cheltenham & Gloucester is now owned by Lloyd's. Of course, Lloyd's one of the banks that got itself into a lot of trouble last year. So you can see that one got absorbed there. But also, Halifax, this was one of the biggies. It used to be a massive building society. And I was one of the many people who made money out of it, when it went to the stock, because they gave you stocks. That was taken over by the Bank of Scotland, and H. Pas, as we know, also has been in some trouble.

Another biggie was Woolwich and that was bought by Barclays bank. You can still get a Woolwich mortgage, Max. So if you are feeling nostalgic. Barclays still calls some of its mortgages Woolwich, but it is part of -



FOSTER: The classic one, of course, was Northern Rock. That really epitomizes the financial crisis with Brits.


FOSTER: So what is the -how does that stand now? It does still exist?

BOULDEN: Yes, well, if people can remember it. We had a run on the bank. I mean, people were queuing in lines, you know, in 2007. It was unprecedented. That was an old building society. A lot of people didn't want it to become a bank. But it became a bank and had shares and then it got in trouble. Still state-owned, still 100 percent owned by the government. A good bank, if you will, and a bad bank. A lot of people wondering what is going to happen to the good bank? Who is going to buy that? Well, there are rumors that Virgin wanting to buy that. So, we may see it get a whole other change with all those.

And all the Royal Bank of Scotland branches that have to sold. A lot of talk about some 300 branches, this week, starting to see if RBS can get some interest in those branches. So we could see, possibly Virgin, possibly Santander, some people say. They might even be going for more branches, if you can believe it. And so we will see the whole face of the High Street, I think, here in the next two years, in the U.K., the banking changing once again.

FOSTER: At least the branches are still there, though, we still bank branches to go to. That was the fear at one point, wasn't it?


FOSTER: Jim, thank you so much.

Let's have a look at the markets then. The European markets, stock markets, ended the day just about unchanged, actually. Share in the financial sector lost a little ground, ahead of the U.S. earning season. In the Netherlands, the giant brewer Heineken was the biggest gainer. It's shares rose 3.25 percent after it struck a deal to buy the beer operations of Mexico's Femza (ph) for more than $7.5 billion. Now they all-share deal will give Heineken control of Femza's big export branch, actually including Sol (ph). The deal is expected to go through in the second quarter of this year.

Let's have a look at the Big Board over on Wall Street. Stocks practically flat, but actually up slightly; up nearly 18 points. Looking ahead to the fourth quarter results after the bell, aluminum maker, ALCOA will report its earnings, JP Morgan Chase and Intel are also due to unveil earnings later this week. Expecting all of those results for the end of last year, to start impacting the markets. We wait to see what they have in store for us.

But right now we are going to check in with the news headlines. We are going across to Fionnuala, who is in the newsroom.


FOSTER: Now measuring the recovery through the eyes of the people. As a survey suggests optimism is making a comeback. Find out what that tells us about the markets.


FOSTER: Right around the world there are people who are gradually feeling more upbeat about the months ahead. And that is the conclusion of a new survey on consumer perceptions and intentions. After polling 17,000 people in 29 countries, market researchers at Nielsen say their confidence, their consumer confidence index climbed 5 points in the second half of 2009. Although, it rose just one point in the last quarter.

Sentiment is improving fastest in countries that investors categorize as emerging markets. People in Indonesia were rated the most optimistic, for example. Of the 10 most upbeat markets, eight were in Asia, in fact. But even there it is a mixed picture. Confidence was lowest in South Korea and Japan.

James Russo is the vice president of Global Consumer Insights at the Nielsen company. He joins me now, live from New York.

Thanks so much for joining us, Mr. Russo. What sort of really jumped out of this research for you? What is the one message that you really picked up on?

JAMES RUSSO, THE NIELSEN COMPANY: Well, I think it is fascinating, really. You know what we are seeing, globally, is a very significant change, not only in the economic landscape, but in the consumer landscape. And the Nielsen Global Consumer Confidence Survey is clearly illustrating that, you know, while we have seen a bottom in the second quarter of 2009, that to your point, Asia is leading out of the recovery. But we also see parts of Western Europe coming out of the recession, slowly.

But we are also seeing areas that are lagging as well, notably in North America, specifically, in the United States.

But we do see that recovery starting to emerge. The beginning of consumer spending more on discretionary items, specifically in the emerging markets of China, Brazil and Russia. But we are watching several issues very closely as we look to 2010.

FOSTER: Yes, what reasons are they typically giving for their confidence?

RUSSO: A lot of the reasons that we are seeing is overall improvements in economic conditions. You know as we look at consumer sentiment, you can see that the economic data points, China, India, Indonesia, Brazil, Australia, are improving as well. So, sentiment, perhaps more than we have ever seen before, is closely aligned to sales, therefore economic conditions. So we see an overall improvement, we see consumers becoming less concerned, if you will, of jobs security and the labor market, which we know has been a very significant issue.

Even areas, such as Spain, where the unemployment rate is 19 percent, we saw the consumer confidence measure start to tick up.

FOSTER: A big concern is that people may be getting a bit ahead of themselves. But if you look at figures, actually, we are some way off a proper recovery. And we don't really want people jumping in and getting in lots of debt and spending. When they could possibly, some people say, be a double dip recession, which could hit us this year.

RUSSO: Well it is a good point. I think that does need clarification. When we see the results of the consumer confidence survey increasing, as it has, it is moderate, it is measured. And that gives you a very good sense of how this recovery is unfolding as well. You know suffice it to say, China, parts of Asia, are increasing, are improving at a more rapid pace. But there is a high degree of uncertainty, there is a high degree of concern, which is why Nielsen is really following the consumer very closely as we understand what they watch, globally, and what they are buying globally.

FOSTER: OK, James Russo, of Nielsen. Thank you so much for joining us, from New York.

Now, the bank bonus bonanza, kicks off this week on Wall Street in New York. A big financial firms will have to say just how much their top talent are taking home. A live report from the city after this.


FOSTER: Now, the U.S. markets are struggling to find a direction this session. Immediately after trading ends this Monday, the starting pistol is fired off on the U.S. fourth quarter earnings season. Susan Lisovicz is keeping an eye on all of the market action for us. And she joins us now live from New York.

What are you expecting, Susan?

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Well, we are expecting things to be a whole lot better, Max. And one of the reasons why is the fourth quarter in '09 was so much better than the fourth quarter of '08. Really when the recession, I think, kicked into high gear. At least that is when we all knew a crisis was escalating when Lehman failed.

And, you know, the quarterly earnings for the fourth quarter of '08 were off 6 7 percent on average, for companies in the S&P 500. So, the comparison is so easy. The folks at Thomson Reuters say that they are expecting growth of nearly 200 percent for the fourth quarter of '09. A lot of that is the easy comps. But, you know, there is also aggressive cost cutting and some improvement overall. But that is a bit tougher, unfortunately, to measure and to see at this point, Max.

FOSTER: We have had a few qualified voices suggesting that we could get this double-dip recession, which will hit us this year. Are investors thinking about that, or are they feeling pretty upbeat? Because the figures for overall, last year, were amazing weren't they?

LISOVICZ: That is right. I mean, we have been seeing, you know, tremendous improvement in corporate America. But unfortunately it has come because of massive cost cutting and that is lay offs by the tens of thousands in some cases, for a single company. And you know, ALCOA, who we are going to hear from, shortly, ALCOA is laid of thousands of people. It will benefit from a boom in commodity prices, undoubtedly. But you know there is concern, the bar is raised. No question about it for this year, Max.

And there are concerns about what is going to happen when the punch bowl, if you will, is taken away. Cash for Clunkers helped the auto industry. Foreclosures is helping the housing industry. The Federal Reserve is helping the financial industry and keeping a lid on mortgage rates by some of its extraordinary measures. This stuff is going to be going away. What is going to happen? There are some, there are some very noted economists who say that look to the history for the answer. And that is in 1937, when FDR said, you know what, the recession is over the crisis is over. We can remove some of these programs. The economy tanked. And many historians will say it was only the Second World War that saved it. So, there are concerns about what is going to happen when the stimulus is removed. Nonetheless, it doesn't discount the importance of these quarterly earnings. No question about it. We'll hear from ALCOA today. We'll hear from Intel and JP Morgan later this week. And a whole lot of financials next week, Max.

FOSTER: Keep across it, thank you so much, Susan, in New York.

Well, quite apart from corporate earnings, this week we'll see major U.S. financial firms revealing just how much they are doling out in annual bonuses. People in the states already getting ready to grab their pitch forks in protest as well. Maggie Lake joins us now, also from New York.

Hi, Maggie.

MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Hi, Max. That is quite an image, but I'm afraid it might not be far off the mark. I want to read you one headline from a blog and this really sort of sums it up: "Wall Street Bonuses Just Sickening or Truly Revolting?"

There is a lot of anger already building about these numbers that we expect to be really, really big, close to records. And the Obama administration is right in there. They are one of the first jumping out and criticizing. Christina Romer, the head economists for the Obama administration had this to say to our own John King, on the weekend.


CHRISTINA ROMER, COUNCIL OF ECONOMIC ADVISERS: You would certainly think that the financial institutions that are now doing a little bit better would have some sense. And this big bonus season, of course, it is going to offend the American people. It offends me.


LAKE: If offends everybody evidently. Now "The Wall Street Journal" is saying that the administration is considering some additional fees on banks to try to recoup some of that bail out money. But they are an awful lot of folks, including some professors who say, listen, the administration, the authorities in Washington missed their opportunity when they had leverage to put restrictions on that bail out money. They don't think anything constructive is going to come of this talk of fees or any kind of claw back. And they say that the taxpayers, the U.S. taxpayers is the one who is going to lose out.


PETER MORICI, PROFESSOR, UNIVERSITY OF MARYLAND: The Federal Reserve lowered interest rates way down to give the banks a break. What that did was lower the rates that were paid on CDs. Many retired folks have lots of certificates of deposits they depend on for interest income in their retirement. So when they were getting 4 and 5 percent, when they came up for renewal, they got 1, 2 and 3 percent. Essentially Ben Bernanke, Timothy Geithner, President Obama, taxed our retirees. They taxed Grandma to pay for Goldman Sachs' bonuses.


LAKE: Oh, dear, and there you have it, Max. And this is the problem. They has been a lot of anger at Wall Street. That anger is starting to spread to include the politicians in Washington, who let it all happen.

FOSTER: Yes, you don't want to work in one of these PR departments in the banks at the moment, do you? They are having to deal with all of this, right now.

What can the banks do? Because a lot of them feel they have to pay the bonuses. But how can they quell this unrest amongst people, many of them still haven't got jobs.

LAKE: Yes, it is a real problem and a lot of people still think, to a certain extent, the banks don't get it. They don't get what a big problem they have. But obviously, it has been hard to miss. First of all, they are trying to pay a lot of that bonus in restricted stock, you know, try to tie it to long term targets. But there are headlines out today that Goldman Sachs, who has really been in the spotlight, is thinking about expanding a program that forces, puts requirements on top executives and managers for charitable giving; that a certain percentage of their pay will have to be directed toward charitable giving. Again, just talk. We'll see if anything comes of it. And we'll see if that is enough to maybe, you know, quell some of the anger.

But, boy, folks here in the U.S., Max, are really, really upset.

FOSTER: Yes, there will be some no matter what (UNINTELLIGIBLE)

Maggie, thank you so much, indeed, for that.

Now, pitting Beijing against Berlin. China is rapid growth is forcing the world to readjust its focus. We'll look at how that is shifting patterns of trade.


FOSTER: Hello there.

I'm Max Foster in London and in for Richard Quest.

And this is QUEST MEANS BUSINESS here on CNN.

Now, economists have now new evidence of China's industrial might. The Asian powerhouse looks poised to become the world's number one exporter. Beijing announced on Sunday that its exports for last month were up nearly 18 percent compared to the previous December. That was the first rise in 14 months.

The news is likely to renew calls for China to allow its currency to strengthen. Beijing has prevented the yuan from appreciating much against the dollar, a policy that's done wonders for its exports.

Germany is the one to beat. For a long time, it's been the world's most powerful exporter. But we'll have to wait to see until it publishes its year end data next month to confirm whether the title has, indeed, gone to China.

Well, German exports rose in November, but they're still well below pre-recession levels.

Overseas demand has been described as the cornerstone of China's economic growth.

Andrew Stevens now looks at what's driving this workshop of the world.


ANDREW STEVENS, CNN CORRESPONDENT (voice-over): In a sense, it was only a matter of time before China took over the mantle. It remains the engine room of the world -- a vast factory floor where just about everything can be pumped out in volume by relatively low paid skilled workers.

Add to that growing trade ties with many newly emerging economies of Asia, Africa and Latin America.

But there's another reason, say many analysts -- a more controversial one. China has pegged its currency, the yuan, firmly to the falling U.S. Dollar. Every time the dollar takes another lurch down, so does the yuan, making Chinese goods ever cheaper and more desirable on the world stage.

This pegged currency policy has angered not only U.S. politicians, but a host of countries around the world, including Asian neighbors like South Korea and Indonesia. Not that China is expected to bow to pressure to change that policy any time soon. Beijing sees exports as a pillar of its economy. And even though it's now the fastest growing big economy in the world, Chinese leaders believe it's still far too early to do anything that could in any way undermine that growth.

Andrew Stevens, CNN, Hong Kong.


FOSTER: Well, China is now the largest auto market in the world. Sales of cars, lorries and other vehicles jumped by a massive 46 percent just over 2009 -- 13.6 million vehicles rolling out of the showrooms and onto the road last year. It's the first time since the days of the Model T Ford that the U.S. hasn't occupied that top spot.

And it's a sign of the difficulty U.S. automakers face selling cars at home. It's a crucial week for the industry, as the Detroit Motor Show gets underway.

Poppy Harlow is at that show for us.

POPPY HARLOW, ANCHOR, CNNMONEY.COM: Well, here in Detroit, it is a new year and, hopefully, a new beginning for the U.S. auto industry. Right behind me you see where they're holding the Detroit Auto Show. A really big focus this year on new technology, on greener vehicles, on hybrids, on electric vehicles.

One of the leaders in that sector here in the U.S. is Ford. Ford CEO Alan Mulally talked to me just a few minutes ago about the importance of small vehicles to his company moving forward and to the American auto industry.

Take a listen.


ALAN MULALLY, CEO, FORD: We want to be part of the solution for energy independence and energy security and sustainability. So we have adopted a point of view that you're going to be able to get any size vehicle you want -- small, medium or large -- but even more importantly, every vehicle size -- no matter what works for you, whether it's an F150 or this fabulous Fusion, you're going to know that you're going to get the very best fuel-efficiency and then let the consumer decide what works for them.


HARLOW: And, of course, one of the companies getting the most attention here right now is General Motors. The struggling automaker, which has now emerged from bankruptcy but is still $50 billion in debt to the U.S. Government -- will they pay U.S. taxpayers back?

I had a chance to ask the CEO of General Motors, Ed Whitacre, that question.


ED WHITACRE, CEO, G.M.: Pay the government loan back. I think the government's investment is well placed and I think they'll make a lot of money. I don't know (INAUDIBLE). It won't be too long.

HARLOW: Looking at plans, are you planning any more plant closures, any more lay-offs?


HARLOW: So some good news there on the staffing front.

WHITACRE: Yes. We're out to sell cars. That's our business. That's what we're going to do. And, you know, closing is not in the picture.


HARLOW: And that is welcome news from G.M., that they are not planning anymore plant closings or major lay-offs -- very welcome news in a city like Detroit, where unemployment is staggeringly high.

But, you know, another very interesting thing about the Auto Show this year is that there are a number of high ranking U.S. lawmakers here, including House Speaker Nancy Pelosi. I just got a chance to catch up with her and I asked her how important Detroit and the auto industry is to lawmakers in this country at this point.

Here's what she said.


REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: This is very important for us because as -- it's fundamental as our manufacturing and technological base, which is essential to our economy and to our national security. It's about job creation. It's about fuel efficiency. And I'm very hopeful and -- and pleased to see the evidence of -- of improved technology because of our legislation.

HARLOW: Are you hopeful the U.S. taxpayer will be paid back?

PELOSI: Oh, I'm sure. We have to have that.


FOSTER: Nancy Pelosi there speaking to our very own Poppy Harlow at the Detroit Motor Show.

Now, going green is not just about the cars that we drive.

What if you could drastically cut your carbon footprint just by changing the way that you communicate?

That's the goal of a new initiative by a host of high technology companies, including the transatlantic telecom's giant, Alcatel-Lucent. I asked CEO Ben Verwaayen how he plans to make it a reality.


BEN VERWAAYEN, CEO, ALCATEL-LUCENT: Internet and a communications network and do it by a factor of a thousand.

FOSTER: So you're reducing energy usage of the Internet by a thousand?

VERWAAYEN: Yes. So what the aim is, in five years time, to develop a total new way of communicating using the components of the Internet and the communications network -- totally different. And do it with the energy consumption that's 1,000 times less than what we do today.

FOSTER: But that seems to suggest a huge problem right now. It seems a huge amount of wastage.

What exactly is going on right now?

VERWAAYEN: But that's in every industry. In every industry (INAUDIBLE)...

FOSTER: But a thousand times?

VERWAAYEN: Yes. But it's -- so theoretically, the Bell aps (ph) research guys looked to it and said what's the theoretical minimum usage that we need to have in order to fuel a big thing around the globe?

And they came with an astonishing 10,000 times.

FOSTER: And they're talking about changing individual components, effectively.

VERWAAYEN: Algorithms, they talk about using very different technology than they have today. Lots of the things that you need to do has to be invented so...

FOSTER: Can you give us a specific example so people can understand, you know, in physical terms, what might be involved?

VERWAAYEN: Yes, well, here is the interesting thing. If I could give you the example in physical terms, it would already have been done. But so you have to believe all the known technologies that we have today, with the fact that you use communications networks for video, for interactivity, for mobile Internet and all the rest of the stuff; plus the fact that every year hundreds of millions of new people come on board because they get, for the first time, the opportunity to use communications; will increase the CO2 emission, because there is more energy needed.

So per user, it's going down. But since there are so many new usages and so many, many new users, the total consumption goes up.

And here is the idea. If you would be radical in making energy consumption of a similar importance as performance as it is today, you can reduce -- and we think in five year's time -- the energy consumption by a factor of 1,000.

FOSTER: It's an incredible ambition.

Is this in some way a response to the politicians' failing and the businesses effectively saying, well, we're just going to crack on what -- whatever the politicians do in their targets, we're going to set our own?

VERWAAYEN: So this is MIT in the U.S. and Stanford and the University of Melbourne and China Mobile and AT&T and Telefonica and a lot of other non-for profit organizations coming together with us and saying we can do this.

It is private industry saying we need to get on with life, set the ambition high and create the army of the willing. That's what we're doing here. Everybody can join. This is not us to be an exclusive club. Everybody can join it. But we need to do this.

FOSTER: And your 1,000 times figure, can you get -- give us an illustration of what that might mean in practice, if you're to achieve it?

VERWAAYEN: So if we do achieve it, it would be similar to getting 50 million cars off the road.


FOSTER: Ben Verwaayen and the future of the technology industry.

Well, someone else says it's next to impossible to forecast what the markets will do next. But Marc Faber is willing to give it a try. Find out what's going up and what could be on its way back down. The investment guru gives us his lowdown on 2010.


FOSTER: And economist and investment guru, Marc Faber, has been going against the grain now for something like 30 years. He proclaims himself a contrarian.

On this week's Biz Clinic, Faber offers views on everything from the dollar to the price of gold and to the markets to watch. You might actually be surprised by which stock market Faber has his eye on.


MARC FABER, ECONOMIST: After the huge gains of 2009, an individual investor, his principal consideration for 2010 is capital preservation -- not to lose any money this year.


BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: The economic information context. (INAUDIBLE) a prescription for a central bank is to lower its short-term (INAUDIBLE).


FABER: To forecast markets is next to impossible, but particularly so if the government intervenes into the markets through monetary and fiscal policies. Then it becomes impossible to say where will the Dow Jones be in a year's time. They are money printing people and they will continue to print money, especially Mr. Bernanke, and that this will obviously lead all the time to depreciation of the value of the U.S. dollar.

Commodities, the industrial ones, could continue to rally until, say, March/April. And that after March/April, we'll have a more meaningful setback, because we have huge returns for a couple -- 150 percent. Oil has gone up from $32 to $80. I mean this will not continue forever.

My view is that people should buy every month some gold.

Now, can the gold price go up from here?


Can it also go down 10, 20 percent?

Yes. Somebody should not buy gold if he cannot swallow a, say, 10, 20 percent decline before a continuation of the up trend.

I think Japan looks interesting in the sense that it's been in a more than 20 years bear market. So technically, it looks, actually, now quite interesting, especially given that I expect the yen to weaken. So a weak yen is actually good for Japanese equity.

I think that emerging economy stock markets are becoming, for my taste, overly popular right now. Now, it doesn't mean that I'm not of the view that longer-term, people shouldn't have 50 percent of the money in emerging markets. I'm just saying for the next three to six months, emerging markets, in my opinion, could be vulnerable to a setback.


FOSTER: There you are, the future of the markets according to one leading investor there.

Let's find out about the future of the weather.

Guillermo is at the Weather Center.

What do you have for us -- Guillermo?

GUILLERMO ARDUINO, CNN METEOROLOGIST: Not good news for many, actually.

The Northern Hemisphere, the same pattern. We're going to see some more snow. Perhaps if we compare the cold with the snow, we'll see more cold than more snow.

But look at Wales, getting significant snowfall. The same in Scotland there to the north. I'm going to take you to other areas where we're expecting some more. If you're watching from Spain, you know that it snowed like crazy in Madrid and that more than 138 flights were canceled today because of the snow and the ice.

Now, look at this section of the southeastern corner of France and into the Piemonte region of Italy, more snow there.

Now if we compare east and west, the east is much worse, especially Germany and Poland and, needless to say, in the Alpine Region here in Northern Italy and Switzerland and into Austria.

But look at the east here. Belarus, then Ukraine, Moldova, Romania, Poland, Scandinavia. So we are going to be dealing with a lot of snow.

Let's take it city by city. London, the chance of snow again for tomorrow. Then Paris also with more snow. Brussels with more snow, so airport delays are likely. Milano and Berlin a little bit more so, so more delays over there. And Frankfurt, Munich, Zurich and Vienna, more snow. Copenhagen, you're dealing with winds, as well. And this is it.

So we are going to be very, very uncomfortable. That is another factor that adds to the delays, of course. This is into the rest of tonight. This low here in the east is pumping the cold air and the snow showers that will continue -- Poland, the Baltics, parts of Belarus and in the Czech Republic, as well. So brace yourselves for that.

The west is doing a little bit better in terms of temperatures. But remember that the wind is going to make that two degree mark feel much colder.

And as we go to the east, the negatives over there -- 16. It sounds like a great number for us in Greece.

Let's see, 40 to 50 below zero, 15 to 25 below zero here. We're talking about the wind chill. So the effect of the wind. So we need to emphasize on that. A minute ago, I went to change my jacket. I went to my car. I had to go through a bridge over here where the winds are, you know, a little bit more intense. Believe me, a nightmare. Unbelievable.

And the cold goes down all the way into Cuba. Gran Piedra here, a record, three degrees; Havana, 12.1. Remember, those houses are not built with the low temperatures in mind, because they never get them. Well, bad news.

What about this?

Minus two in Sarasota, Florida; Miami, one.

Let's see, in fact, what we usually get in Miami. The low at 17. The people woke up at two degrees today. And the low -- the high temperature of the day is gradually going back to normal.

If you are coming to the States,. You're going to see that it is going to be above -- a little bit better here into the Midwest. And as we go to the north, Montana, the Dakotas. And then in the East here, we get the temperatures below average. Florida even worse. There's no way that the air is going to warm up with so much snow on the ground here in North America.

The same can be applied into the northern parts of Europe and Asia, right?

Well, no significant change. C minus five in Montreal for Tuesday. Four in Atlanta with the wind. It's not really nice.

And, on the other side of the break, we have more QUEST MEANS BUSINESS.

You, Asians, are not out of the woods. The cold will continue.

Stay with us.


FOSTER: Let's have a look at the big board in the U.S. in later trade. It's up a bit more than it was before, but pretty much flat. Everyone really looking forward to those fourth quarter results this week, as they start coming in.

After the bell, it will be Alcoa, the aluminum maker, reporting its earnings. But, also, later in the week, we've got JPMorgan Chase and also Intel, all due to unveil their earnings. And people very much wondering how did they do at the end of last year. Positive figures really expected across-the-board, I think it's fair to say. But then they'll be looking for some advice, also, on what's expected this year. Some people being mixed about this year. Some people saying, actually, the financial crisis and the recessionary fears should be over. Not everyone is quite convinced yet.

Now, any business traveler will tell you the flights they take aren't measured only in miles, but also in air miles, a currency you can spend -- and one that seems to drive some people to extreme length, as well.

CNN's Morgan Neill picked up some mileage of his own and got a glimpse into the lives of the frequent fliers.


MORGAN NEILL, CNN HAVANA BUREAU CHIEF (voice-over): It's the journey that counts, not the destination -- the mantra of mileage millionaires getting ready for a one day journey that's set to make them 15,000 miles richer. Fanatical about flying, mad about miles, the Star Alliance Mega Do, organized by members of FlyerTalk, is a mileage run with a bonus.

(on camera): It's now 5:00 in the morning. As you can see, everyone is here, pretty enthusiastic about getting on that flight. And speaking of the flight, take a look at the plane. This is the flight they've chartered -- the plane they've chartered for today. And if you can read down the side, it says, "wir leben fliegen," which is very appropriate in this case. It means, "we love to fly."

(voice-over): You certainly have to love flying to endure this grueling one day itinerary -- Frankfurt-Oslo, Oslo-Toulouse, and then back again to Frankfurt.

Today, the passengers are in charge. And with luxury travel under threat, they've decided to celebrate in style.

(on camera): So we've now completed the first leg of the trip, was -- which was from Frankfurt to Oslo. And if there was any doubt that we've arrived in Norway, well, here you have it -- snow everywhere.

(voice-over): It's famous for its fiords and mountains, but all they will see of Norway is another runway and another lounge. Still, they're not in search of a golden moment, but a platinum card.

DAVID BALKAN, FREQUENT FLYER: Because we travel so much, the extra luxuries, I guess you could call it, of lounges and upgrades to first class or business class was an important element. When you spend, you know, seven or eight trips a month, you -- you like those creature comforts. And as air travel gets more and more disrupted by security checks and this and that, you -- you really have to have that to survive.

NEILL: This is no ordinary mileage run. Airline executives jumped on board the event to find out what their most valued customers have to say.

(on camera): The idea isn't just for passengers to tell the airlines what they'd like to see more of, it's also for the airline to let the passengers know what it's like to be in here. And that's why they're over there.

(voice-over): At Lufthansa's training school, they learn how to serve and then back on board, they take to the trolleys.

11:00 a.m. And it's leg two of the trip.

(on camera): So first we went from Frankfurt to Oslo and now from Oslo to Toulouse. You can see everybody getting off the plane 10,000 miles richer.

ANDY PETERSEN, FOUNDER, FLYERTALK: It's a game to play within the rules, but go by the axiom that he who dies with the most miles wins. I mean we want to collect that stuff. Some people collect rubber bands. Some people collect paper clips. Frankly, we just collect frequent flyer miles so -- and during that process, we also collect our dreams.

NEILL: Today we have gone from Frankfurt to Oslo to Toulouse and now back from Frankfurt. We've heard a lot of arguments about why people have so much passion for traveling, what they'd like to see out of these airlines and what drives them to keep doing this as a hobby, really. And I'll tell you, between us, I don't get it. I think they're nutty.

(voice-over): Morgan Neill, CNN, Frankfurt.


FOSTER: Find out more about what frequent flyer programs mean to airlines on this month's Business Traveler, hosted by Richard, who's got -- must have a few air miles under his belt. Wednesday, 5:30 p.m. in London, 6:30 in Berlin, right here on CNN.

Also, take a look at the Web site. There's all sorts of information on there. I'm looking at it right now -- A few extra articles for you to read as well as watch the show.

We'll have a check on the latest numbers in the U.S. after a short break. We're looking ahead to those fourth quarter results. We're finding out finally what happened last year in terms of results.

Also, a look ahead to 2010.



FOSTER: Let's have a look at the big board a few moments on. Still up something like .26 percent. About the same, up 27 points there. Looking forward to those fourth quarter results.

Alcoa the big one today -- very much seen as a barometer of the global economy, because when the global economy does well, so does Alcoa. It makes aluminum.

JPMorgan Chase and Intel also due later this week.

Also, some concerns about the Venezuelan currency, which actually is affecting some of the consumer product makers in the U.S. Interesting story there.

The story here around Europe at the close, well, shares here ended the day pretty flat. The financial sector lost a little ground ahead of the U.S. earnings season.

In the Netherlands, the brewer Heineken was the biggest gainer there. It was up 3.25 percent after it struck a deal to buy the beer operations of Mexico's Femsa for more than $7.5 billion. The (INAUDIBLE) deal will give Heineken control of Femsa's big export brands, which include Sol.


I'm Max Foster in London in for Richard Quest.

And Christiane -- Christiane Amanpour is up next, after the headlines from the I Desk.