Return to Transcripts main page

QUEST MEANS BUSINESS

Will Cisco Bid for Skype?; Japan's Economic Challenge

Aired August 30, 2010 - 14:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hype for Skype. Millions of us use it, but now Cisco may want to buy it.

Up, up, and away, Japan's yen flies in the face of the central bank's latest economic fix.

And spinning out of control, the black market betting business rocking the world of cricket.

I'm Richard Quest. We start a new week together and I mean business.

Good evening.

With just a click of a button Skype revolutionized the way we communicate around the world. And, tonight, on this program, we're looking at why company that offers so much for free could well be targeted for billions of dollars. The tech rumor mill has been swirling with talk that Cisco System is reportedly trying to get its hands on Skype before the company has an IPO and goes public.

TechCrunch.com says a reliable source has told it Cisco has already made a bid. And it could be in the region of $5 billion. It comes just weeks after Skype filed for an initial public offering, an IPO, in New York. Cisco and Skype have told us they are not commenting on speculation. If the deal happens it could be a healthy marriage of hardware and software leaders. Cisco is the world's biggest Internet network equipment provider. Skype, you probably don't need much of an introduction, it dominates the online telephony market by some large measure.

The Telly (ph) Geography Research says Skype handled 13 percent of all international call minutes last year. Now, if you come and join me over at the library, the high tech library today, you'll see what we are talking about. Now this is the mobile device users. There are 4.6 mobile device users at the moment. And that number is just going to continue to increase. Skype has 590 million users; 125 million are active. Interestingly only about 6 to 7 percent actually pay any money for Skype. Most just make free phone calls. Facebook, with 500 million users now valued at around $33 billion, but of course, owned by private equity and investors, so we don't really know. Although, share of Facebook, the common shares owned by staff and investors are trading at about $76 a share.

This is the interesting play, Gmail. Gmail, through Google, is now introducing a service that directly rivals Skype. You are starting to see how all this comes together. Gmail through its entire orders is now definitely launching attacks. Then you've got MySpace, you've got Friendster. Twitter, of course, @RichardQuest, with $114 million. Yet to work out a suitable method to amortize into profits or a vehicle. Linkin and then you've got Looped. Look at all these, Google Latitudes, and Foursquare. Interestingly, all these are location services; but these location, if you like, social networks in fact have now been integrated into the others. And interestingly the one that-Foursquare-has had a round of refinancing and is generally believed to be beating Gowalla.

So, that is the scenario that we see at the moment. Dean Takahashi writes for technology news Web site, VentureBeat. He joins us now via Skype, funny enough, from Silicon Valley in California.

Dean, straight up question: Do you give credence to the rumor that Cisco is after Skype?

DEAN TAKAHASHI, WRITER, VENTURE BEAT: I think that there may be something happening there. I've heard a similar indication from a source that the TechCrunch story is accurate. And that Cisco really does want to get its hands on the 590 million users that you mentioned. Cisco doesn't- I mean, this is another chapter in the battle of the tech giants. And I think that you know, the Intel McAfee deal was a very strange deal. It is a $7-billion deal right? But this is much more similar to what Cisco is already doing with its Web ex businesses and its Tanberg (ph) Video Conferencing business.

QUEST: Right.

TAKAHASHI: So, it is more of what Cisco needs, it needs lots of users.

QUEST: OK, the question is why now?

TAKAHASHI: As I had mentioned there is this sort of this acquisition frenzy going on right now. And a lot of the companies want to position themselves. Cisco wants to head off the Skype IPO. Because there is a chance that after the IPO that it is going be even more expensive for CISCO to buy.

QUEST: But you see, the model of Skype, I mean, most people don't pay to use it. It is about to come under ferocious opposition from Googlemail, from Gmail and Google, MSN, everybody else is in it. Is the Skype model, as such, still viable?

TAKAHASHI: Skype is still searching for the right business model. I think that is why it has had this sort of tumultuous history behind it; eBay had sold it off, and private investors hold it now, Cisco may want it. Everybody thinks that there is some value in all of the users that Skype has, but exactly how to get that value is the question. Advertising is a possible model. They have talked about game-related services as well.

QUEST: If Cisco is in the market do you imagine that anybody else will come in and have a bit? I'm not suggesting a 3PAR/HP/Dell situation. But is there-which frankly, has now reached extremities-but is it likely that there would be anybody who would stump up 5 bill, because Cisco has got the cash. It can pay it.

TAKAHASHI: I wouldn't be surprised if there are other bidders who put Skype into play. I think Intel has its hands full now with a couple of big acquisitions. There are very few other companies that could afford this kind of deal.

QUEST: Dean, many thanks. We'll talk again-and of course, the moment we get confirmation, or otherwise, you'll be back with us to help us understand this deal. Dean, joining me there from Silicon Valley.

On this whole matter of Skype there was a fascinating article that breaks down exactly who Skype users are, who is paying, and who isn't. It looks at the Skype IPO details. It goes into the regulatory filings. Have a look at it. You can look at it at Twitter.com/RichardQuest. That's where you'll be able to read this article. Twitter.com/RichardQuest, and while you are about it, don't forget join me, follow me, and become part of the QMB community.

The $11 billion question, with the wrong answer. Japan's stimulus measures have failed to curb the soaring yen. We'll talk about that, after the break.

(COMMERCIAL BREAK)

QUEST: The other big talking point in the markets, no magic bullet. Investors didn't take heart from emergency moves by the Bank of Japan, the BOJ, to increase liquidity in the market and to come up with a new lending facility and a stimulus package that will be announced by the ministry of finance, in the recovery of the yen. It is all part of Japan's economic problems.

The Bank of Japan has announced the two basic pillars of the latest regime. The first is a liquidity plan, or program, that will grant more money into the market. Questionable if anybody needs any more money at the moment. The second comes tomorrow when the ministry of finance will announce, the government, will announce it-basically, its formal stimulus package that it hopes is going to put billions of yen into the Japanese economy.

Why they doing it? Very simple. Japan is suffering rather serious problems at the moment. A weak recovery, barely half a percentage of growth in the second quarter. Deflation that seems to be entrenched and getting worse. Japan's been overtaken by China as the second largest economy in the world, depending on your definition. There is also a political crisis at the moment. Prime ministers have been changing fast. And even the current prime minister is under some serious pressure.

And yet, throughout all of this the yen has managed to maintain this extraordinary rise, up some 10 percent against the dollar. The yen even gaining ground today when the BOJ announced its liquidity. The similar sort of thing, unfortunately, cannot be said if you look at the Nikkei. Where we see from the beginning of the year to now, that is roughly a fall of about 14 to 15 percent. But more serious, perhaps, the top part, from that rising-up until May. From May down to here, peak to trough, is a fall of about 20 percent. Now, we need to know why that is all happening. Joining me, as always, to talk about these things, Seijiro Takeshita.

Lovely to have you.

Why the BOJ, why the ministry of finance, why are they all doing it now?

SEIJIRO TAKESHITA, SENIOR STRATEGIST, MIZUHO INT'L.: Well, they've been basically criticized so severely by the Japanese corporates. There has been mounting pressure, almost a threatening pressure that they would avert their capital expenditure away from Japan to external sources.

QUEST: But what is the object of the exercise? Is it to bring down the yen? Because that failed today. Is it to stimulate growth? It is not going to do that. What is the object?

TAKESHITA: Well, those are the nominal rewards, they say, for reasons for doing it. But again this is basic to avert the pressure, for the time being. Basically it is almost like an appetizer to the economic plan that they will be announcing tomorrow. Which, unfortunately, I can see is not going to surprise the market unless they come with more concreteness on, for example, taxation cuts. They have to be concrete for the market to really recognize and to be convinced.

QUEST: But even it they, even with a MRF (ph) stimulus plan, what is the long-term goal? Is it to get inflation back into the economy? Is it to raise growth levels? Because Japan has had growth and still had deflation.

TAKESHITA: Well, let's face it, Richard, we are not going to go back to the growth era of Japan. They have to realize that we are making the transition away from a growth economy into a much more mature economy type of growth, like the Europeans. And they have not done the homework of making that transition right.

Now, our current prime minister was trying to do this, but today, with the political new that is on, I must say that we are probably getting the biggest back step that we have seen in let's say, about half a year.

QUEST: What happened to the prime minister? What happened to the government?

TAKESHITA: It is basically under pressure to basically abide, almost, by Mr. Ozawa. Now, Ozawa and Kan was running one on one, and today, tonight, he is basically pressed that they will go for a troika, which is a threesome. Which means that he is going to revert back to the faction level of the political scene.

QUEST: What the FTO over stating the Mr. Ozawa in its editorial. It was absolutely excoriating about Ozawa as a possible prime minister.

TAKESHITA: Well, I certainly hope that is not the case. I think the probability would be very low. In fact, he is usually encouraged not to be a prime minister. He was threatening. He was showing the sword to be the prime minister, and threatening almost Mr. Kan.

QUEST: So what does he want that Kan is not doing?

TAKESHITA: Well, basically, he would have-he still has the biggest factional power within the DPJ. He wants to sustain his power by utilizing his power appointment (ph), as he did with Mr. Hatoyama.

QUEST: Can the Japanese government continue to put forward multi- billion yen, tens of billions yen, stimulus packages when GDP levels are so high? Because how are they going to finance it-other than by Japanese people?

TAKESHITA: Exactly. This is a long-term problem which Kan, himself, said he will tackle. Again, the biggest answer to this is transition, or more focal point into the Japanese domestic arena. That is really the only way forward. I know it is not a quick solution. But that really is the only way forward.

QUEST: But Kan is the very man who went out and said he was so worried about-and wanting to reverse the debt GDP level?

TAKESHITA: But, the first priority among the Japanese is right now the anxiety about the jobless. This corruption that we're seeing on the Japanese model of growth, and therefore, the most important thing is to sustain employment. In order to do that, he has to revert back into seeking more employment through expanding domestic demand, not necessarily to over rely on exports, because we get all the things that you were mentioning about, exporters being hit by, well, a strong yen, and also a downward trend on the external demand.

QUEST: Finally, I cannot fathom, why is the yen strong, repeatedly strong, and does not buckle under the weight of the economic problems?

TAKESHITA: Well, that is because the Japanese yen is not strong. It is simply because of exclusion process, other currencies are weaker. That is the only factor.

QUEST: It is the old, are you strong? Are you weak? There is always two sides to every story. Good to see you.

Europe wasn't terribly impressed with the BOJ's moves. Stocks ended a bit in the red. Trading was thin. The U.K. markets closed for a bank holiday. One of the session's big decliners was Infineon. The German tech sank more than 3 percent, weighing after Intel agreed to buy its wireless unit. With the U.K. out Forex, of course, is always on the low level. Besides London it is still the world's largest foreign exchange market.

Wall Street stops on the down. And there was interesting numbers on personal income and spending. But the real talking point was President Obama's remarks on the economy. The president spoke in the Rose Garden a short while ago. Alison Kosik is at the New York Stock Exchange.

(DESK BELL CHIMES)

Anybody who had hoped that the president was going to say something robust was disappointed.

ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Yes, you said it. You know, many people say that it was just an underwhelming speech. I mean, what you saw there, Richard, was President Obama come out after, you know, over the summer he said this was a summer of recovery, and pretty much doing what people in politics do. They were sort of deflecting.

And in this case President Obama was, you know, telling the Republicans, go ahead. Let's go ahead and pass this legislation that would give small businesses a boost. I'm talking about tax cuts and tax credits. President Obama looking to small business to hopefully jump start the economy that is really gone into stalling mode. He says that congressional Republicans are holding this particular bill hostage, here's what he had to say.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Just this morning a story showed that small businesses had put hiring and expanding on hold, while waiting for the Senate to act on this bill. Simply put, holding this bill hostage is directly detrimental to our economic growth. So, I ask Senate Republicans to drop the blockade.

(END VIDEO CLIP)

KOSIK: You know, but the overall message here is that nothing concrete came out of his speech, Richard. As you heard, you know, to get the economy moving in the right direction right now. The focus is on small businesses, at least, from the Obama administration, because the fact of the matter is, where small businesses are concerned they do a lot of hiring. And if a lot of people get back to work they are going to go ahead and spend more. And hopefully get the economy moving again, Richard.

QUEST: Alison, give us a bit of guidance as we look to the week. We know we have a very important jobs number on Friday. But we also know it is a long weekend coming up in the U.S. So, all things considered, is this week going to be of interest?

KOSIK: Yes, we have a really busy week. I mean, right now, obviously volume is pretty light here at the stock exchange. That is why we are seeing these big moves here, as far as the Dow industrials, the S&P, and the Nasdaq. But as far as the week goes, we are going to get lots of reports. Consumer confidence, pending home sales, construction spending, but the biggie of course, is the government report on unemployment. That is coming Friday and here is what is expected. Wall Street is expecting a loss of almost 120,000 jobs last month. This is after a loss of 130,000 jobs in July. The unemployment rate, Richard, expected to tick up to 9.6 percent. Obviously not great news for investors, not great news for the Obama administration, Richard.

QUEST: But at this point in the recovery the U.S. economy is still losing jobs. But not at the rate obviously-Alison, you and I will be talking many more times over the course of the week. So we'll see you tomorrow. Many thanks, Alison Kosik is at the New York Stock Exchange.

One of the world's busiest capitals is courting controversy. We'll show you why so much is at stake for New Delhi, as it strives to become that "Future City".

(DESK BELL CHIMES)

(COMMERCIAL BREAK)

QUEST: In just over a month India's capital will host the Commonwealth Games. Some venues aren't finished. India's prime minister is urging organizers to get the construction done. At the same time charities have accused the government of relying on underpaid migrant workers to finish building the major venues.

More than a 1,000 migrants pour into New Delhi everyday. And with the city pushing to be one of the world's great capitals, this evening "Future Cities" is another chance for us to see Delhi's single most important challenge.

(BEGIN VIDEOTAPE)

QUEST (voice over): New Delhi, a city on the fast track to modernity that has become a symbol of India's economic prowess. As it has grown it is a magnet of the country's huge workforce.

More than half a million people migrate here every year. Arriving from rural areas and neighboring states, into the hot, hectic heart of the Indian capital.

(AUDIO DISTORTION)

DUNU ROY, HAZARDS CENTER: a-to urban areas, because that is where work is. That is where water is. That is where electricity is. These people sitting here, electricians, plumbers, carpenters, painters, these are jobs that the city creates. So people will come. There is no doubt about it. They are required for the city.

QUEST: They may be required, but for a city that is already struggling to cope with 17 million people, this massive influx exerts huge pressures on the aging and crumbling infrastructure.

This is the story of Delhi's swelling population and how to cope in the future.

SHEILA DIKSHIT, CHIEF MINISTER, DELHI: It is tough, it is very tough, but there is nothing we can do about it. It is India's capital, so it is everybody's right to come here.

QUEST: Manish Kumar left his family in West Bengal and moved to Delhi two years ago. He was driven by the desire to be a part of new India's rapid but unequally shared economic growth.

He managed to rent a rickshaw, for a $1 a day, ferrying people to and from railway stations, and about town, he earns 150 rupees. That is roughly $3 a day.

MANISH KUMAR, NEW DELHI MIGRANT WORKER (through translator): In my village there were others who had worked in Delhi and returned. They bought farms, some bought houses, opened shops. Looking at them I understood I must also leave and see, and learn. So I thought, let me go to Delhi.

QUEST: As people like Manish arrive here everyday. The housing situation becomes urgent. Just under a third of Delhi's population lives in housing like this. Another 200,000 don't even have that. With the rising flow of immigrants, they live on the streets. As part of the Delhi master plan the government is building new housing to deal with the influx.

DIKSHIT: We are going to build houses for those who are today living in shanties and slum areas. We'll build about 300,000, 400,000 houses. Put them into that. We've worked out a system already about 10, 15,000 have been made.

QUEST: Delhi's chief minister, Sheila Dikshit has been at the helm of this city for more than a decade. It is her job to shape the city's future. The government is relocating residents to designated areas, many on the outskirts of the city. And slum areas have given way to gleaming new stadia, and access routes for the Commonwealth Games, which begin in October.

Nawana, North Delhi, it is a two-hour drive from the city center. Here advocates for the poor say that many people didn't want to move.

ROY: They just were evicted overnight. The bulldozers came and just, you know, went over the houses. I've seen those slums, there is no question of them being better, because there is infrastructure there, there is water, there is sanitation, schools, health dispensaries, transportation, and most important, livelihoods. None of that is available in the country.

QUEST: Designing the Delhi of the future. The chief minister says they are doing all they can to accommodate those who must relocate. There are challenges, still she believes the city is serving the interests of the poor. As Delhi presses ahead with its massive reconstruction and transformation projects, the people just keep coming.

And whether the authorities like it or not this massive migration to the Indian capital makes Delhi truly a future city.

(END VIDEOTAPE)

QUEST: And next week future cities, we start our new series when for the month of September I'm in the city of Cairo, on future cities, the capital of Egypt.

In just a moment after this break. Caught out, Pakistan's most popular sport sits over a huge cloud of controversy tonight. The national cricket team is questioned by an alleged spot betting scandal.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. QUEST MEANS BUSINESS, this is CNN. And here the news always comes first.

(NEWSBREAK)

QUEST: And despite an unexpected delay, officials in Chile still expect to get started today on digging the shoulder-width escape tunnel for 33 trapped miners. The drilling was supposed to start early this morning. There is a power source for the drill which is late arriving from Germany. They had earlier sent out a phone cable so the men could finally speak to their families. Officials say the rescue could take up to four months.

Thousands of people in Southern Pakistan are returning to their homes as water levels recede near Thattah. Emergency crews bolstered levees over the weekend and protected the city from a surge of water from the Indus River. Low lying towns nearby were not so lucky. Some flood survivors waited for help on the roofs of their homes.

Police say a 50-year-old gunman has killed at least six people in an apartment building in Bratislava in Slovakia before continuing the rampage in the street. At least nine people were wounded. The state news agency reports he killed himself after police cornered him. The victims included members of a single family.

Pakistan is sending investigators to England to look into allegations of spot fixing possibly involving some players of the Pakistani national cricket team. A British tabloid newspaper reported that gamblers fixed part of a Pakistani match against England last week. No players or team officials have been arrested. The Pakistani national team manager says police questioned him and three players.

Now, sport betting and corruption have gone hand in hand for hundreds if not thousands of years. The subtleties of quitting -- of cricket offer endless options for gaming, gambling and possibly nefarious activities.

Pedro Pinto is with me to talk through all of this. And these are the various issues that you and I need to get to grips with.

Let's start on cricket. I had never really thought of cricket as being, if you like, a big gambling sport as such compared to, say, soccer or -- or any of the others.

PEDRO PINTO, CNN SPORTS CORRESPONDENT: It is. And the issue here, especially when you talk about cricket and the countries where it's popular, such as the subcontinent, these people don't really bet online because it's not legal. So the problem here is that they use the black market. And this is what we're talking about. Online betting and online betting companies have been criticized over the last few days saying that they are to blame. You can bet on anything these days, Richard.

But they say, wait a minute, our betting is regulated. The problem is with the black market.

And I had a chance to speak with a betting specialist earlier today who said that eliminating online betting and regulating betting is the wrong way to go.

(BEGIN VIDEO CLIP)

MARK DAVIES, SPORTS BETTING EXPERT: They get access from the regulated license industry, like that in the U.K. The difficulty is that governments around the world don't all license betting. What's interesting, though, is that some of the national governing bodies of sport have, in the last 24 hours, come out and called for a reduction in betting and for a limit on what the license and regulated betting companies can do.

That, of course, will produce exactly the opposite effect of what is needed, because it will drive people, once again, into a black market where people aren't going to be aware of what betting takes place and who is behind the movement of funds.

(END VIDEO CLIP)

QUEST: Interestingly, what they alleged is -- is this spot fixing. Now, in the newsroom today, we've had a lot of discussion about spot -- you know, it's not fixing of matches, it's this spot fixing. Tell me what spot fixing is.

PINTO: Spot fixing relates to individual events in a match that might not affect the outcome. So it's not match fixing because you're not rigging who's going to win. But like the no bowls that were bowled by the -- by the Pakistani players who are now under investigation, it was specific events -- incidents you can bet on, but they might not affect the outcome.

QUEST: But hang on. Some of these things -- and I've got a list, because I'm not an expert on -- on what -- no balls, fall of wickets, number of catches, slowing, run scoring.

I mean do people really bet on the minutiae of that level of detail?

The risk must be huge.

PINTO: Well, the -- the sports expert that I have been talking about, he said he searched for hours and hours on all the main online betting companies and couldn't find anything like this, like no balls or anything like that because...

QUEST: So who's don't it and where?

PINTO: Well, it's the black market and it's in the subcontinent. And he says people are making millions -- millions and hundreds of millions of bets through -- through bookmakers that aren't regulated and no one can really trace.

QUEST: One of the allegations that I've heard about this particular case is that it might actually not be the investors or the gamblers who are allegedly doing the corruption and the bribing, but, actually, the bookmakers themselves, who to, if you like to, stack the books in their favor.

PINTO: But -- but you know what, Richard, what it comes down to is the integrity of the players. Because you and I can try to plan the outcome of a result.

But what do we need?

We need a contact with a player, don't we?

QUEST: Yes.

PINTO: We need someone who is going to do it for us. And this is the contact and this is the education that people are saying you need to educate the players when they're young. If they're not making enough money, they can't be corrupted.

QUEST: But is -- but come on, we have World Cup gambling. We had the Asian betting rings broken. We've had cricket before, in the 1990s. I mean defend your industry here.

PINTO: What I'm worried about, myself even, as a fan, is you start thinking what's real and what isn't?

When you talk about a sport like wrestling, you know, you know it's fixed. You know it's a -- there -- there's a script to it. But what -- what worries me as a fan is what is real, what is being planned, what is not being planned. And it's impossible to regulate black market betting. If these people are willing to wager millions on certain things occurring and they have direct contacts to the source, to the players, to the referees, what can we do about this?

QUEST: It's a moral question.

PINTO: It is. It all comes down to whether a player or referee or official will be bought or not. And you can't teach that.

QUEST: We'll report you for the hour.

Many thanks, indeed, Pedro Pinto.

Cricket is played professionally in professionally in more than 100 countries. It was never as profitable as many other sports until the advent of the Indian Premier League in 2008. IPL teams play -- pay top players as much as $1.5 million for a five week season. Nice work if you can get it, Pedro.

Mahendra Singh Dhoni is the captain of India's national team. He has the prevailing of being the world's highest paid player. He earned $10 million last year.

Cricket finances rely heavily on broadcast revenues. Televised cricket in India alone is worth $150 million in the advertising market.

Put that into perspective, add in a little bit of spice from corruption and gambling and you start to see why this is such a mess.

In a moment, we turn, though, to another serious matter from Pakistan, the scandal is one aspect. But Pakistan has been in the news for other, much more serious incidents, of course, the floods. We'll talk to one man who is going to put his money where his mouth is. And by that, I mean hundreds of millions of dollars, in a moment.

(COMMERCIAL BREAK)

QUEST: The death toll from Pakistan's devastating floods now tops 1,600. And that figure could rise as water levels recede and more bodies are found. More than 17 million Pakistanis have been affected by the monsoon floods that began a moment ago. And hundreds of thousands of people fled the advancing waters surrounding the southern city of Thattah this weekend.

Emergency crews have now been able to bolster the levees that protect the community from the swollen Indus River. The floods are eroding one pillar of the Pakistani economy, which, of course, is farming. A United Nations spokesman told CNN he estimates 700,000 hectares of crops have been lost; 200,000 head of cattle have died -- or livestock -- have died in the Sindh Province alone.

And what, of course, is worse that in the years and months ahead, the seed corn for next year has also been destroyed.

International aid contributions to flood-stricken Pakistan stands at just under $700 million. On Friday and before the cricket betting scandal broke, I spoke to one Pakistani businessman willing to pledge more than double the $700 million from his own personal finances.

Malik Riaz Hussain is the chairman of the urban development enterprise, Bahria Town.

And I asked him whether to assess the scale of the crisis facing his country.

(BEGIN VIDEOTAPE)

MALIK RIAZ HUSSAIN, CHAIRMAN, BAHRIA TOWN: Our economy is an agriculture economy. And more than 60 percent of businesses collapsed due to this flood. And we have 140 richest people in Pakistan. I will we request every Paki -- the richest people of Pakistan, come forward. And I personally declare my 75 percent assets go to the people of Pakistan.

QUEST: When you say 75 percent of your assets, how much is that?

Can you quantify that for me?

HUSSAIN: More than $2 billion.

QUEST: So you're saying you're giving more than $2 billion...

HUSSAIN: Yes.

QUEST: -- for the creation of...

HUSSAIN: Yes.

QUEST: -- or the rebuilding of the...

HUSSAIN: Inshallah, Inshallah, (inaudible) God.

QUEST: You have been very critical, in many ways, of the way in which the Pakistani government has -- has spent and dealt with the money that's been coming in, haven't you?

HUSSAIN: I think that the way of sending the money of Pakistanis are made, we can lose 48 percent of money, because if -- if you pay -- I give to -- $1 billion to the government of Pakistan, 48 percent gone to wasted, because if the government will give the -- contract to somebody, he will take a 30 percent profit -- contractor profit. Six percent goes to the income tax and a 22 percent commission coming up last 200 years (ph).

QUEST: And corruption?

HUSSAIN: Corruption.

QUEST: You want money to be given directly to the companies who actually do the building?

HUSSAIN: Yes, through the -- I'll tell you one thing. If -- if you spend $35 million (ph), you can build today in Pakistan 10,000 houses. Ten thousand houses mean 80,000 people. And you might build there the hospital. You build there the school.

QUEST: If somebody was to give you the money to build these houses, because you're a builder...

HUSSAIN: Yes.

QUEST: You're a -- you've built -- you've built villages.

HUSSAIN: Yes.

QUEST: You've built towns.

HUSSAIN: Yes.

QUEST: Would you guarantee to build those houses and those towns for no profit?

HUSSAIN: Yes. I'm ready. I -- I am spending my own money, because in these days, we are in so good position. If we donate $4,000, we can make the houses. If we donate one pound, one Pakistani eat five days.

QUEST: But what guarantee can you give to people that the money won't be siphoned off into corruption?

HUSSAIN: You choose the people of Pakistan. You make the committee. And you and the government will monitor -- their government will check the quality. And you people check how to use the money.

QUEST: But you actually have a large scale welfare program at the moment, don't you?

HUSSAIN: Yes. Yes. We are doing 150,000 people food and about 80,000 people medical facilities and they will give him the -- all his clothes and education and each and everything. We spend millions -- a million-and-a-half money -- rupees every day and every month. And I am ready to spend my each any penny for this purpose, because if my people are out of food, out of houses, I cannot sleep.

QUEST: The billionaire who's pledging 75 percent of his money to the Pakistan flood relief.

Now, to the weather forecast.

And Guillermo Arduino is at the CNN World Weather Center.

And I -- I'm starting to get a little bit uncertain as to where we stand, whether or not, for the south, things are getting better or is there a deterioration underway?

GUILLERMO ARDUINO, CNN METEOROLOGIST: Well, in terms of weather, it's better. And September 1st is the beginning of the retreat of the monsoon. And first we see it in Pakistan. India is going to have to wait a little bit more for it.

We have to look at the Indus River. That's the other aspect that we see evidence now of waters receding even in the south. So you see they remain high here in these areas. But at least the levels are falling. And if it doesn't rain in the north, the situation in the south ultimately is going to get better. So we see it will reach the record last -- that was in 1956. And now they are falling slowly.

That's a clear indication that with a retreat of the monsoon, no more precipitation in store. Things are going to get much better very soon. At least we're going to see progress very soon.

So take a look at the satellite. You see Pakistan nothing, some clouds in here. And this can be deceptive, because you can tell me hey, I see some clouds there in Sindh Province, is it raining?

We don't think so. You see, we see that mostly what we have is the rain in India and clouds there into Pakistan.

And, again, we see another look at the satellite picture. But then when we go to the precipitation, we're not going to get any in the next 48 hours over there. So it means that it is going to be in the clear.

That brings about, also, another aspect now, that temperatures are going to remain very high. And we're talking about some heat indexes in the '50s, like 53 degrees or so.

Now, let's go to Europe. Nice. I wonder how the weekend was for our Richard. I think that morning -- Saturday and Sunday were nice. Then we got some clouds, then it rained a little bit. We're in the clear now. We're going to see some white clouds, some foggy conditions maybe in the morning all across Great Britain. So we are not -- fog, I told you. So we're not going to see any big problems.

The problems are going to be where all the colder temperatures are right now here, the central parts. London with a high of 20, Istanbul at 30 and Madrid still very warm. Here you go, the Balkan Peninsula, Slovenia, Italy, Trieste -- a beautiful city there. And Trieste actually has a lot of lightning. It's -- I was there like four or five years ago -- an amazing lightning experience at night dining there at a former royal palace with all those lightnings. Oh, fantastic. Lightning bolts all over.

Let's see, the bad weather is going to come here, from the Lower Countries into Germany, the Alpine Region, the Czech Republic and Poland. I think, Richard, you're going to be fine.

QUEST: Well, if we carry on at this rate, we'll end up -- you'll end up showing us the snapshots from your holiday.

ARDUINO: Yes. If my snaps -- yes.

QUEST: No, no, no. Listen, before we finish, there's only one place that I want to -- not today, but as the week wears on, I need you to look into your meteorological crystal ball and I need you to look down into the Costa del Sol in Spain and I need you to look down at Malika...

ARDUINO: Warm.

QUEST: -- and take an unhealthy interest in the weather there, because that's where I'm going on my holidays at the end of the week.

ARDUINO: Wow! I think it's going to be fantastic and warm. And now it's cooling down, so is going to be very comfortable. We want to see those pictures from you, too.

QUEST: Not a chance.

Guillermo, many thanks.

You -- when we come back in just a moment, Northern Ireland has reaped a massive peace dividend. Well, now, violence is on the up tick.

What effect could that have on investment?

We'll hear from the head of the Northern Ireland Development Authority, in a moment.

(COMMERCIAL BREAK)

QUEST: Ever since the peace process became final, Northern Ireland has reaped a massive dividend in terms of investment and an increase in business. Money has flowed into the province from around the world. In fact, Northern Ireland's economy has grown faster, pretty much, than anywhere else in the United Kingdom.

Is all that under threat now with the recent spate of attacks from dissident Republicans?

There have been many attacks in recent months. Luckily, so far, no one has been killed.

But the experts say it's just a matter of time.

Northern Ireland is also suffering from looming budget cuts, as Britain's economic squeeze means funding to the province has been cut by more than $600 million. Northern Ireland must also find a way to slash nearly $200 million more from its books.

The recent up tick in violence has investors worried that Northern Ireland could see a new wave of the so-called troubles erupt.

Now, violence and budget cuts -- it's a toxic mix.

I was joined by the Northern Ireland trade and development minister, Eileen -- Arlene Foster.

And I asked Arlene Foster how she convinces people with deep pockets that the security situation isn't going to get worse and undermine business.

(BEGIN VIDEO CLIP)

ARLENE FOSTER, NORTHERN IRELAND TRADE & DEVELOPMENT MINISTER: Everybody that's involved in the political process here are committed to peaceful means. And that's right across the spectrum. And as you -- I don't know whether you've seen the reaction to some of the violence that took place, but certainly there was no political representatives that came out in support of it. They have absolutely no support in Northern Ireland.

QUEST: Right...

FOSTER: And I think that that should -- investors in Northern Ireland who come here and who make those investments know that that is the case.

QUEST: The investors might be fearful that what they're hearing from politicians, albeit on both sides of the political divide -- is rose- colored spectacle vision of what they hope will happen, but the reality might be different.

FOSTER: Well, and that's why we always encourage investors not just to talk to politicians, but to actually talk to those people who have invested in Northern Ireland over this past few years, see how they have felt about it. And, indeed, we find that 75 percent of people who come to invest in Northern Ireland reinvest in Northern Ireland.

So we think that that's a very good testament to coming to Northern Ireland and investing here.

QUEST: With the U.K. government withdrawing much of the financial support to the province that has been given over the past decade, as part of the agreement, that is making it much more difficult economically, at the moment, in Northern Ireland.

FOSTER: Well, I think the whole of the U.K. is slipping into austere times, if you like. Northern Ireland has to play their part in relation to that. But what we have find is that we want to grow the private sector and we are very much concentrating on that at the moment on our Program for Government, which was started about three years ago now. It looks at creating a dynamic, innovative economy...

QUEST: But can you keep that...

FOSTER: -- and that's what we are -- that's what I am determined to do.

QUEST: Can you keep that program intact and continue to invest in the way that you have at a time of austerity, though?

Surely that -- there's going to be very difficult.

FOSTER: Well, it's going to be difficult. But the part of being in a devolved administration is the ability to be flexible at times when we face difficulties. And what we are doing at the moment is setting out our new economic strategy, which looks at two aspects. One is rebuilding and one is rebalancing the economy. So we have both of those aspects to take on board.

QUEST: And if we look at the Northern Ireland, that rebalancing and giving it redirection, paint a picture of what you would like the economy to look like in five years time.

FOSTER: Sure. I would like the economy to be an open, regional economy, part of the United Kingdom. We're very close to America. So from that perspective, we see ourselves as being a key linchpin, if you like, for America doing business with the new growth that's happening in Asia, we believe that investing in India and looking to China, we can provide solutions for companies who may then want to go back into the United States.

So we see our geographic position, if you like, in Northern Ireland is very important moving forward.

(END VIDEO TAPE)

QUEST: That's the Northern Ireland development minister, Arlene Foster, joining me earlier.

Greece's finance minister has told the Associated Press that the markets are over pricing Greek risk. George Papaconstantinou said it will take time to convince investors that Greece is meeting all its cost cutting targets. Greek debt is currently more than 11 percent when German bonds are trading at just over 2.25, a 9 percent difference. It's a record.

Well, now in the summer tourism season, Elinda Labropoulou takes a look at how tourists and the season are progressing.

(BEGIN VIDEOTAPE)

ELINDA LABROPOULOU, CNN CORRESPONDENT (voice-over): The port of Heidra (ph), just over an hour's distance from Athens. Straight out of a postcard, the island has, for decades, been the playground for Greece's elite and international jetsetters. But this year, cosmopolitan Heidra is losing its cool.

Mass strikes and demonstrations in Athens are discouraging visitors.

Anne Marie booked her ticket from Montreal back in January. And the news of the unrest in Greece did not affect her plans. For her friends, though, it was a different story.

ANNE MARIE SANTORINAIOS, TOURIST: A lot of my friends were thinking to come to Greece. Three or four of them canceled for those reasons, being scared of the strike and not being able to travel as easily.

LABROPOULOU: Zeus Bouchlas' family have co-owned a pirate cafe bar for over three decades. He says the drop in tourists, combined with higher taxes, makes this the toughest summer his business has ever faced.

ZEUS BOUCHLAS, GREEK CAFE OWNER: I've been taxing drinks twice again. It's almost gone up 40 percent this year. And I'm losing a lot of money. So instead of dropping the prices, I think it -- it's best for them to have a free drink.

LABROPOULOU: Heidra has always taken pride in its VIP status. Now it's looking toward a mass market. Offers of free drinks are part of a new strategy to attract day trippers from Athens. Visitor numbers this year are down by over 20 percent in Heidra and make up about 80 percent of the island's economy.

People like Dimitris, a waiter at the pirate bar, are worried that without the tourists, there will be no work.

DIMITRIS MELACHROINOS, WAITER (through translator): We work, effectively, four months a year, which is not enough to support ourselves for the rest of the year. If things continue this way, we will have to leave the place. We will have to emigrate, like previous generations did many years ago.

LABROPOULOU: The tourists who make it to Heidra this summer are getting better deals than ever before. But the people who work here worry that with so few visitors, there aren't enough people to spread the word.

Elinda Labropoulou, CNN, Heidra, Greece.

(END VIDEO TAPE)

QUEST: A Profitable Moment is next.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment.

The first time I made a video call over the Internet, a revolution in communications -- growing up, you and I had always been promised some day we would have flying cars and video phone calls.

The first hasn't happened, the second has exploded across the world. And the most extraordinary thing, these calls are free.

For instance, Skype makes its money from those of us who buy phone numbers and make so-called Skype in and Skype out calls. But honestly, only less than 10 percent of users actually spend money on Skype.

As a business model, anyone who takes over the company will try to increase that percentage. It won't be easy. There are new entrants like Google, with deep pockets, who are driving for the market.

Ha!

The talking will remain free for the time being.

And that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest.

Whatever you're up to in the hours ahead, I hope it's profitable.

Now, "WORLD ONE".

END