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QUEST MEANS BUSINESS
Zimbabwe Announces Presidential Election Results; Zimbabwe Police: Six People Killed, Eighteen Arrested at Opposition Headquarters; U.S. Intelligence Chief Say Russia is Still Trying to Interfere in U.S. Politics; Apple Becomes First U.S. Company Worth $1 Trillion; Sonos Remixes the Opening Bell; Moonves Accusations Hang Over CBS Earnings. Aired 4-5p ET
Aired August 2, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ZAIN ASHER, CORRESPONDENT, CNN: I love having a front row seat to history there, two major things we are watching right now in terms of the market.
Number one is that the market has been dragged ever so slightly lower by threats of retaliation in terms of a trade war with China, but on the other
hand, the market is being pulled up by Apple, which my friends, has just made history as America's very first -- very first one trillion dollar
company in terms of market cap and that my friends is the main story of today, Thursday, August 2nd.
Tonight, one company as I mentioned 12 zeroes, one trillion dollars. Apple as I have said have just made stock market history and California fuming,
Arnold Schwarzenegger is angry at Donald Trump's emission plans. And the CBS CEO is set to break his silence over a harassment investigation.
Hello, everyone. I'm Zain Asher and this my friends, is "Quest Means Business."
All right, there are two major stories we are watching as well in the show for you. We are watching Zimbabwe in terms of the election now because we
are awaiting the first results from Zimbabwe's presidential election. Those results are due to come out any moment now. We have our David
McKenzie standing by for us. And we'll also be going to hearing a little bit later on the show, roughly around 4:30 for the very first time, the
head of CBS, from Les Moonves himself, the CEO is going to be speaking on the company's earnings call is very, very likely that he's going to be
asked about those sexual harassments, sexual misconduct allegations that we have. Brian Stelter is standing by for that.
But first, as I mentioned at the top of the show, we are witnessing a moment in terms of market history, Apple has certainly done it. The tech
giant is the very first American company to reach a market cap of one trillion dollars beating rivals Amazon and Google for the very sort of
symbolic victory, a strong third quarter helped drive shares over the threshold. They obviously came out with earnings just a couple of days ago
and that includes solid sales of Apple's most expensive iPhone. I am speaking about the iPhone X, $1,000.00 phone. Apple stocks, you can see
they're just hitting all the way up more than 20% so far this year.
Only a select few companies have ever been given the title of the world's most valuable and none of them have actually ever reached these heights.
ExxonMobil was the company that overtook -- that Apple overtook, previous title holders include names like IBM, GE and Phillip Morris as well.
All right, so two of CNNMoney's finest join us live now. We've got Samuel Burke who is joining us live now in London, Clare Sebastian is joining us
at the New York Stock Exchange. So Clare -- guys, thank you very much for being with us. Clare, I want to start with you. So, listen, I mean, does
this one trillion dollar figure actually mean that much at all beyond just the sort of psychological relevance?
CLARE SEBASTIAN, CORRESPONDENT, CNN: Well, I can tell you, Zain that there was a bit of a cheer that rose up from the floor when it did hit that mark
around midmorning today, but overall, yes, this is a psychological barrier. I think the issue is now -- the question turns to who is going to be next,
so we're talking about Amazon and Alphabet -- Google's parent company. Those market caps are really gaining ground, and I think people are looking
particularly to Amazon which is the next player in line there. Their market cap is over $880 billion today. And they really are in growth
If you look at Apple, their smart phone sales declined around the world. They're going to have to grapple with that. Amazon is in e-commerce and
the Cloud -- two markets that are really growing, plus their stock is about 55% this year, which is twice the rate of Apple. So, I think, yes this is
a psychological barrier, but it certainly has turned everyone's attention to who will be next to meet that milestone.
ASHER: Right, so you talked about Amazon, but Samuel just heard Clare, they're talking about the fact that yes, this is a psychological barrier.
A lot of people are wondering whether or not Apple can actually maintain this momentum, especially when you look at, you and I talked about this
yesterday, Samuel, when you look at some of the headwinds that are already visible, including trade war fears. China coming out just recently
basically saying that, listen, if President Trump imposes stronger tariffs on the $200 billion worth of Chinese goods, the Chinese are saying, they
will retaliate, given that Apple supply chain is based in Asia, a lot of it is. I mean, what sort of effect could that have on them and on the stock
SAMUEL BURKE, BUSINESS AND TECHNOLOGY CORRESPONDENT, CNN: Zain, not just the supply chain, 20% of Apple's revenue comes from China. Don't forget,
they're one of the few American companies that actually have a presence there. This means, they have huge exposure to possible retaliatory
So what was once the envy of so many American tech companies, could be very volatile, very dangerous for them. On top of that, they've got the
competition from Chinese smart phone maker, Huawei which just dethroned them, and to go back as the number two smart phone maker in the world. And
just to go back to what Clare was saying, think about how dominant Amazon is in so many facets of our life, including hardware maker. The biggest,
hottest product out there right now is the smart speaker. Who invented that? Not Apple, the well known hardware maker, it was Amazon.
BURKE: So, they are falling behind in innovation.
ASHER: And Clare, I think earlier in the week, you were sitting next to me at the stock exchange and we were talking about what a blood bath tech
shares we're dealing with. Obviously, they had some disappointing earnings, especially Facebook, that sort of spread to other companies as
Now, that you're seeing obviously Apple rise higher, it's now a one trillion dollar company, what sort of effect will that have on the rest of
the FANG stocks on other tech shares, too?
SEBASTIAN: Well, you know, it's interesting, Zain because there -- as we saw that, that bloodbath in the rest of tech and to think we have social
media, Apple didn't really fall that far. It lost a few percentage points and today, we see the rest of the tech riding up on the coattails of Apple,
not as much as it has been down recently, but certainly up a little bit.
I think what we're seeing is increasing questions about whether FANG really is what people should be trading as a group or whether they should be
looking for these really high market cap companies like Apple, Microsoft, Amazon, Alphabet -- more of the kind of group that should be trading
together, but it isn't because if you look back at history, a lot of these companies have really ridden on the coattails of Apple with their own
If you think about Apple's contribution to smart phones overall, that has helped Alphabet. That has helped Amazon. That has helped Facebook -- all
of these companies have grown up together and I think people are starting to kind of look at them in slightly different ways, but also they're
grouped all together, it's still the highest growth that you see in the market.
ASHER: Samuel, I want to talk a bit more about how Apple got here? How it got to this one trillion dollar market cap. I mean, when their earnings
came out, everybody was talking about the fact that the average selling price for an iPhone rose dramatically. It's $724.00 and that was partly
because of the iPhone X that came out, that $1,000.00 phone. So, I mean, just -- what does that tell us about what Apple's strategy is going forward
in terms of really raising value to shareholders? Is it no longer going to be about innovation and coming up with new ideas? Is it all about the
bottom line and the money and sort of creating more expensive products?
BURKE: If Tim Cook is the businessman, then he is still making money off of the products that Steve Jobs really invented or that he innovated at the
very least. I think, really, at the end of the day, what this trillion number is, is a tribute to Steve Jobs. He co-founded this company 24 years
ago. He oversaw the iPhone and the iPad. What Tim Cook has done very well is figure out how to squeeze every last penny out of these puppies,
including the iPhone X, but there isn't major innovation happening under Tim Cook.
I think if there is going to be a second trillion dollars, yes, we're already going there, Zain. It will be in the services that they make,
thins like Apple Pay, things like Apple Music. They've just signed Oprah to create what we all assume is a streaming video competitor to Netflix, so
that will be where they have to make that next amount of money.
ASHER: Yes, a lot of people love the idea of signing Oprah, but it does as seem as though, fundamentally, the real sort of heart and soul of the
company seems to have changed since those super innovative days of Steve Jobs. Guys, we have to leave it there. Clare Sebastian, Samuel Burke,
live for us. Thank you so much, guys. Appreciate that and we will have much, much more on Apple on this historic day and on the tech sector later
on this hour. I will be speaking to the top Apple analyst, Gene Munster. He is going to be joining us very, very soon. The President of the NASDAQ
will also be live here in the studio, and I will speak to the Sonos CEO who just listed on the NASDAQ today, so lots of tech in the show.
What gives Apple the market trade fear's take away, President Trump's threat of steeper tariffs Chinese goods hit the Dow early in the day.
Apple's trillion dollar milestone pulled US markets out of their funk, but the Apple effect came too late for the rest of the world stocks.
Take a look here, in China it saw the biggest losses down about 2% or so, the red actually spread over to Europe next, German stocks were actually
the worst affected. German economy is heavily dependent on exports and weak results from BMW and Siemens just added to the selling as well, so the
rest of the world, a lot of them really just ending the day solidly in the red.
I want to turn now though to political news out of Zimbabwe where the nation is on edge. People really biting their nails awaiting election
results. Six people have died in clashes between opposition protesters. There's been a lot of violence in the country in the aftermath of the vote.
I want to bring in David McKenzie who is joining us live now from Harare. So David, we were told that we would expect at least partial results round
about now, obviously, this is huge for Zimbabwe because this is the first sort of election since Mugabe was ousted. Just walk us through what you're
DAVID MCKENZIE, CORRESPONDENT, CNN: Well, that moment hasn't yet arrived and we expect it in this hour at the election center behind me and you have
this very tense calm as it were in Harare in the capital today. Earlier today, Zain, you had the military moving ...
MCKENZIE: ... in telling people to get out of the center of town. Most of the shops closed down, locked up. Some people I spoke to say they just
want this political season, an extraordinary one, it has been to end. They just want to get on with their lives to get jobs and feed their families.
Others, very focused on this political moment because you have the opposition that has for several days now, cried foul, saying that they are
rigged elections underway and that the results will not be credible.
At the same time, the government says, you need to wait and see and the electoral commission that is working in the building behind me has said
that people must be patient and they need to be meticulous.
Whatever way this announcement goes, you certainly will have a possibly dramatic action or reaction on the streets, Zain.
ASHER: All right, David McKenzie, do let us know which kind it ends up, sort of pulling out ahead if you hear any news during the next hour or so,
appreciate that. All right, still to come here on "Quest Means Business," when we come back, the sweet sound of success for Sonos, the smart speaker
company in mixed gains after their IPO debut on the NASDAQ. And Donald Trump takes on the Terminator. The President wants to remove California's
tough rules on low emission, and Arnold certainly is not happy.
All right, Sonos built its following by creating high quality wireless speakers for homes. Today, the company made some noise of its own.
So much excitement there, Sonos CEO, Patrick Spence there ringing the opening bell at the NASDAQ. The IPO actually raised a bit more than $200
million. Less of this has been expected, but hungry investors really bid top up shares though, sending the stock up nearly 33%. And in fact, the
CEO of Sonos joins us live now, Patrick Spence.
Patrick, thank you so much for being with us. So a huge day for you, so much excitement. Obviously, your shares did very, very well, up 33% or so,
a huge milestone for the company. How are you feeling?
PATRICK SPENCE, CEO, SONOS: Feeling great. It's just been a fantastic day. We did some really exciting stuff with NASDAQ today. It's been great
to see the support from investors and our banking partners, so just a fantastic step on which has been already a long journey, and we expect many
great years ahead.
ASHER: When you think about just what's happened to tech stocks over the past sort of week or so, I mean, I've just been talking to my colleagues
about this. There's been a huge sort of bloodbath after Facebook reported earnings. So it's an interesting time to go into IPO, I guess, what the
takeaway has been from this week is that even if you have a loyal fan base, no company is completely invincible. What kind of young sort of public
tech company like yours learned from that?
SPENCE: You know, I think it's -- there's never a perfect time, right, as you go through it, but what's important is to find the right investors, go
tell your story to as many as possible and you'll find the right people at the end of the day that ultimately believe in your story, believe in the
company, and believe in the future, and that's what we were able to do and that's what I think any company if they have a strong story is able to pull
off and it's always going to depend on the market, but we were able to persevere and get through.
ASHER: Let's talk about your evolution because you guys started in 2002 and at the time, just -- Sonos was such a hugely innovative company. There
was so much excitement about what you guys were doing. It really just seemed as though you guys were really ahead of your time, and then now, you
have a situation, I think a lot of companies are dealing with this where the tech companies are encroaching in every sort of different facet of
life, be it content and in your case, speakers.
So, your competition being Apple coming out with speakers, Amazon, Google - - how do you stay one step ahead?
SPENCE: Well, and they are our partners, too, right? We work with these companies.
ASHER: Right, so it's a weird dynamic.
SPENCE: We've worked with these companies for the last decade, putting their streaming services on our platform, and now, we're putting Amazon's
Alexa, Google's Assistant on our platform, so I think it's a really interesting time and last year, the IEEE rated our patent portfolio which
is all around what you talked about, our innovation, really around multi- room home audio set. We're the second most powerful patent portfolio in consumer electronics next only to Apple.
And the reason they did that is because this is an area that has become hot, right? So, we invented it. Clearly, we continue to innovate, we just
added our most recent million homes in the fastest time yet, so there's momentum there, that's why we thought, as well, it's a great time to step
onto the public stage because consumers look at it and they want to know that you're in it for the long term. You're a strong company and being
public has allowed us to do that.
I think your point about big tech being in everything is absolutely right, but that's an opportunity for us. We are very focused and we're focused on
building great products that last for a long time. Nobody else is doing that and what we found is consumers will buy more as a result. And so, we
have a unique focus and I think with focus and agility, anything is possible.
ASHER: Okay, so listen, you're the CEO of the company, obviously, you have to highlight the company's strengths especially on IPO day and I understand
that. However, what about your vulnerabilities? What are the areas if you could be honest, what are the areas you think you could work on especially
as you come to compete with big tech which is -- these are companies that have decimated and disrupted pretty much almost every single industry?
SPENCE: So, that's where I think you need to pick your spots, right? We're not trying to do everything. We're trying to use the capabilities we
have and be very innovative in certain areas. We're the only company to put multiple voice assistants on one platform to put all of those streaming
services. You look for opportunities where the big tech players are not going to play. They are not going to play nice with one another, so we
have an opportunity to actually create a platform which is best aligned with consumer interest where you can get any of the services from big tech.
So, my advice would be in that situation, look for those opportunities really to partner and to do things a little bit differently. I think
that's the key, you know, as you think about both partnering and competing in some aspects with those companies.
ASHER: So one piece of sort of big news that sort of seem to drag the market lower today, despite the fact that Apple topped one trillion dollars
in terms of market cap, one of piece of news is really this escalation of the trade war between the US and China. China is saying they will no
doubt, just of the integrity and their reputation, they say they will no doubt retaliate if Donald Trump ends up imposing 25% tariffs on $200
billion worth of Chinese goods. How does that impact you? How worried are you about an escalating trade war?
SPENCE: There's been so much rhetoric on this, it's hard to know really what to believe at the end of the day. We're monitoring it very closely.
We don't feel like it's in the best interest of anyone, that ultimately consumers will really pay for this. And so, we're watching it closely.
Ultimately, I don't think it changes necessarily the long term trajectory of where we're going or where other companies are going, but certainly, in
the short term, it could cause more uncertainty, which is never good for really anybody at the end of the day. But I hope it's just more rhetoric.
ASHER: All right. Thank you so much for your optimistic perspective. Patrick Spence live for us there. Thank you so much. Congratulations.
SPENCE: Thank you.
ASHER: You're very welcome. Okay, so you heard the sound of Sonos actually ringing the NASDAQ opening bell. Just a couple of minutes ago, we
played it for you. It is actually the first time the NASDAQ has used a brand new bell -- brand new bell remixed in partnership with Sonos. We'll
speak to the team behind it later on in the program.
In the meantime, BMW is avoiding tariffs imposed by the US in China by building more of the X5 SUV in Thailand. Martin Savidge is in South
Carolina for us at the world's largest BMW plant.
So, Martin, just walk us through how BMW is just going about trying to reduce the burden of a potential trade war.
MARTIN SAVIDGE, CORRESPONDENT, CNN: True, Zain, good to see you. A lot of people may not realize, but the largest exporter of American made vehicles
that's imported isn't GM, it's BMW here. But they're not making them in Detroit, they're making them here in rural South Carolina.
But as we all know, there is a conflict between China and the United States and a lot of the vehicles made here go to China, which has put this plant
and this community right in the middle of the cross hairs, take a look.
(BEGIN VIDEO TAPE)
SAVIDGE: It may not look like that Spartanburg, South Carolina is a war zone, a trade war, thanks to the President, most folks here voted for him.
Spartanburg is home to the largest BMW plant in the world.
Last year, they made more than 370,000 luxury SUVs employing 10,000 people, pumping billions into the state's economy.
Is it safe to say how well BMW does is how well Spartanburg County does?
JESSE JONAS, SPARTANBURG RESIDENT: You might say that because there's a lot of industry in Spartanburg County that are directly connected to BMW.
MARILYN SAUCADO, SPARTANBURG RESIDENT: Growth, jobs, and I know that that's brought in a lot of families into the area. It brings money into
SAVIDGE: Spartanburg is also deep red, meaning in 2016, the county voted 63% for Donald Trump. But President Trump has threatened to place tariffs
on imported BMW vehicles and parts. That could make BMW's made and sold in America a lot more expensive.
The company is already feeling the impact of Trump's trade war with China. Over 80,000 Spartanburg made BMW SUVs are sold in China every year. Now,
China is striking back placing tariffs on the American made vehicles. It's an economic double whammy of Trump's making which BMW says could have
negative effects on investment and employment in the United States.
In other words, BMW might have to scale back production and lay off workers in Spartanburg.
DAVID BRITT, SPARTANBURG COUNTY COMMISSIONER: I feel like I helped birth BMW.
SAVIDGE: David Britt is the Spartanburg County Commissioner and a Trump backer. How concerned are you now about talk of tariffs and trade war?
BRITT: I am extremely concerned because the impact, the ripple effect -- it goes beyond BMW and the automotive industry.
SAVIDGE: Britt is one of the few Republican politicians in the country willing to tell Trump he is wrong.
BRITT: These tariffs could put the foot on the throat of growth and stop it. We don't need that.
SAVIDGE: Other Trump supporters we talk to here say they support the President's policies, but some are concerned. None wanted to talk on
camera. And they're not the only ones reluctant to speak out. Many South Carolina companies are also concerned, but fear if they criticize the
President's policies, they will become a target of his Twitter rap, much like what happened to Harley Davidson.
TED PITTS, PRESIDENT, SOUTH CAROLINA CHAMBER OF COMMERCE: You're better off working with his administration on issues to help them understand it
and allow them to get to the right answer.
SAVIDGE: Ironically, Trump's tough talk on trade was part of his appeal to voters in South Carolina. Now, there's growing concern Trump's trade war
is about to backfire on them. And possibly, eventually, on him.
PITTS: I don't see this issue changing voters' minds. Now, if you look down the road and there are concerns.
(END VIDEO TAPE)
ASHER: All right, some breaking news for you. Zimbabwe's electoral commission is actually announcing the results of the latest elections.
Let's listen in.
UNIDENTIFIED FEMALE: (Foreign language). Thank you.
UNIDENTIFIED MALE: (Foreign language).
ASHER: All right, that gave you a sort of sneak preview in terms of what we're expecting in terms of Zimbabwe ...
ASHER: ... election results. You just heard the Zimbabwe election commission reading out partial results. We're going to have David
McKenzie, hopefully, a little bit later on the show to break down what happened and who has advanced. Those are just partial results. We should
get the full results in a few days from now.
In the meantime, our Martin Savidge is still standing by in South Carolina for us. Martin, I apologize for having to interrupt you there. Just walk
us through how much BMW actually manufactures cars in the Chinese market and how that protects them slightly from an escalating trade war?
SAVIDGE: Well, BMW will say that the cars that they are primarily making in China right now are a specific electric model, the X3. What they make
here is the gasoline version of the X3.
So, they're not quite the same vehicles and it's not going to be readily easy for the Chinese plants to pick up what's manufactured here because of
the trade war that's going on. I should point out there is good news for this plant and that is there is the new X7 going to be produced here. It
means a thousand more jobs coming to this plant.
So, there is a bright side despite the ongoing trade war between the United States and China, but they would like it to end as soon as possible, Zain.
ASHER: All right, Martin Savidge, appreciate that. And apologies for the interruption there. We just had breaking news as you know. Thank you so
Okay, so from BMW and issues of trade war and how that sort of affects the car market here in the US, I want to talk about emissions now because
former California Governor and you'll know him as the Terminator, actor, Arnold Schwarzenegger has come out all guns blazing against the White House
plans to water down auto emissions standards. The plan will free the rules ordering auto makers to make cars which are more fuel efficient. It will
also withdraw California's Clean Air Act.
In fact, Arnold Schwarzenegger tweeted, "I am sick and tired of these fake conservatives who believe in state's rights to make their own policies as
long as state policy is to pollute more." Very harsh words there from the Governor, not holding back at all. I want to bring in Nick Watt who is
joining us live now from Redding, California.
So, Nick, obviously, the ex-governor Arnold Schwarzenegger clearly, clearly not happy about this. How is California going to put up a fight here in
terms of what the President wants to do?
NICK WATT, US CORRESPONDENT, CNN: Well, Zain, California has already said that they will challenge this in every possible way and the previous
governor of California is not the only person who is very agitated about this right now. This from the Attorney General of Massachusetts. He says,
"This has to go down in the books as one of the dumbest ever," and the current governor of California had this to say, "California will fight this
stupidity in every conceivable way."
So the proposal itself is this, so back in 2012, the Obama administration set these incremental fuel economy targets for auto makers that by 2025,
across their fleet, an automaker would have to have fuel efficiency of about 50 miles per gallon. What the Trump administration is now proposing
is freezing that at the 2020 level which is about 43 miles per gallon. Now, the Trump administration has a reason for this. They say that it will
make the roads safer because if auto makers don't need to stick to these very stringent guidelines, cars will be cheaper, therefore, more people
will buy new cars, therefore, there will be fewer unsafe old boneshakers on the road and lives will be safe.
Now, opponents say that is not the case. They say that this is a Trump administration trying to prop up the oil industry. Now, there is a
potential wrinkle as well for the auto industry. The auto industry moves at a fairly glacial pace, and I don't mean that disparagingly, it takes a
long time to get cars into production, so what do they do now? Do they keep on following the Obama era guidelines or do they move to these more
relaxed Trump era ones?
They don't know what to do and this could, Zain, drag through the courts for many years. In fact, one environmental activist told me that this will
still be going through the courts when Trump leaves the White House whenever that may be, Zain.
ASHER: Gosh, so yes, you're right. It does move at a glacial pace. All right, Nick Watt live for us there. Thank you so much. Appreciate that.
All right, so Apple prides itself on making its devices thinner and lighter. The latest product, the market cap one trillion dollars is the
fastest of any American company. Gene Munster will tell us where Apple goes next after the break.
[16:30:00] ZAIN ASHER, HOST, QUEST MEANS BUSINESS: Hello, I'm Zain Asher, coming up in the next half hour of QUEST MEANS BUSINESS, Les Moonves has
began what could be literally the most difficult earnings core of his entire career.
And the Nasdaq wants to jazz up its opening bell for the artist son of the Fifth Beatle to help him out. Giles Martin will be here in the studio with
me shortly, but first though, these are the top headlines we are following for you at this hour.
Right now Zimbabwe's Electoral Commission is announcing the results of the presidential election, they're running a bit behind schedule. Officials
have so far only officially declared the results of the parliamentary vote which gave a ruling party two-thirds of the seats.
The opposition says the vote was rigged, we will bring you the results, a live report as soon as we get them. And emotions have been certainly
running high this week in Harare earlier, clashes between protesters and security forces actually claimed six lives and police arrested 18 people
Thursday at opposition headquarters.
The U.S. Intelligence chief say Russia is still trying to interfere with the U.S. political system. Some officials put on a united front at the
White House press briefing earlier on today. The director of National Intelligence says President Trump has specifically directed him to make the
issue a priority.
All right, so for Apple reaching a $1 net trillion value mark was suddenly a test of stock strength. It put on weight earlier on this year, but the
gains were gone by mid-April and the stock actually came back down to $165, that was due to concerns about slow sales as stocks slowly bucked up a
little better over the next six weeks and hit a record high in June.
A trillion Apple is better at this conference, but beating your own record is not good enough. Shares actually surged on Wednesday of a strong
earnings, Apple was able to overcome stagnant sales by charging a higher average price for their phones.
[16:35:00] The strong earnings gave Apple shares a second win today, putting them to $207.4, and therefore giving the company a market cap value
of $1 trillion. Getting those 12 zeros hasn't always been easy. Apple has certainly come a long way from its origins, making early personal
computers, take a look.
UNIDENTIFIED FEMALE (voice-over): Decades after its groundbreaking massive plush commercial in 1984, Apple is smashing barriers again. The company's
30-year-old journey from fledgling IPO to $1 trillion corporate colossus is the stuff of legend, and it never could have happened without Steve Jobs.
His vision for Apple got it where it is today.
UNIDENTIFIED MALE: It takes Apple during the ten years to getting in 2000 in this whole new direction, reinvents the music industry, reinvents the
STEVE JOBS, FOUNDER, APPLE: Everyone once in a while, a revolutionary product comes along, that changes everything.
UNIDENTIFIED MALE: He discovers, now we have to think different again. And he says we're going to do devices, devices that will make your computer
sort of the hub of your digital lifestyle.
UNIDENTIFIED FEMALE: Jobs' run of revolutionary devices began with the iPod in 2001.
JOBS: And we are calling it iPhone.
UNIDENTIFIED FEMALE: But it was the iPhone that clearly changed everything. Released in 2007 when Apple's market cap was just $100
billion. The iPad followed three years later when the Street valued Apple at around $300 billion.
Apple's market cap has more than doubled under Tim Cook; CEO since 2011. Cook has launched only one major new hardware line, the Apple Watch. For
his commitment to strengthening the Apple ecosystem with services like Apple Pay, cloud computing and music streaming guarantees a steady flow of
TIM COOK, CHIEF EXECUTIVE OFFICER, APPLE: IPhone is the most loved phone in the world.
UNIDENTIFIED FEMALE: Make no mistake however, it is the iPhone that will be key to Apple's fortunes well into the future.
UNIDENTIFIED MALE: Whether it'd be there to venture into entertainment or some of the other things they're doing, obviously, those are added to their
business, but the business is driven by the iPhone.
To get people to pay a $1,000 for something that fits in your pocket is absolutely in a year and a half for two years. That's a remarkable
UNIDENTIFIED FEMALE: A business model that has been plushing profitable for Apple investors.
ASHER: Oh, let me tell you, there's one man, there's one man that investors turn to to make sense of Apple's business, his name is Gene
Munster and he joins us live now. He's the founding partner of Loup Ventures.
And Gene, what's interesting is that you said apparently, that you never thought that Apple would get to $1 trillion, why not?
GENE MUNSTER, FOUNDING PARTNER, LOUP VENTURES: Well, I guess you've got to probably look at what that window was. Back in 2012, we published a
research note that was titled "The Next Trillion Dollar Company".
But then I lost faith for a period there, because the iPhone growth had hit after their successful iPhone 6 had pulled back and it kind of went from 35
percent growth. And so I did lose faith for a small period there. But that was the thing that I fundamentally missed and I have corrected myself
ASHER: OK --
MUNSTER: In the past few years. Is that this is not just about the iPhone, it's about a much bigger story, just around services and different
devices, wearables. It really has these devices, had become the fabric. So the nice thing about the Apple story is it's a much more reliable story
today than it was five, ten years ago.
ASHER: So you know, when you look at -- you know, other companies that have sort of been the biggest companies in the world or even past $1
trillion in terms of market cap, the story doesn't sort of end that well in the end.
I mean, you know, they might surpass that sort of psychological milestone and then come back down again. How bullish are you about Apple -- just in
terms of the short term, just in terms of between now and the end of the year, do you expect the stocks to go that much higher or do you expect a
pullback especially when you think about the headwinds when it comes to an escalating trade war?
MUNSTER: So I think the stock does move higher, and part of the reason is that I think there's some fraction outside tools, some of the numbers ought
to be the services number or the iPhone number. And the reason is that this fall, they're going to come out with a couple new iPhones.
One of them is likely going to be a bigger screen, 25 percent bigger. And what we've observed in the iPhone 6 cycle is that when you come out with a
much bigger screen that has a powerful impact. And so I think that they're kind of moving into a period here where there could be some upward
adjustment to the street number.
So I think still the trajectory is positive, once we get through that in December, it probably trades off after that, but I think longer term that's
just a much bigger story going on here beyond just the iPhone is about a series of products.
ASHER: And just in terms of what we expect from Apple, have we lowered our expectations?
[16:40:00] Obviously, you know, Tim Cook has been great in terms of losing shareholder value and a lot of people congratulating him about that.
But just in terms of innovation and creativity and coming up with the next big thing and wowing the entire world, you know, have we changed what we
expect from Apple and is that right?
MUNSTER: I think we have changed some there in part, like your piece earlier said is that the watch is essentially Tim Cook's baby, and that
hasn't had near an impact. That's a couple percent of Apple's business, a very small business.
But I think what's important to recognize is the reason why we hit this trillion dollar milestone is because Apple did the right thing in the long
term. And in this case, over the last 30-plus years, they focused on a product and made it really great.
Whether it was the Mac or the iPad or the iPhone, and I'm optimistic that when the next innovation cycle comes, Apple is all over the steam about
augmented reality and this idea of glasses and some form of a wearable, that's the next piece of innovation and I suspect that they will be equally
militant on those details and making a great experience.
ASHER: When you compare Apple to the other FENG stocks, I mean, obviously just, you know, we could go when they had just broke earnings, you know,
the tech stocks were dragged down quite significantly. What makes Apple different? What makes Apple sort of standout compared to the other major
MUNSTER: It's an easy perspective and that is that the amount of cash that they generate is unprecedented. In the last Amazon earnings call, they
generated a couple billion in cash, they may generate 10 billion a year.
But you look at Apple, they're going to give back probably close to a $100 billion to investors this year or as a magnitude higher than any of the
other FENG stocks. And the reason is that they have this machine essentially where people high retention rate of the devices, highly
profitable devices and they can essentially count on every three years, every one upgrading.
And so that is a big distinction is that this concept of a hardware business, having predictability like a software business is unique compared
to the other FENG stories.
ASHER: Right, Gene Munster live for us there, thank you so much, I appreciate that.
MUNSTER: Thank you Zain.
ASHER: You're very welcome, OK, so let me come back Sonos rewrites the sound of the business day, we'll hear from the president of the Nasdaq and
the actual man, the actual man who actually wrote the new music for the exchange and a special treat for you long time QUEST MEANS BUSINESS fans
were slain after the break.
[16:45:00] (COMMERCIAL BREAK)
ASHER: Certainly told you earlier in the show, Sonos was welcome to the Nasdaq today, and in return, the sound system company rewrote -- they
rewrote the Nasdaq opening music. So let's compare, let's re-clip of the old version first.
This is the first version, take a listen.
(BEGIN VIDEO CLIP)
(END VIDEO CLIP)
ASHER: All right, so that is the old version, now I want you to listen to the brand new version.
(BEGIN VIDEO CLIP)
(END VIDEO CLIP)
ASHER: Ok the question is, what exactly is the difference, there's been a sort of subtle slight change. I'm joined now by Nelson Griggs; President
of the Nasdaq Stock Exchange and also Giles Martin; Sonos producer responsible for the new sound.
So Giles, why is -- I mean, listen, I listened very carefully, and there's a very sort of subtle slight difference I think towards the end. Why is
the new version better than --
GILES MARTIN, SONOS PRODUCER: We just -- we just worked on the Nasdaq bell sound.
ASHER: OK --
MARTIN: So along with Nasdaq is collaborate -- I mean, the IPO for Sonos is a milestone for us, and we decided it'd be fun to a couple of new bell
sound. And the challenge for us actually is that as a team, as we decided to make a bell sound which I used no bells.
ASHER: Right --
MARTIN: So yes, it's basically -- it's the (INAUDIBLE), it's Tibetan bowls, it's coins being dropped --
ASHER: Right --
MARTIN: And then there's just one of those -- Nasdaq, we're guessing coming, and Sonos it's about sound --
ASHER: Yes --
MARTIN: You know, we spent so much talking about sound. We engage as a good friend of mine -- a good friend of the company is called Kris
Jengins(ph); an Academy awarding sound mixer for the films, we worked together and we came out with a fun set for Nasdaq.
ASHER: So how did this idea even come about? I mean, you know, just because a company is launching an IPO, you wouldn't necessarily think, oh,
why don't you rethink the opening the bell for us, how did that come about?
NELSON GRIGGS, PRESIDENT, NASDAQ: Yes, we had decided to be partners for their IPO, and our teams got together and said work us a little different
and more creative because the market opens and closes twice a day everyday --
ASHER: Right --
GRIGGS: And the fact that the teams kind of collaborated and worked well together and said this will be something really cool. Our bell has not --
it's about 20 years old and we have a new brand campaign called Rewrite Tomorrow.
So the whole thing kind of came together and it's been a ton of fun to work on.
ASHER: So obviously, these as you know, given the terms of advertising is hugely important. Whether it's television, advertising, radio advertising,
music that you play is important because it gives the audience or listeners certain impression and a feeling about the company.
When you worked on this, what did you -- what was the feeling and emotion you were trying to convey? I know that you just changed the bell part, it's
a very small part, but what were you -- what was the message you were trying to send?
MARTIN: Well, sound is quite -- sound is so important to us in our lives - -
ASHER: Yes --
MARTIN: And you know, this is -- this is kind of what Sonos is about.
ASHER: Right --
MARTIN: So there has to be details, we can't have a glance, it happened so. In order to -- the fun thing is in order to come up with the sound
that triggers you, it triggers emotions, so for Nasdaq, it's to be celebration, it's about progression.
And so just the fact that even though you don't know you're hearing a thin- hair glasses or the drop of your coins or even we're plucking ground pianos in the studios, we're doing fun things, it can triggers various things.
It's like, you know, we don't -- I don't think we realize it, I think we appreciate how much different sounds affect us, you know --
ASHER: Right --
MARTIN: You know, we have noise going on the whole time.
ASHER: Right, and I actually want to play you because obviously you mentioned that music is hugely important to branding. We've gone through
various iterations of music on this show and we would love your opinion on our own sort of theme music and how it's developed over the years, let's
take a listen.
(BEGIN VIDEO CLIP)
(END VIDEO CLIP)
ASHER: It's very dramatic, isn't it?
MARTIN: Well, I mean, it's exceptional as I can say. So it's --
ASHER: You have to say that --
MARTIN: I do, yes, but it gives him -- it gives you the mood, it gives this --
ASHER: What is the mood? What is the mood that it can be?
MARTIN: Well, it's -- it makes you -- you need to engage with it --
ASHER: OK --
MARTIN: It is also sort of bombastic and important as they seem --
ASHER: Yes, they do --
[16:50:00] MARTIN: But you can't -- the tricky thing is, the tricky thing about the Nasdaq, though we couldn't -- we couldn't counter the sound, it
becomes a novelty sound, the company that the duty --
ASHER: Right --
MARTIN: Has its car horn for instance.
ASHER: You're right --
MARTIN: It's one of those things like --
ASHER: Yes --
MARTIN: There has to be a sound, the idea was we talked about it, there had to be a sound that would last forever --
GRIGGS: That's the point --
ASHER: And it's also when you listen very closely, it's also very sort of subtle changes as well because obviously, your music becomes part of your
brand, it becomes part of your identity, people around the world hear that theme and they think, oh, you know, this is QUEST MEANS BUSINESS.
So what do you make of the fact that we've employed subtle changes each time and is there anything you would do differently?
MARTIN: Oh --
ASHER: You could be honest, honestly we don't take anything personal on this show.
MARTIN: No, with your no, I think I mean to your music is perfection --
No, without any question at all. It was -- it was --
ASHER: It's text in the mail my friend --
MARTIN: Yes, thank you, thank you very much. You know -- you know what? I think that -- I think you can tell whether people -- and there's a feeling,
I mean, you know, the team you have around you, a very good team will listen to this music --
ASHER: Guys, did you hear that, a very good theme he says --
MARTIN: Right, let's listen to the same music day in and day out. And so therefore, they know after what I think of really -- is it -- is it about -
- and I think they'll say isn't it a bad time we changed the music?
GRIGGS: That's where we get our sound. You know, coming, they're for celebration, it's fine --
ASHER: Yes --
GRIGGS: And that's vibe that we got off the bell that was created for us, so --
ASHER: Congratulations(ph), very good in terms of marketing, I mean, excellent idea. But guys, thank you so much --
MARTIN: Thank you --
GRIGGS: Thank you very much --
MARTIN: Thank you so much --
GRIGGS: Yes --
ASHER: You're very welcome. OK, so "Cbs" has reported earnings in line with what the markets actually expected. It's the unexpected accusations
when it comes to sexual harassment or accusations of sexual misconduct against the CEO Les Moonves managing a team of real investors are jittery
about, that is why stock prices tumbled recently.
The company's earnings core is going on right now, it is happening as I speak, we'll bring you what Les Moonves is saying right after this break,
QUEST: All right, as I speak at this moment right now, executives at "Cbs" are addressing shareholders and analysts on the company's earning core is
still going on right now. The CEO Les Moonves has so far stayed away from the controversy that has gripped him and the company and has been less than
one week since the "New Yorker" published allegations from six women who said Moonves sexually harassed them.
The "Cbs" board has actually hired two law firms to investigate those allegations, but it has not actually taken any action yet against Moonves.
[16:55:00] Our senior media correspondent Brian Stelter is with us now. So Brian, Les Moonves, we were just talking like a second ago, he's not
necessarily going to address sexual allegations on this earnings core. I mean, it does seem like to be honest just from a legal perspective a smart
move just for him to stay silent.
He's issued one statement already --
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: Right --
ASHER: How can he -- honestly, how can he survive this? I mean, "Cbs" has been just so aggressive in standing by him and honestly since the Me Too
movement started I have --
STELTER: Right --
ASHER: To think about this.
STELTER: This is a turning point of sorts, maybe not in the right direction, that's certainly been debated in Hollywood about whether "Cbs'"
board of directors are making the right move here. I think what the company is saying is hey, everyone deserves due process.
And Moonves is our CEO, he deserves due process like everyone else. So in the court of public opinion, these allegations are out there, but now the
lawyers are going to be involved and now two law firms, both appointed last night will come in and conduct a review.
Essentially, that gives Moonves a lot of time here. This is going to take a while and the necessary earnings core --
ASHER: And it can take a while, what are you looking, months?
STELTER: Well, I think it is fair to say weeks or months, certainly at "Cbs" news just in the news division, there has been investigation for the
last three months and that hasn't wrapped up yet.
So in this case, what we see is an allegation coming from the "New Yorker", from his ominous book on the record in many cases, Ronan Farrow --
ASHER: They gave their names and everything --
STELTER: Yes, there could be more stories coming, there could be more reporting coming, but the company is differing to the lawyers to look into
it, and for now Moonves sounds very much like a man who is in charge and remaining in charge on this earnings call, promoting the company, promoting
digital extensions --
ASHER: Yes --
STELTER: Of the brand.
ASHER: So how they got -- just in case --
STELTER: Right --
ASHER: Right, I don't know what's going to happen, I'm not a psychic. Just in case Moonves is forced out, who do they have waiting in the wings
that they're grooming to take over?
STELTER: You know, I would say the COO is the most obvious candidate, but there's not a clear number two or a clear leadership structure there under
Moonves. Frankly, there's a number of his top lieutenants who probably want to lead if he left.
It's a very tightening company, Moonves is a strong leader at the top of the company. And look, up until a week ago, he was recognized as one of
the best broadcasting executives in history. Someone who was a legend and is a legend in Hollywood.
Now, you have this sexual misconduct allegations which he certainly has regrets about some of his behavior, but he has said, he hasn't abused his
power, he's tried to be somewhat contrite while denying any abuse of power.
It's a difficult situation --
ASHER: Right --
STELTER: For everyone involved, most importantly for their last victims --
ASHER: Right --
STELTER: And for now, the board is standing by him.
ASHER: Right, Brian Stelter live for us there, thank you --
STELTER: Right --
ASHER: So much. And that is QUEST MEANS BUSINESS, I am Zain Asher, the news continues right now.