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QUEST MEANS BUSINESS
Jacob Zuma Denies Wrongdoing at Corruption Inquiry; Amazon Workers Protest on Amazon Prime Day; Symantec and Broadcom End Takeover Talks. Aired 3-4p ET
Aired July 15, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: An hour to the closing bell on Wall Street. And we are bouncing up and down, just
barely around zero, sometimes up, sometimes down. Predominantly lower, but the market in a tight range could go anyway. But not a big move, I
suspect, as we head towards the closing bell in the next few minutes.
The markets and the reasons why. A slump in China's economic growth. It has given President Trump ammunition in the trade war. A prime day for
protests. Workers walk off the job as Amazon's shopping extravaganza is underway. And Citi kicks off the earning season as fears of an earnings
Tonight, and all this week, live from London on Monday, July the 15th. I am Richard Quest. Of course, I mean business.
Good evening from London, it is the final hour of trading, and is also the beginning of the busy week of earnings. And Citigroup is starting the
earnings season on a positive note. The shares have come off the session highs, second quarter earnings beat expectations, boosted by a share
And this week, more than 50, I should say, of the S&P 500 companies are reporting results. Some analysts say we're on track for an earnings
recession. Matt Egan is in New York. What does an earnings recession mean?
MATT EGAN, CNN BUSINESS LEAD WRITER: An earnings recession would be two consecutive quarters of year-over-year declines in earnings. And so that
is potentially what we're looking at here because analysts pooled by FactSet, that they're calling for a three percent decline in S&P 500 EPS
for the second quarter. And that hasn't happened as far as a back-to-back decline there with an earnings recession. That hasn't happened in about
But I would caution you, Richard, you know this, well, companies are really good at guiding analysts lower and then coming in and beating those lowered
expectations. So what we may actually see is flat earnings this quarter or even a slight increase if history should be trusted at all.
QUEST: Right. But, Matt, if there is an earnings recession, I mean, to a certain extent, companies should have warned if there was going to be any
nasty surprises. It doesn't behoove them to suddenly turn around now and say, "Oh, we've missed by 10 percent."
EGAN: That's right. And companies are warning. There have been 88 S&P 500 companies that have issued negative guidance for the second quarter
according to FactSet, now that is actually the most since 2006.
So companies are in fact warning, one of the big issues is, of course, the trade war and the tensions around that. And also, the dollar continues to
be a headwind, although it has come back a little bit thanks to the Fed talking about rate cuts.
So it would be a negative if we see an earnings recession. But look, the market has already priced in a lot of this. Part of the reason why we saw
stocks really plunge at the end of 2018 was because people were worried about an earnings recession. So some of this, Richard has been priced in.
QUEST: All right. And what's your feeling? I mean, Citi's results were good. The markets, it's given back most of the gains. We have other
banks, obviously, that we're wanting to see. The gut feeling right at the start?
EGAN: Citi was good, but not great. We saw the stock bounce a little bit in the morning and kind of bounced around. It's pretty flat. I think
that's because as you mentioned at the top, part of this has been driven by share buybacks. If you look at what happened, they ended up buying so much
stock back, that their share count actually declined by about 10 percent during the quarter. So that's a big part of it.
Their capital markets business was weak. Their consumer business was really good. What I'm actually intrigued by is if you look at some of the
other consumer banks today, Bank of America and Wells Fargo, who we'll see later this week, their stocks are actually down a little bit. And Richard,
I think that's because they're a little bit more sensitive to interest rates than Citi is.
QUEST: One final thought, sorry to interrupt you, do you expect to see more buybacks this quarter? Or do you feel that the buyback binge has been
EGAN: I think that the company is -- the banks are going to continue to try to reward shareholders with as aggressive a buybacks as regulators will
let them, but you know, you would hope that there would be at least one big reason to maybe tap the brakes a little bit on the buyback and that's the
fact that valuations have come up recently for the U.S. stock market as a whole and so maybe, they might not be buying back quite as aggressively.
QUEST: Matt. Matt Egan, thank you. A blue day for Boeing as investors are reacting to a "Wall Street Journal" report that says 737 MAX jets could
stay grounded until early next year. American Airlines has extended its flight for the plane for the fifth time. November now is the likely date.
"The Guardian" is reporting that the 737 MAX model name has been changed on the plane. A 737 to be delivered to Ryan Air is described as the 737-8200.
Boeing shares are off today and they're off the lows of the session.
[15:05:31] QUEST: But of course, Boeing always pulls down the dial with it. CNN's Tom Foreman joins me. Two issues to talk about here, Tom, let's
first of all do this report that until next year. I mean, when I hear -- we're already July, when I hear somebody say next year, I'm always tempted
to say, "Well, what made you think it will be anything but."
TOM FOREMAN, CNN CORRESPONDENT: Well, yes, really, when you think about this, look, a couple of months ago, the Boeing CEO was being interviewed.
And he said, "Oh, I'm sure that for everything else that is going on will be back before the end of the year." And at the time, that seemed like a
long way off.
But now, day after day after day, we get more and more delays. And you know what happened here, Richard? What happened here is they had this
catastrophic problem with the MCAS system, no question about that.
But what's been killing them ever since is they have had one delay after another. It seems to have opened the box for looking at everything about
this airplane. Why it was approved? How it was approved? All the other systems involved. Can you fix it with software? Or do you need hardware
fixes? All of which pushes the delay further and further and further.
And yes, when you've had two massive fatality crashes, you need a lot of scrutiny. But could it get any worse for Boeing right now, Richard? I
don't know when it comes to this airplane.
QUEST: Well, I suppose arguably, Tom, if it has transpired that there has to be some fundamental redesign of either infrastructure, or airframe to
account for it, then you'd be talking about it yes, but we are some way off -- we're not even on that card yet, I don't think, are we?
FOREMAN: No. No, we're not there yet. And of course, Boeing doesn't want to get to that point. Because you're right that would be, yes, in a sense,
in a business sense, catastrophic.
So they're not there yet, but all of their holding maneuvers have not really been paying off, have they?
QUEST: What about this story that "The Guardian" had? It has the pictures of the plane, the Ryan Air, I think it's called a 737-8200. Now it's
noticeable that when IAG bought its planes, 200 of them at the Paris Airshow, they didn't use the word MAX at all. They called them the 7378
and the 7379. Do you think MAX does not belong to this world in terms of the name?
FOREMAN: I think it's gone. It's not gone yet, and Boeing keeps saying they're not looking for a new name. But they could just start ignoring
that name and acting like that name doesn't exist, and allowing carriers who buy the plane to call them what they wish, with a series of numbers
It's hard to imagine at this point in time, that any airline out there is eager to say, "We're flying a 737 MAX." And it's hard to see that in the
near future. So yes, I think the idea that somehow that gets changed is very real.
Right now, again, Boeing says they're not searching to do that. But this is true. For this plane to get back on the air, not only does it have to
survive all of these tests, not only does it have to get past this enormous scrutiny, not just here in the U.S., but from the international market.
But once again, we come to that question of faith. Somehow faith has to be restored and it's hard to see how you get there with the name MAX hovering
QUEST: Tom, good to see you. Sir, keep watching and come report back to us. Thank you.
As QUEST MEANS BUSINESS is continuing from London, now, Alan Turing helped win a war by cracking enemy codes. Of course, he took his own life because
of anti-gay prejudice. Now Britain is playing proper tribute to the code cracker, Alan Turning.
And staff at Amazon on strike. It's the company's biggest day of the year from America to Germany, its Prime Day protests, in a moment.
[15:11:42] QUEST: There is strong evidence tonight that the Trump trade war is hitting China's economy and that's raising the stakes and the
standoff between the superpowers. Growth in the last quarter was China's slowest in three decades. President Trump is taking this credit.
He tweeted, "Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries. Thousands of companies are
leaving. This is why China wants to make a deal with us."
China is stimulating its economy. Extra government spending, tax cuts to cushion the slow down and shifting the reserve requirements for banks. And
Beijing insists the present pace of growth is sustainable.
(BEGIN VIDEO CLIP)
MAO SHENGYONG, SPOKESMAN, CHINA NATIONAL BUREAU OF STATISTIC (through translator): We have put more energy into restructuring, transition and
upgrading without deliberately relaxing the policies for the sake of maintaining a certain speed. The current economic growth speed is
therefore solid, high in quality and sustainable.
(END VIDEO CLIP)
QUEST: Patrick Chovanec, is the Chief Strategist at SilverCrest Asset Management. He joins me now. Patrick, good to see you. Thank you, sir.
And the so how much -- I mean, really what we need to know is how much is the trade tariffs actually taking a toll here? How much of this number,
assuming we believe it even to be moderately accurate is because of the trade tariff?
PATRICK CHOVANEC, CHIEF STRATEGIST, SILVERCREST ASSET MANAGEMENT: It's convenient for politicians both in the U.S. and China to blame tariffs for
this or the trade war. It's convenient for the White House to say that they're gaining leverage on China, it's convenient for the Chinese to say,
look, this isn't our problem. This is something that the United States is doing to us.
But really, Chinese exports overall globally are down about one percent year-on-year. You know, that's a dent to the economy. It didn't help, but
really China slow down comes from much deeper issues in the Chinese economy, over reliance on credit expansion, over investment and then bad
debt that's resulted from it that's weighing like an anchor on China's economy.
And what that means is that not only is the trade war not really to blame for China's slow down, but a trade deal won't solve China's slow down.
QUEST: All right. The wider economic issues. As you've just said, if we look underneath the numbers, though, there are some reasons for
encouragement, more consumer demand, more domestic-led demand now in China, coupled with more stimulus, but you're not buying it.
CHOVANEC: It is hard to know what to make of China's numbers. You know, increasingly people who watch China closely take the headline number, the
GDP number with a grain of salt simply because it just doesn't vary from quarter to quarter like a normal economy does, it is way too smooth.
And then if you look at other economies that usually are bellwethers for China, South Korea, actually its GDP shrank in the first quarter.
Singapore's, it shrank by three percent. China's own imports shrunk by nearly eight percent year-on-year.
All of those seem to indicate actually shrinking demand within China. So it's really -- you know, I know what the official numbers say that there
was buoyant domestic demand in China. But it's hard to reconcile that with the bigger picture.
[15:15:13] QUEST: So take that and then if things are worse than expected, what is the Chinese capacity or appetite to withstand these trade tariffs?
Bearing in mind that President Xi may not have to face an election, but he does have rest of regional governance, and he does have a rural populace
that can cause him trouble.
CHOVANEC: So the hope in D.C. is that by weakening the Chinese economy that it will force them to come to the table and essentially open up and do
the things that they themselves have said they need to do.
But the indication really seems to be that under Xi, they've gone on lockdown that they're trying to insulate the Chinese economy from external
trade pressure, and that means essentially stopping reforms, the kind of reforms that while they're necessary to get China's growth back on track
could also prove risky, and potentially introduce some instability.
So it actually in some ways, unless there's a breakthrough, it pushes China in the opposite direction, that we want them to go with.
QUEST: Finally -- all right, but then, again, this idea, you -- we can -- I suppose I am taking it down to its most simplistic level, which is the
President of the United States saying our tariffs are hurting, and they will force you to come back to a deal, and others saying, no, China has
enormous capacity for pain. And if they don't want to do a deal, they won't do a deal, regardless of the economic outcome. Who is going to win
in that eventuality?
CHOVANEC: You know, I think China would like a deal, but -- and they like the President to get off their back, but I don't think they're willing to
give up, you know, as much as he wants them to. And they seem to be digging in. That seems to be the rhetoric.
And you know, there are a lot of things that they could do, including devaluing the currency, which they've proven reluctant to do that would
kind of slap the United States back in a hard way.
So I think it's dangerous for the policymakers in the U.S. to sort of be cheering the slowdown of China's economy, an uncontrolled slow down.
China's economy needs to slow and it needs to change gears, but an uncontrolled slowdown could hit the United States in a lot of ways,
including, for instance, slower Chinese demand for oil, for energy, can undercut the oil price.
It could turn around and undercut the very highly leveraged shale industry in the United States. And, and hit them hard like that's what happened in
2015. So there are a lot of ways that this can rebound against the United States.
QUEST: Patrick, it is good to see you. Thank you, sir.
CHOVANEC: Good to be with you.
QUEST: One day before Facebook's head of cryptocurrency faces questions on Capitol Hill, the U.S. Treasury Secretary is warning he has serious
concerns about Libra, which is the supposed digital currency they are creating and other forms of digital currency.
Speaking over the last hour, Steve Mnuchin says cryptocurrencies could be used in money laundering and for financing terrorism.
(BEGIN VIDEO CLIP)
STEVE MNUCHIN, U.S. TREASURY SECRETARY: This is indeed a national security issue. The United States has been at the forefront of regulating entities
that provide cryptocurrency. We will not allow digital asset service providers to operate in the shadows and we will not tolerate the use of the
cryptocurrencies in support of illicit activities.
(END VIDEO CLIP)
QUEST: From cryptocurrencies to the real thing, and the man whose breakthrough help Britain win World War II, he went on to lay the
groundwork for modern computing and artificial intelligence has been announced, he will appear on the new British bank note, the 50-pound note.
Alan Turing is featured on the new plastic 50-pound note.
[VIDEO CLIP PLAYS]
QUEST: Turin's life story was turned into a movie starring Benedict Cumberbatch. His computer broke the Nazis Enigma code for encrypting top
secret messages. It gave the allies a huge advantage.
Unfortunately, he committed suicide at the age of 41, following his conviction for having sex with a man. Homosexual acts were a crime in the
United Kingdom until 1967.
In turn, Alan Turing received a Royal pardon five years ago, but it was 60 years after his death. John Leech is a former MP who campaigned for
pardons for men convicted of offenses under the pre-67 anti-gay laws. He joins me from Manchester.
It took a long time, not just for Turin, but for the others to receive the necessary pardons, didn't it?
[15:20:05] JOHN LEECH, FORMER BRITISH MEMBER OF PARLIAMENT: It certainly did. Originally in 2009, there was an apology from the then Prime Minister
Gordon Brown. But that simply wasn't enough.
So I introduced a bill into Parliament to get a Royal pardon for Alan Turing. And eventually, we managed to get that through Parliament. And
then subsequently, 75,000 other people who've been convicted of similar offenses, also received a pardon.
QUEST: I sort of look at what happened, you must be very, I suppose, pleased or gratified, I don't know whether it's the right word, but you
know what I mean, that he is being recognized in such a traditional establishment way by putting a face on a bank note?
LEECH: Yes, that's absolutely true. I think it's a fitting tribute for a national hero. He was an icon, and has been an icon for decades since his
death. And as the Father of Computing, the person who brought the Second World War to an early conclusion and saved countless lives as a result of
the work that he did during the Second World War.
It was absolutely devastating to see the way he was treated after the Second World War, and I think this is the final piece of the jigsaw to show
that Alan Turing was a national hero, and I think people will now see him and understand what he stood for and what he was responsible for, for
decades to come.
QUEST: I don't want to in any way, belittle or diminish the work that others have done like yourself, but how far do you think the rehabilitation
or the ability to do that? As you know, it's not rehabilitation, there is nothing to be rehabilitated for? How far do you think the movie went to
putting Turing's case before the public?
LEECH: Well, I think the movie played an important role in getting the story out to more people. I remember attending an event several years ago,
when the Lord Mayor at the time, Elaine Boyes was explaining how she'd come to understand about Alan Turing because there was a road in her council
ward called the Alan Turing Way.
And it's certainly the case that millions of people in the U.K. didn't know who Alan Turing was and that film actually brought it to lots of people who
otherwise wouldn't have known about the story of Alan Turing.
QUEST: If we look now at the measures and moves you're making to rehabilitate and to pardon those who were convicted under laws at the same
time, how far is it going?
LEECH: Well, Alan Turing received a pardon; 75,000 people subsequently also received a pardon. Clearly, the offenses for which they were
convicted shouldn't have been offenses in the first place.
And I think although it's partly symbolic now, it does make -- it does people realize that actually, they should never have been convicted in the
QUEST: But John Leech, let me finish by saying you say it's only symbolic. But isn't the symbolism significant? Bearing in mind that there are parts
of the world, for example, in Kenya, where the Supreme Court has upheld the same sort of laws that the U.K. got rid of many years ago.
And although India has changed, many of the former British colonies, hold on to those laws on the basis -- so the symbolism is important.
LEECH: I think we're lucky in the U.K. to live in a society that recognizes equality. There's still problems around inequality in the U.K.,
but we recognize equality now, and we are now leading the way in showing other countries that they ought to be going down the road of bringing full
equality to everybody and treat everyone the same.
QUEST: John Leech, thank you for joining us. We much appreciate it tonight, from Manchester. We will show you the markets and the way they're
trading because it is an interesting day, bearing in mind, we've had so many records of late, it is time to take a bit of a pause.
But what's interesting is the pause is not that great. We're up nine points. By the way, if we go through nine then I think this is a record on
the back. Yes, Dow and the NASDAQ are both at records. The Dow is comfortably over 27,300, obviously. The NASDAQ -- so the S&P is not at a
record, obviously it's down, but it is still over 3,000. So what we are seeing are small moves, which suggests that the market is content to trade
Meanwhile, it's trading sideways while millions of shoppers are browsing Amazon Prime Time Deals or Prime Day deals. Amazon's competitors and
workers are marking the orgy of consumptions in very different ways.
[15:28:20] QUEST: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. Amazon's Prime Day is delivering protests in
spades. Competition is taking a shot at Amazon, too.
And it is Cricket Marketing World Cup. We will look at the sponsors who want to claim victory. As you and I continue. This is CNN. And on this
network, the facts and the news always come fast.
President Trump is defending his racist tweet about four Democratic women of color insisting it wasn't racist at all. He is now accusing the
Congresswoman of hating America, adding, "If don't like it, they can leave." Trump earlier said the lawmakers all American citizens should go
back to their home countries.
E.U. Foreign Ministers held crisis talks on the Iran nuclear deal today. They decided to give diplomacy more time, even as Britain warns the small
window to save the deal is closing. Iran says it won't resume full compliance until Europe honors its commitment to shield Tehran from U.S.
The Congo says it has confirmed a case of Ebola in the City of Goma, a major transport hub and home to more than a million people. Until now, the
disease has mostly been confined to smaller villages. Almost 1,700 people have died in the outbreak since last August. The World Health Organization
says it thinks it caught the case early enough to prevent Ebola from spreading throughout Goma.
And the former South Africa President Jacob Zuma has denied corruption allegations at a government inquiry in Johannesburg. It's the first time
Zuma has been questioned about alleged corruption of state resources.
[15:30:00] Mr. Zuma told the committee, he is the victim of a character assassination conspiracy by his enemies.
Amazon's Super Bowl of shopping has arrived. It's the fifth annual Prime Day, and it started on Monday. Amazon says this year you get more deals,
you have more time, but it doesn't say its backlash is bigger, too. Workers worldwide are striking over pay on working conditions.
Activists are protesting against Amazon's involvement in the U.S. deportation efforts. CNN's Clare Sebastian is following it. Not
surprising, really, isn't it? If Amazon is going to trumpet its big day and garner all the publicity, then workers who have grievances are going to
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Richard, you know, we've seen it from the past, we've seen the scattered protest around fulfillment
centers and things like this. But it really feels like this year, it's taken on a whole new energy. We're seeing all kinds of different groups
out there protesting all kinds of different grievances from workers' rights to climate change to Amazon's alleged involvement with Immigration and
It's also global, it's all across the U.S., we've seen workers in Germany walk out, we've seen protests in the U.K. But this, don't forget is a
really big deal for Amazon this day. Prime now has about 100 million members, this is a huge driver of growth, and so they've carried on,
Richard, they've carried on investing in the day and marketing it as best they can.
SEBASTIAN (voice-over): When it came to marketing this year's Prime Day, Amazon did not shop around for the cheapest options.
TAYLOR SWIFT, MUSICIAN: I want to say thank you so much to Amazon for having us all.
SEBASTIAN: Taylor Swift headlining the live-streamed Prime Day concert, celebrities like Will Smith and Mark Wahlberg appearing in ads.
MARK WAHLBERG, ACTOR: You don't need to go shopping anymore, you just go to Amazon Prime.
SEBASTIAN (on camera): Is it the day work is an event?
UNIDENTIFIED MALE: Absolutely, that's why we keep growing it.
SEBASTIAN (voice-over): Prime Day is now five years old and has grown to a full 48 hours. The deals are exclusive to Prime members of which there are
already more than a 100 million across 18 countries.
UNIDENTIFIED MALE: More people are now in a monogamous relationship, if you will, with Amazon vis-a-vis Prime then voted in the 2016 election or
SEBASTIAN: Prime Day is now Amazon's biggest sales event of the year, bigger than Black Friday or Cyber Monday, but this year, it's not just
about the many items getting shipped out of centers like this. The company is facing backlash on a number of fronts. From its team of workers to
concerns it's simply gotten too big. Give me a sense of how you view the regulatory questions around the company at the moment?
UNIDENTIFIED MALE: I don't spend a lot of time thinking about it.
SEBASTIAN: One thing they are thinking about, this Prime Day brings the first-ever walkout at a U.S. Fulfillment Center. This group of workers in
Minnesota which has protested in the past that employees have set unrealistic targets leading to stress and injury.
UNIDENTIFIED MALE: We have a lot of redundancy in place for it. We have over 175 fulfillment centers globally to make sure that Prime numbers are
not disrupted during this event as well. But we take, you know, concerns of our employees obviously very seriously as well. But I'm really actually
proud of the working conditions in our fulfillment centers.
SEBASTIAN (on camera): Why do these concerns keep coming up?
UNIDENTIFIED MALE: Most of these are from the outside, it's obviously very hot political environment as well.
SEBASTIAN (voice-over): And the backlash is also coming from the competition even as they launch their own sales to rival Prime Day. Target
is advertising Summer deal days, emphasizing no membership required and eBay has gone a step further with the tongue and cheek ad featuring a
teenager called --
UNIDENTIFIED MALE: Alexa?
AMAZON ALEXA, ARTIFICIAL INTELLIGENCE: Yes?
SEBASTIAN: Even calling their event a crash sale promising extra deals if Amazon's website crashes as happened in 2018.
ALEXA: They mostly have deals on a bunch of random stuff nobody really wants.
UNIDENTIFIED MALE: Unlike some of the competitors, this time of year, the sales and the deals that we're featuring are not products that are
sitting on our warehouses that are collecting dust that we have to liquidate.
SEBASTIAN: In an e-commerce market where one company controls almost half of all sales, Amazon's annual shopping festival has made it a pretty big
SEBASTIAN: So, Richard, the walk-out in Minnesota by around a 100 Amazon employees, that got underway at the top of the hour, this is significant
not because of its size, it's just a 100 employees and one of about 110 fulfillment centers in the U.S.
But it's significant because notoriously seen that it's been hard for workers in the U.S. to organize. These workers, I've spoken to one of
them, say that they hope that this will embolden others in the U.S. to do the same. A scathing response there from Amazon to all of these protests.
They say these groups are candoring misinformation to work in their favor.
QUEST: Right, but are they having any effect, these -- I mean, it's not surprising, Clare, that workers would take the moment of greatest
opportunity to make the greatest protest.
[15:35:00] SEBASTIAN: Not surprising at all, Richard, and especially given the political climate at the moment, we've seen a lot of the 2020
candidates taking on Amazon, the right guys to round this is pretty strong right now. But I mean, the numbers speak for themselves, there's just a
few walk-outs and around 175 fulfillment --
QUEST: All right --
SEBASTIAN: Centers worldwide. So, as the Amazon exec told me in the piece, they have a lot of redundancy, they're not worried about this, they
QUEST: Right, quick poll. Have you bought anything yet on Prime Day?
SEBASTIAN: I have a couple of things waiting to pull the trigger, I have to admit, I haven't quite done it yet.
QUEST: Oh, I haven't, I couldn't find -- no, I've been -- life is too short, all right, thank you. Wall Street is reacting to reports that
Symantec and the Broadcom have called off takeover talks. Symantec shares are looking at a steep slump. At the moment, they're down sharply,
Broadcom is up and Symantec is down 12 percent.
Reports suggest the deal broke down, Symantec said it wouldn't accept a buyout for less than $28. Anna Stewart is with me. Look, but they always
said they won't accept more, so what happened here that they held to their 28, that there was no wiggle room available?
ANNA STEWART, CNN REPORTER: Well, it did seem from media reports that actually, they had agreed over $28 a share, but over the weekend during due
diligence, they uncovered some nasties and they decided to bring that down. And Symantec is not happy.
But what's really interesting, Richard, is the fact that this was a deal that really made sense for Symantec as a company undergoing all sorts of
problems. And one analyst today said it's a major head scratcher, and frankly, most analysts had the value for this for this deal at $24 -- $28,
at the very highest, but actually that was above most.
QUEST: So what's the thinking on why this fell apart? I mean, assuming Symantec are not lemmings that want to do serious damage to themselves?
STEWART: Well, either this is just the art of the deal, and we will --
QUEST: Oh, you think --
STEWART: See it come back to the table --
STEWART: Oh, it's not over yet, oh, it's never over, oh, this is just the beginning, I suspect?
QUEST: Oh, really?!
STEWART: Oh, yes! But then you see the new interim CEO, has only been there since May, he's called Richard Hill and he is very famous for wanting
to turn things around, and he's made a big deal about saying he can turn this around. So, a lot of analysts out there wondering whether he just
wants to make sure that he can fix it rather than flip it because that's what he said he would do.
There are part that actually firms are involved, a couple on the board, but frankly, they're not going to get nearly as good a deal from a private
equity firm than Broadcom which had all these synergies. This was a deal that made sense.
QUEST: So, if you're a betting woman which you're not --
STEWART: Of course not --
QUEST: But if you were a betting woman, do you think this has got more to go?
STEWART: I think it's got more to go, but they need to be quick as Broadcom's got other targets that it's looking at buying. TIBCO for
example is on a massive software acquisition spree, it's obviously traditionally a chipmaker, but it's really trying to diversify away from
hardware into software at a $19 billion software acquisition last year.
QUEST: But why did this one make sense? Why did Broadcom and Symantec make such sense? Though the street liked it, the deal looked like it should
STEWART: The balance, I would say was more -- it made more sense for Symantec than Broadcom. For Broadcom, there are several other options out
there that it could see synergies with its new acquisition from last year. So, for Broadcom, there's much more out there, there are many more options
on the table.
For Symantec, I would say there are less. This was a good deal for Symantec. But for Broadcom, it's interesting why they're trying to
diversify into software because they were trying to do this when the Qualcomm deal dream that fell too.
QUEST: Yes --
STEWART: Help administration --
QUEST: Yes, help administration --
STEWART: Absolutely not -- but since then the Huawei ban has really bitten hard for Broadcom.
QUEST: Right, but now Huawei's ban has -- seems to have been alleviated --
STEWART: No, only seems, but straight after the ban, they said they were going to lose $2 billion a year in annual sales. And it's so unclear, yes,
we don't know what the fall-out will be. But certainly they're diversifying -- they're diversifying away from chips towards software makes
QUEST: Good to see you, thank you very much, indeed. The high-tech nation and its low-tech energy and why South Korea is struggling to switch to
renewables. In a moment.
[15:40:00] (COMMERCIAL BREAK)
QUEST: The president of Indonesia says his country needs economic reform on a massive scale. Joko Widodo -- we turn to CNN's Anna Coren, it's his
first interview since he was elected to a second term, and he explained how he'll boost growth.
(BEGIN VIDEO CLIP)
ANNA COREN, CNN CORRESPONDENT: Well, the IMF believes that with ambitious economic reform here in this country, Indonesia could grow by 6.5 percent
by 2022. Do you have the political will to enforce these very vital reforms?
JOKO WIDODO, PRESIDENT, INDONESIA (through translator): We must conduct reform on a massive scale, a reform of mindset so that these changes are
real and will deliver a giant leap for this country so that we're not stuck in the middle income trap that's experienced by many countries.
We don't want that, but this is a huge challenge for us, and it's fairly difficult, but we will continue to work hard to achieve that goal.
COREN: Education, as you have mentioned, is a huge problem for your country. Despite the constitution requiring that the government spend 20
percent of its budget on education. Studies have found that more than half the students finishing school are illiterate, why do you think the system
is failing these kids?
WIDODO: Well, I think in terms of the 20 percent budget, it's quite a large amount, but I think there is a lot of misuse, so that is something we
would like to work on so that we can have a better targeted budget which will result in a better education system in Indonesia.
Issues related to curriculum, the quality of teachers and issues relating to vocational school are important for Indonesia to improve and elevate its
COREN: Well, the trade war between the United States and China is obviously unsettling world markets, but could this be an opportunity for
WIDODO: Trade war for any country is something that they cannot gain from, and I think all countries are facing difficulties due to this trade war.
Nobody wins, but I think Indonesia will seek opportunities to take advantage of the situation so that the Indonesian economy will not be
Of course, it's not easy, but we will hope that protectionism and the trade war can be eliminated because I believe that free market, free trade and
fair trade is something that is highly beneficial for the global economy.
(END VIDEO CLIP)
QUEST: The president of Indonesia as his country faces economic challenges, South Korea is facing an energy challenge. It's one of the
most high-tech countries in the world, but when it comes to renewable energy, the gears of change are grinding slowly. CNN's John Defterios
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR (voice-over): It's known locally as the Han River Dynasty, South Korea's six-decade long industrial
From the ashes of the Korean war to the Asian economic tiger. But in the land of K Pop sensations and all things high tech, South Korea remains very
20th century when it comes to energy.
[15:45:00] (on camera): Why was it slow adapting to the renewable energy market, would you say?
KIM DONG-SEOP, CHIEF EXECUTIVE OFFICER, RENEWABLE ENERGY DEPARTMENT, SHINSUNG E&G: Korean people enjoy low price of electricity due to coal
generation and the nuclear generation, but because of the social issues like air pollution, the people start to appreciate the very renewable
DEFTERIOS (voice-over): Shinsung Mix cutting-edge solar cells, they say can boost average output by 25 percent.
(on camera): The company moved into the solar business in 2007, recognizing the energy transition, but it was actually founded 30 years
before providing cooling system for chip manufacturing.
(voice-over): After a dozen years of sluggish growth due to intense competition from China, these shipments are destined for the United States
and Canada as demand rises.
DONG-SEOP: Six hundred and thirty kilowatt solar panel on roof-top.
DEFTERIOS: The CEO Kim shows me how the sun powers 40 percent of their own operational needs, but that is certainly not the norm in the country.
Renewables make up just 6 percent of overall energy, dwarfed by coal and nuclear power representing 70 percent. The government's goal is to more
than triple solar and wind energy by 2030.
UNIDENTIFIED MALE: The target is ambitious, and we as a business as usual case do not have them achieving the target, they need to do something
UNIDENTIFIED MALE: Because of the worldwide movement for renewable energy 100 percent, I think most of the big Korean companies should go in that
direction to survive.
DEFTERIOS: Kim believes by 2040, South Korea after a very slow start can do in renewables what it achieved in the fabled on River Dynasty. John
Defterios, CNN, Seoul.
QUEST: There's nothing boring about this. It's a dream that's three decades in the making. England won its first Cricket World Cup. The Brits
and the brands are celebrating and it was an extraordinary, nail-biting finish.
QUEST: OK, our regular viewers would be aware, I could hardly describe myself as a cricket fan, and early understand the rules, but that doesn't
seem to matter because as my next guest just pointed out to me, everybody in this country is an ardent cricket fan especially the Prime Minister
Theresa May celebrating today after the men's team won their first World Cup on Sunday, but they didn't just win.
[15:50:00] (WORLD SPORTS)
QUEST: Yes, it was -- you know, it wasn't just winning. It was winning on the back of archaic rules that have almost never been used in a match that
went on almost as long as any and by the slimmest majority or the slimmest victory possible, defeated New Zealand, capacity crowd in a victory so
riveting, the fans will be talking about it for years to come.
And that Prime Minister Theresa May, well, she got into the spirit, she does like it both, she may indeed be Prime Minister for a few more weeks,
but she's not frightened to go another dance. It's not the first time we've seen her dance, and of course, she welcomed the cricket team tonight
at Downing Street for a reception.
And so, a contest of the highest quality, and the competition off the field too, truly advertisers, cricket-themed campaign. So, Britannia; Indian
food company launched a sweepstake with a weekly prize plus a trip to England to see the match. Coca-Cola, India, put Bollywood stars in the
forefront of its adverts and invited the fans to check the codes on bottles for a chance to win tickets.
And Uber, not the broadest angle music, creating a World-Cup anthem that makes sounds from around the globe. Gareth Balch is the chief executive of
sports marketing firm Two Circles who measures the impact generated by campaigns like these. Good -- joins me now, good to see you. What was
GARETH BALCH, CHIEF EXECUTIVE OFFICER, TWO CIRCLES: We've been supporting the ICC and England cricket world -- England World's Cricket Board with
setting them out with tournament and broadcasting it into the widest possible audience we can to grow the game of cricket.
QUEST: Right, so how did -- I mean, you couldn't really lose in the sense of this particular final --
BALCH: OK --
QUEST: But up until the final, how had it been going?
BALCH: It had been going well. We had a damp start, it rained a little bit more in June and we all hoped which sometimes could be a peril of
English Summer. But the cricket was fantastic, from the bench, those catch, and the first game at the oval to memorable innings and chasers, it
was a -- it was a wonderful tournament for cricket.
The batmen and the bowlers were well offset against each other.
QUEST: Right, but all the pieces are in play. All the contracts are there, all the marketing is there, so how does a great final like yesterday
-- how does that play in?
BALCH: Right, you can't -- you can't plan for this cricket --
QUEST: Right --
BALCH: Drama or sport, but you hope for it. And yesterday was -- yesterday was a treat like no other, and I think what we'll see is a long
legacy from cricket for people to understand that you don't necessarily need to know what you described as the archaic rules of cricket.
But just to know that I've got this many rounds and I've got this many balls and the person who gets the most wins. So, yesterday, the tie made
it a little bit more complicated. But --
QUEST: It was a strange rule --
BALCH: It was a strange rule --
QUEST: That they had to fall back on which has not been used.
BALCH: Yes, indeed, and the crowd was bemused, even those --
QUEST: I can see they were Googling.
BALCH: Yes, indeed --
QUEST: You know, what this rule is and how does it operate?
BALCH: Indeed, I think Lord's Wi-Fi was somewhat challenged --
QUEST: Yes --
BALCH: Than any other tie-break, even the best cricket fans in there. But the beauty of the game is the tension it can create and the sport that we
saw yesterday was like no other.
QUEST: Who gets -- sure, you know, hard dollars and cents, who gained yesterday in terms of sponsors?
BALCH: A lot of sponsors did very well yesterday --
QUEST: How, though? They've already spent the money.
BALCH: Exposure. The Cricket World Cup has delivered 2.6 billion video views, twice as many as the FIFA World Cup last year at the course of the
tournament, that was before yesterday. The sponsors would have benefitted hugely from that. So, Nissan and MRF and Booking.com and Uber who you
mentioned earlier all would have benefitted from that.
And what you are increasingly seeing is the sponsorship dollar working harder than the paid media dollar, the options for brands to be able to
clinch to audience through paid media are there, and they do work, the sponsorship has a unique quality.
QUEST: Right, because it's quite difficult sometimes to convince sponsors and except for the marquee teams --
BALCH: Yes --
QUEST: The value of it, as I've always understood it --
BALCH: Yes --
QUEST: Because not only do you have to pay for the sponsorship, you have to pay for all the stuff to --
BALCH: That's right --
QUEST: Amortizes it and --
BALCH: That's right --
QUEST: Leverages it.
BALCH: Yes, indeed, you bought rights for it and then you have to activate alongside that. What we're seeing though is the rights holders like the
ICC and the ECB who were party to the contest yesterday, were able to offer new value because there are media owners too, they can connect to audiences
via their own channels.
The 2.6 million video views is a unique channel that maybe often there certainly proved the internet age and it's increasingly available to
sponsors to clinch to audiences by sportswriters in this.
QUEST: And all the other ancillary sponsorship that goes with it, maybe not in cricket, but you know, the shirts, the all -- how many logos?
BALCH: Yes --
QUEST: I mean, Grand Prix, you're also involved in the Grand Prix.
[15:55:00] BALCH: Very much --
QUEST: Now, CNN, we used to sponsor a car in there? How many bits and bobs can you shove on a car?
BALCH: Yes, indeed.
QUEST: Is it worth it?
BALCH: Well, increasingly, it's proven that it is, but it's not just about a signage or logo placement, it's about more than that. It's about --
QUEST: Is it?
BALCH: It is, I promise you it is, but it's worth it relative to my alternative spend options, so in my media mix, from a CMO of a brand like
Booking.com, I've got to make a decision about where my spend is, is going to work hard for me, how am I able to sell more -- it's over, sports proven
time and again to deliver.
QUEST: Do you have to be careful that you don't blind yourself to the glamour and the glitz and the --
BALCH: Yes --
QUEST: Razzmatazz and the ability to take yourself and your friends and family to the game?
BALCH: Yes, well, but you have to be careful of a passion buy, but what sports been is a passion buy for a long time, that is also now an evidence
data driven by, and that's the real appeal. So, you get moments like yesterday with all the intoxication that comes with those highs, and I can
now see how it drives the bottom line of our business too, and that's the opportunity for brands.
QUEST: Very good to see you, sir, I like you --
BALCH: Thank you, have a --
QUEST: And on the intoxication of highs that we're just talking about, well, a bit intoxicated ourselves for the last few minutes on Wall Street.
Look, it's only 3:09 for the exchange and by the second, but if it goes -- if that number stays positive, we will be at a record and we'll have a
profitable moment after the break.
QUEST: Tonight's profitable moment, I've just been told that the plastic handle on my microwave oven at home has broken, and it doesn't look like it
can be repaired and it's older, but anyway -- but the point is the person said to me, well, get a new one. It's Amazon Prime Day.
You can afford to get a bargain or a deal, and yes, I suppose I cannot just be bothered. I mean, I'll just be blunt about it, the thought of going on
and then having to battle and find and try and find, but I suppose this manufactured event which is Prime, which will eventually reap huge profits
for Amazon and everybody else on the way, I suppose that for society we live in today. That's the way it all goes.
Somebody creates an event, a consumer event, Christmas and everybody else piles in. I'll show you the microphone if I've chosen if I ever get around
to actually looking online. And that's QUEST MEANS BUSINESS for tonight, microwave and all, I am Richard Quest in New York -- no, not, I'm in
Whatever you're up to in the hours ahead, I hope it's profitable. That is New York, the bell is ringing, the day is done!