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QUEST MEANS BUSINESS
President Trump Fires His National Security Adviser; Apple Has Unveiled Its Latest Range Of Gadgets; The E.U.'s Controversial Competition Commissioner Is Coming Back And She's More Powerful Than Ever Before; President Trump Fires U.S. National Security Adviser John Bolton; Israeli Prime Minister Benjamin Netanyahu Announces Plan to Annex Parts of West Bank; At Least 31 Dead After Ashura Stampede in Iraq. Aired 3-4p ET
Aired September 10, 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: There is an hour to go before the closing bell rings on Wall Street and if you look at
the market, it's not quite as grim or as bad as it seems. There's a lot of red across the board, a couple of little mountain -- not mountains --
peaks, maybe just hills of green, many valleys of red, but it is the key point, it is already down 32 points. It's a loss of barely a tenth of one
Same for the NASDAQ, same for the S&P. We'll get into the reasons on the market and the reasons why.
Oil prices drop. Donald Trump says he has fired his National Security adviser, now what's the relationship there? Apple has announced its new
iPhone and the ones go to 11. And the Chief Executive of Saudi Aramco says an IPO is coming and it's coming in his words, very soon.
We are live in London on Tuesday. It is the 10th of September. I'm Richard Quest, and of course, I mean business.
Good evening, tonight, oil prices are down and the reason, President Trump fired his National Security adviser, John Bolton. The news came a few
hours ago. Now Bolton was a strong advocate of Donald Trump's administration's maximum pressure campaign against Iran. The surprise exit
prompted speculation the chance of any military action there was now decreased.
Brent came into pressure almost immediately after the President tweeted that he asked Bolton to resign. Look at the graph. It really is quite
clear if you marry it up to the time of the tweet. Bolton tweeted a different version of events saying, "I offered to resign last night." And
President Trump said, "Let's talk about it tomorrow."
Speaking at the White House a few moments ago, the Secretary of State Mike Pompeo admitted John Bolton did not always see eye to eye with colleagues.
(BEGIN VIDEO CLIP)
MIKE POMPEO U.S. SECRETARY OF STATE: ... about how we should proceed. The President is entitled to the staff that he wants at any moment. This
is a staff person who works directly for the President of the United States and he should have people that he trusts and values and whose efforts and
judgments benefit him in delivering American foreign policy.
It's what -- as Cabinet Member Secretary Mnuchin and I try and do each and every day and when the President makes a decision like this, he is well
within his rights to do so.
(END VIDEO CLIP)
QUEST: Jeremy Diamonds is with me in Washington, Matt Egan is in New York. The politics and the business. Let's talk to -- let's go to Matt Egan
first. The relationship between oil and John Bolton is what?
MATT EGAN, CNN BUSINESS LEAD WRITER: Well, I think it's as simple as this. The biggest Iran hawk in the White House has left the building. The market
is betting that this sudden departure of John Bolton will either improve relations between the United States and Iran or at least lower the chances
of some sort of a military conflict.
And so that's what we saw this really sharp decline within minutes of President Trump tweeting out the news that Bolton has left. Bolton was
obviously a hardliner when it came to Iran. He really supported this maximum pressure campaign, which was really all about sanctions on Iran.
So I think this really shows two things. I mean, one, the oil market is very sensitive to anything that suggests new supply coming on the market
and two, the market is moving on tweets more than actual fundamentals -- Richard.
QUEST: Jeremy Diamond in Washington. John Bolton, I mean, the hard line on Iran, the President would have liked, so what was it? Where was the
disagreement besides Bolton's naturally abrasive character that rubs other members of the administration the wrong way? What was it about the
President and Bolton that the two couldn't exist?
JEREMY DIAMOND, CNN WHITE HOUSE REPORTER: Well, it was on a range of issues, Richard and you hit the nail on the head when you talk about Iran,
that is ultimately the reason why the President hired John Bolton in the first place. He was frustrated with his coterie of National Security
advisers at the time who were trying to keep him from withdrawing from the Iran Nuclear Deal. And he sees this guy, John Bolton on TV arguing for
withdrawing from the Iran Deal, and that is ultimately the reason why the President brought him in.
But over time, daylight between the President and John Bolton on a number of issues became quite clear, ranging from North Korea up to most recently,
this notion of whether or not the President should bring Taliban leaders to Camp David for peace talks and whether or not the President should strike a
deal with the Taliban to decrease the United States' true presence in Afghanistan.
DIAMOND: And beyond that, there were also concerns that Ambassador Bolton was perhaps leaking information to the press that according to several
sources inside the White House who said that the President believed that Ambassador Bolton had perhaps been behind this notion that Vice President
Mike Pence was among those who disagreed with the President about this notion of bringing the Taliban to Camp David.
But again, we know that National Security adviser, John Bolton or former National Security adviser is pushing back on this notion that he was fired,
insisting that he resigned of his own free will.
QUEST: We'll come to that in just a second, I want to go back to Matt on the markets because the markets have an extraordinary stomach for
presidential tweets. They move -- they do move with a certain volatility, to be sure, but they tend to unwind themselves once they can sift out and
sort out between one and the other. This is just taking it in that stride to some extent.
EGAN: Right. This is a knee jerk reaction. And I actually think that the market may still be moved by tweets from the President, but it's not going
to really be about Bolton and Iran. It's going to be more about China and the trade war, right, because if you take out today, the real big issue
impacting oil prices and stock prices has been this concern over the economic fallout from the trade war, and how that could potentially cause a
severe slowdown or even recession.
And so, I think that the market -- the oil market -- may end up starting to pay a lot more attention to the trade war again, and not so much this Iran
QUEST: Finally, Jeremy, the palace intrigue, Bolton says he offered to go last night. The President said that think about it overnight, and in the
morning, the President just tweeted he was out. Where is the Smart Money? Whose story is right?
DIAMOND: That is a difficult one to be the judge of, Richard, but certainly beyond the President's tweet himself, we do have several sources
inside and around the administration who have told us that the President did indeed ask for Ambassador Bolton's resignation.
I spoke with a senior administration official just a little bit before coming on your show here, who was saying that the President and Bolton were
in the Oval Office last night arguing specifically over this issue about Camp David and the potential of leaks surrounding that and that the
President at the conclusion of that meeting asked Bolton for his resignation.
That being said, just to emphasize the suddenness of this firing this morning. This morning, an hour before the President tweeted that
Ambassador Bolton had been fired, John Bolton was in a principal's committee meeting, a meeting of top administration officials talking about
this notion of a refugee camp for next year. And he was the one leading the meeting and that meeting ended just an hour I'm told before the
President tweeted that Ambassador Bolton had been fired.
QUEST: Yes, Jeremy in Washington, Matt in New York. Thank you, both. The markets in the U.S. down just a tad. The Dow has pared the early losses.
The index would end a four-day winning streak if lower today, by only 30 odd points. So really, Treasury is continuing to push high, again, not by
much, 1.6 that they are now yielding.
At its headquarters in Silicon Valley, Apple has unveiled its latest range of gadgets, and the idea is that they'll breathe new life into 2019. This
is what they've announced, an iPhone 11 and an iPhone Pro. More cameras on both low end and high end handsets. More durable, longer life, slightly
lower prices. And there's an iPad with a bigger screen. The new Apple Watch has a display that's always on.
Now the stocks have 35 percent so far this year, it's just flat for the day. It is the best performer in the Dow. That being said, Samantha Kelly
is in Cupertino in California, Apple's headquarters. Should I be getting excited by what they've announced today? This is very much evolutionary
rather than revolutionary.
SAMANTHA KELLY, CNN BUSINESS EDITOR: Right, exactly. There wasn't anything major that was seen today. There are no foldable phones, no 5G
phone. Some of its competitors in the space are already doing that. So like you said, everything was kind of evolutionary.
The rumor mill was of course working its way, you know, in the past few weeks and everything was pretty much out there. So we didn't really get
shocked at all today. However, I would say the one thing that was a little bit surprising is they revealed some of the pricing for some of its
services, Apple Arcade is $5.00. The Apple TV plus subscription is $5.00. The iPhone 11 is $699.00. A lot of these prices are actually under what we
were expecting and I think that was somewhat of a surprise.
QUEST: The $5.00 for Apple TV or the Apple Plus or whatever it is being called, that is quite interesting compared to the -- it is a couple of
dollars less than the same basic service that you get out of Netflix. Now, here's the question though, does it make a difference? Are people going to
forgo their Netflix? Most of us are at the full screen $15.99 anyway, but I'm wondering whether or not it will make a difference that you save two
bucks by going to Apple.
KELLY: Right. Well, in some cases, it's even more than that, because Netflix updated the standard subscription to the $12.00 range just a few
months ago. So that's a pretty significant savings. Apple is touting a lot of exclusive streaming content shows with big names like Jennifer
Aniston and with Reese Witherspoon.
So I think it that has the content to lure people over for $5.00 a month, I mean, that's pretty significant savings.
QUEST: Samantha, thank you. Now, we want you to join in the conversation, get your phones and go to cnn.com/join. Which of the new products that
Apple announced today is the most exciting? Maybe none of them actually. Is it the iPhone 11, the Apple TV Plus streaming service and the pricing at
five bucks, the Apple Arcade gaming service, that's one straight in the eye, or none of them? cnn.com/join.
I agree if you're an Android person, you will probably be answering none of them. And you'll skew the results one way or another, and good luck to you
on doing that. But you'll see the results. You're welcome to join anyway, whatever way.
Apple is the company that ignited a communications revolution with the iPhone 12 years ago. Now, there's serious concern of what's next.
Innovations of the not so distant future were absent. There was nothing today. There was no 5G. There was no foldable. There was no two-way
wireless charging. It will be years before you get that from Apple.
But of course, the rivals -- Samsung, Android and Huawei -- have these features, or at least are well and truly on the way to bringing them to
market. Instead, Apple is going for services -- music, TV, and now gaming apps, which brings those steady revenue stream a year through the monthly
But is this really what Apple was about? The era of Job -- Steve Jobs that truly changed the world. Shelly Palmer is with me to tell me. Shelly,
what they announced is mildly interesting. But when you look at Samsung with its folding phone, and you look at Huawei, and the 5G -- I can -- is
it a bit meh?
SHELLY PALMER, CEO, PALMER GROUP: So Richard, first of all, what they announced today was nothing short of amazing. And anyone who is not blown
away by it simply doesn't understand how much technology they packed into the phone. You may not care about the three cameras, but if you shoot real
video or you're going to become a real videographer, having three primes, a wide, a telephoto and an ultra-wide is an incredible, incredible upgrade.
The front facing camera is now 4K capable that you can actually -- you can do things with this camera you couldn't even think about doing with a
camera ever before. It's going to literally change the way you do interviews because you can run the front facing camera and the rear facing
cameras simultaneously and get different shots with them. And there's editing software in the phone. So I'm sorry, there's crazy awesome stuff
going on there.
Secondly, they've done some pricing -- there's some pricing about this that says, "Hey, we know we're a little expensive. We've got an iPhone for
everybody." And probably the biggest news of the whole day is they said that the XR was the best-selling iPhone ever, in fact, the best-selling
smartphone ever. And they kept that in the line and they kept the price point down. So let's give these guys a little break. I thought they did
some great stuff today.
QUEST: All right, but what other shift, because, Apple is, if you look at the revenues and you look at the profits, Apple is a one-horse town to some
PALMER: Yes, it is, and I agree with you. The services are important that they brought out today and five bucks a month, I think that is the gateway
drug into charging a lot more money later, but they want to get you into it.
You know, people counted Apple Music out completely when it started. And Apple Music has become a formidable competitor and also a very good source
of revenue to the music industry. I think this is going to happen in the TV business also. TV Plus, it looks pretty good. The Arcade thing, the
users will judge and users will determine its success by whether or not they're willing to pay five bucks a month for the whole family to enjoy
that stuff. You do make a lot of money with services. They are behind the eight ball on the foldable phones. They're behind the eight ball on the
other hardware, they are. They are -- and 5G is what's definitely missing.
QUEST: Is there a risk, though, that Apple is trying to be too many things in too many markets?
PALMER: No. No.
QUEST: Well, I haven't finished the question.
PALMER: I'll tell you why, Richard. I'll tell you why. Because they're a platform company. In fact, one of the most interesting things, one of the
most remarkable things they announced today with the iPhone Watch Series 5 was all the health research initiatives.
PALMER: They're all over the place with this, but they're a big company with the largest cash on balance sheet of any company that I think we know
of, they can get into some good and interesting stuff. It's not going to spread them too thin.
QUEST: Why Apple TV streaming service? I mean, stick to your knitting, stick to what you're good at.
PALMER: So that's a good -- I'm with you.
QUEST: Why do you suddenly find you that you have to go into television or movie production that's going to cost you an absolute fortune, when there
are better people who can do it?
PALMER: They have. First of all, there may or may not be better people who can do it because they have the cash to buy anything they want to buy.
But in 2019 and beyond, you cannot and I mean, cannot separate content and distribution.
And if you look across the media industry, DTC -- direct to consumer -- is the strategic play cross the entire industry and Apple is coming out from
the other way. They're starting with the hardware and the distribution, and they're going to add in the content and whether they end up producing
it originally, or hiring in or ordering in, this is what they have to do it. They know it and they're going to do it.
QUEST: So we're going to end up with all these streaming services. We've talked about this before. And I'm still not convinced by your argument on
this. You've got Disney, you've got our own Warner Media. You are going to have -- you've got Apple. That's before even Hulu, Netflix and all the
existing players in the field.
PALMER: Richard, there will be a shakeout. To be sure, I'll tell you who's going to be on the winning side of that. Done. Apple. There will
be a shakedown.
QUEST: Shelly, Shelly, Shelly, Shelly. Right? All right. Well, we will revisit this. It's not over yet.
PALMER: You bet.
QUEST: We'll revisit. Good to see you as always, so you're looking well and fit. And that's good to see. Apple isn't likely to find any relief in
Europe. The E.U.'s controversial Competition Commissioner is coming back and she's more powerful than ever before.
Jaguar Land Rover unveils a new version of the off-road icon. I speak to the CEO about the bumpy road of Brexit.
QUEST: Silicon Valley's European nemesis is back and more powerful than before. The E.U.'s Competition Commissioner Margrethe Vestager is back
with a new Commission and taking on new responsibilities. President Trump has called hating the United States, thanks to the massive fines that she
has led her department to levy on American tech firms.
QUEST: Now Vestager says her job is striking a blow for democracy, not against business.
(BEGIN VIDEO CLIP)
MARGRETHE VESTAGER, EUROPEAN COMMISSIONER FOR COMPETITION: This is not an attack on businesses. This is an attempt for democracy to shape our
society. And we see in a number of our cases that the case would win itself, I cannot do it.
(END VIDEO CLIP)
QUEST: Nina is with me, tracking the personnel moves. Nina is in Brussels. Interesting and unusual, Nina, that the new President-elect
decided to keep somebody in the same brief which they don't usually do and give her more power as an Executive VP.
NINA DOS SANTOS, CNN EUROPE EDITOR: That's right. The same brief here, so a second term for Margrethe Vestager, the liberal Danish politician but as
you said, quite rightfully, Richard, with an expanded brief at this time will help take Europe into the technological age.
Obviously, as you pointed out, this is somebody who has fallen afoul of the Trump administration. And also let's be frank, Silicon Valley as well.
Donald Trump referred to her back in 2018 as the Tax Lady for her endeavors to try and make big Silicon Valley firms pay up on tax to the E.U. She has
also taken companies like Apple to task, Google. In fact, she forced the Irish government to pay back taxes to the tune of about 14 billion euros
back to Apple.
So you can imagine this is somebody who isn't shy of a fight. And this means that it pits the E.U. against the United States on the subject of
tech justice with the new President Commissioner Ursula von der Leyen of the European Commission, the building behind me. She has also taken
another big thing under her mantle, which is the likes of trade.
She has also decided to nominate an Irishman to the trade task as well, and that means that we have two key people in key positions to take on the two
challenges. One of them being, digitalization of the E.U. and the other one, obviously being Brexit and Ireland's issues with the United Kingdom
over that -- Richard.
QUEST: Let's talk about that trade aspect. The new Trade Commissioner is a man who has experience, obviously of foreign affairs in Ireland, but he
has been highly critical of Brexit.
DOS SANTOS: Yes, that's right. And in fact, the Irish Taoiseach Leo Varadkar commenting on this nomination here for Phil Hogan, the Irish Trade
Negotiator Designate, because remember that all of these positions that the E.U. Commission unveiled today now have to be vetted by the European
Parliament later on in the week and it is expected that those appointments will be rubber stamped.
Phil Hogan is somebody who is just like Margrethe Vestager, is actually somebody who is going to be serving a second term at the European
Commission. He was previously in charge of Agricultural Affairs. Now, he is going to be taking on the trade brief, and that means that he is going
to be having the brief to shape the relationship with the United Kingdom when the U.K. tries to form a future trading agreement after it has managed
to extricate itself from its E.U. membership after Brexit.
That means that this man will have huge sway on what kind of relationship the U.K. has and is somebody who is pro-big trade agreements, rather than
small bilateral ones. That's what we understand -- Richard.
QUEST: Okay, so in a sentence or two, sum up the new Commission of von der Leyen.
DOS SANTOS: Well, the E.U. Commission of von der Leyen is an interesting one, because on the one hand, Richard, it is gender parity. So it's an
equal number of women and men. Von der Leyen has also made a big push of trying to make sure that in terms of the geographic distribution of the
E.U., nobody is left out.
So you've got some rather controversial nominations from the Czech Republic, also from Hungary for having briefs that include making sure that
everybody upholds the E.U. rules, and also making sure that the E.U. has its voice heard in places like the Western Balkans integration, if you
The other thing that she has done that's really interesting is that she's also given the economy brief to an Italian. Now, this has raised many
eyebrows in the E.U., of course, because Italy is having a very high profile spat with the European Union, or at least its previous government
up until now had done in terms of upholding the fiscal rules.
It will be Paolo Gentiloni, a former Italian Prime Minister's role to make sure that everybody sticks the budgetary discipline rules. So there's so
many reasons why this new Commission that was unveiled earlier today and College of Commissioners, the Cabinet of the European Union, if you like,
speaks to so many different forces that are pulling Europe in many different directions.
Just going back to the subject of Margarita. You mentioned in your introduction, Richard. That's an interesting one because it's an idea that
Ursula Wonderland referred to many times in that press conference.
Back to the subject of Margrethe Vestager that you mentioned in your introduction, Richard. That's an interesting one because it's an idea that
Ursula von der Leyen referred to many times in her press conference saying that we now have to push Europe to become new in the digital age, a Europe
delivers for everybody, all of its citizens. And that's essentially the message that the Commission was putting forward today -- Richard.
QUEST: Nina, thank you. The European markets are now closing mostly higher. Investors are looking ahead to an ECB policy decision. They're
hoping for a fresh stimulus package to be announced on Thursday to boost the Eurozone economy.
The Land Rover Defender, possibly the most famous off roader in the world is back today at the Frankfurt Motor Show. Jaguar Land Rover and revealed
its new version. I asked the company CEO, Ralph Speth, what it was like.
(BEGIN VIDEO CLIP)
RALPH SPETH, CEO, JAGUAR LAND ROVER: The vehicle is so exciting. You have just to test it. You have just to drive it because not only that it has
about by far higher capability in all terrain. As I mentioned, it also has an unbelievable capability as well as responsiveness in terms of on roads.
The vehicle is unbelievably capable.
QUEST: How many of your customers actually use the car, beyond its basic capabilities of driving around and doing the morning shopping? Or going on
a road trip? How many use the off road, the more extreme capabilities? Have you done any research into that?
SPETH: Yes, we are doing a lot of research in many areas. And we see that many customers use the vehicles to sit higher, to have a better overview,
to be safer. Use it in cities, use it in London, but we also see that many families use it for outdoor adventures, use it for experience with the kids
and use it in a very, very broad way.
And still, also the new Defender is a workhorse. The new Defender has a commercial option. And therefore, this kind of new spread of capability
will be also seen very positive from our customers.
QUEST: The Defender is made in Slovakia, so we won't really have a problem in terms of Brexit although you may have research and some difficulties.
The Jaguar side of the company is very different, where your preparations for Brexit, whether they're not done yet, it's a bit -- you're probably too
late. How prepared are you for Brexit in all its extremities?
SPETH: First of all, we are a British company and we want to stay a British company and we do all our design, our engineering, procurement,
whatever we do, we do everything out of the U.K. And I hope that can be the case in the future.
We want to stay British. Nitra, the European plant is going to help us on the European country, on the Continental side of the channel. But I hope
that also for the Brexit, both sides of channel will find a solution in order to guarantee free trade, frictionless trade so that we can really
We need 20 million to 25 million parts a day delivered on time to the assembly lines. And if we miss a part, we cannot produce. But that's a
question about Brexit. I cannot give you a clear answer because I don't have a sheet of detailed terms and conditions in front of me to say this or
that is the implication. We try to prepare past it, and we try to prepare for alternatives. But we also don't know what we really have to expect.
(END VIDEO CLIP)
QUEST: To list or not to list, that is the question that WeWork is facing. The company's biggest outside investors reportedly trying to pull the plug
and we'll talk about that in a moment.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, a lot more QUEST MEANS BUSINESS as we continue. The Chief Executive of Saudi
Aramco will tell us the biggest IPO in history may be coming very soon. And U.S. politicians are lining up to call for regulations on e-cigarettes.
I'll be joined by top executive from British-American tobacco. And before all of that on this network, it's CNN, the facts always come first.
President Trump has abruptly fired his outspoken National Security adviser John Bolton. The two have clashed on a number of key foreign policy
issues, including North Korea, Venezuela and Iran.
Now, we're learning they had a bitter argument last night over Donald Trump's plans to invite Taliban leaders to Camp David. Israeli Prime
Minister Benjamin Netanyahu says he plans to annex parts of the occupied West Bank if he wins next week's general election.
He says the annexation would apply to the Jordan Valley and the Northern Dead Sea. He says Donald Trump will announce the Middle East peace plan
after the election.
At least 31 people were killed during a stampede at a celebration of the Muslim festival Ashura. Ashura is the holiest day on the Shiite calendar.
Hundreds of thousands of people got to Karbala, Iraq to market. More than a 100 people were injured during the stampede.
The British Prime Minister Boris Johnson has dismissed claims his decision to suspend parliament is anti-democratic, calling it a load of nonsense.
The comments come a day after lawmakers heavily rejected his latest bid to hold a snap election, now a controversial five-week suspension of
parliament is under way. MPs are due to return to work on October the 14th.
The CEO of L. Brands, the parent company of Victoria's Secret says he's embarrassed by his ties to the sex offender Jeffrey Epstein. Les Wexner
says he was taken advantage of and betrayed by Epstein who was his personal money manager for years. Wexner calls Epstein's behavior abhorrent.
Epstein killed himself in jail while awaiting trial on new charges of sex trafficking.
Will they or won't they? And if they do, when will it happen? Saudi Aramco and WeWork could be some of the biggest IPOs of the year, but there's huge
confusion about the "ifs", the "whens" and the "hows" and the "wheres".
Saudi first, the chief executive says it will be very soon. Which is going to be very soon. Well, how long is that? How long is a piece of string?
We'll hear from him in a moment. Saudi Arabia is trying to lift oil prices, if more so, after today is full. WeWork is a lot more complicated.
Because WeWork has -- we're hearing conflicting reports. Now, the "Financial Times" says that SoftBank, a major earlier investor is urging
WeWork to shelve the IPO because valuations have fallen so much, and indeed, the latest thinking is it's at the absolute lower end of the range.
However, "CNBC" is saying WeWork IPO is full speed ahead. Paul La Monica is in New York. Where do you stand between these two views?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, Richard, I don't think when you read the stories that they are as conflicting as they might sound at
first. I think it is true that SoftBank is scared about how WeWork might do if it goes public because of all the criticism of the company's
unconventional business model and the concerns about unicorns in general, the lower valuations.
"CNBC" is just reporting that they're going full steam ahead, but it's probably going to be at a lower valuation, $15 billion to $20 billion.
SoftBank may not want them to do it, but I think WeWork is intent on getting this thing done.
QUEST: All right, so, they're going to get it done or they're intent on getting it done. But what's the risk? What's the fear? I mean, we've seen
IPOs, a good example is Uber which IPO-ed and fell, but the CEO has made it clear time and again, look, we're in this for the long run and it doesn't
really matter to the day-to-day running of the company if we are below our IPO price. So, what's the fear here for WeWork?
LA MONICA: I think the fear is that you have a company that is just ripe for criticism because of their business model. They're losing a lot of
money, nearly 2 billion last year, almost 700 million more in the first six months of this year. There are questions as to whether or not WeWork is
really a viable business model.
They talk a lot about wanting to elevate the world's consciousness, but I think, you know, people that look at the numbers, you know, old-fashioned
people like you and I, you know what? This is really nothing more than a glorified real estate company that isn't making money and isn't going to be
paying you a hefty dividend yield like most REITs do.
So, I think the question here is whether or not any of these companies that have recently gone public have a path to profitability. Remember, everyone
is trying to compare what happens now with WeWork and what happens with Slack and Uber and Lyft and their post-IPO, you know, time, to Facebook a
couple of years ago -- oh, Facebook stumbled there after the IPO and then they wound up rebounding. Facebook was profitable when it went public.
None of these companies are.
QUEST: And as I see it, none of them -- I mean, I shudder, every time I hear the phrase, path to profitability because I'm afraid, Paul, you're as
old -- no, not as old as me, but you certainly remember the dot-com boom and bust of the '90s, and you certainly remember being tried to be told
that the path to profitability was there.
LA MONICA: Yes, the path of profitability is there that always raises the alarm bells. The other one, this time is different. No, it isn't. Make
some money and then we can talk about how your companies are going to be eventually the next big FANG stocks like a Facebook, Amazon, Netflix and
Those companies graduated to where they are because they are profitable. And again, I mean, Uber may eventually get there one day, same thing with
Lyft and some of these others. But these companies had the benefit of staying private for a lot longer and they're still not profitable. And I
think that's staggering.
QUEST: Paul La Monica, thank you. Saudi Aramco's CEO says the company's IPO will happen very soon. It's a critical part of the country's massive
plan to diversify the economy. The kingdom is targeting $2 trillion valuation for Aramco would absolutely blow away anything else. Getting it
would require oil prices to rise significantly though.
Saudi's leaders are hoping installing a new oil minister will make it happen. The kingdom has now had three oil ministers in three years. John
Defterios spoke to Aramco's CEO who said the company is ready for its debut.
(BEGIN VIDEO CLIP)
AMIN NASSER, CHIEF EXECUTIVE OFFICER, SAUDI ARAMCO: That's a shareholder decision with the point of council is together with -- you know, the
decision is with the shareholders. For Aramco side, as I said, we always say we are ready for whatever the decision is. So locally, which is going
to be the primary listing is to list locally. But we're also ready also for listing outside in other --
UNIDENTIFIED MALE: Sorry, I don't mean to interrupt you. Other jurisdiction would be a Tokyo preference or is less litigation?
NASSER: It's a shareholder decision, not a --
UNIDENTIFIED FEMALE: Mr. Nasser, how will the separation --
UNIDENTIFIED MALE: Do you have a preference for that?
NASSER: We are ready as I said to list -- shareholder decide. We are within for different decisions.
(END VIDEO CLIP)
QUEST: Prepared and very soon, but what do they mean? We'll wait and see. Coming up, vaping is facing a backlash, e-cigarettes are being called a
public health epidemic by some. The chief marketing officer at British American Tobacco is with me after the break.
QUEST: A U.S. senator and a former New York mayor are joining the fight against e-cigarettes. Vaping has been linked to at least six deaths in the
U.S. and hundreds more cases of severe illness. Michael Bloomberg has pledged $160 million to ban flavored e-cigarettes through Bloomberg
In an article for CNN, the U.S. Senator Dick Durbin says vaping is an epidemic and a danger to children. Tobacco companies are using e-
cigarettes to get them addicted early. Kingsley Wheaton is the chief marketing officer of British American Tobacco. He joins me now, good to
see you --
KINGSLEY WHEATON, CHIEF MARKETING OFFICER, BRITISH AMERICAN TOBACCO: Thank you, Richard, thanks for having me.
QUEST: I assume you don't agree with the learned senator?
WHEATON: Well, you know, we've been for a long time now embarked on a journey to invest and deliver a new alternative tobacco and nicotine
products that consumers can enjoy and move consumers from smoking to these alternative products. I think it's very important that they're responsibly
marketed and responsibly stewarded. But no, I don't agree with him.
QUEST: Every article I've read suggests that these vaping devices are a more efficient delivery mechanism for nicotine, and therefore no longer is
the combustion the problem, but nicotine addiction per se is.
WHEATON: Well, I think you're weighing up there two different alternatives to health policy. I think the old world was about quit or die. You know,
people shouldn't smoke and we would argue that, and the alternative was to quit. These products are about giving consumers alternative ways with
nicotine as well because that's important to enjoy these with less health risks than themselves.
QUEST: Except we don't know the full range of health issues as a result of vaping, and the early evidence is suggesting that it's worse than we
thought -- epidemic levels.
WHEATON: Well, I don't think that's the case. I could quote you in the U.K. public health England, vaping is probably 95 percent safer than
smoking -- or college physicians, the same thing. Even action on smoking and health, ASH would say if you're unable to quit, it would be better to
vape than to smoke.
QUEST: I see that, but are you not at serious risk of just substituting one health issue for another? Because the number of cases -- you know, the
"New York Times" had a few articles recently -- zombie teenagers who can't stop vaping.
WHEATON: Well, the recent health concerns that have come out of the U.S. are isolated cases. The FDA is pointing to the use of THC in vaper
products, and also products that have been tampered with. That's why I think it's really important for consumers that we have -- we responsibly
market these products, we have sound regulation, we've invested nearly $4 billion on this journey.
We have 130 PHDs across our RNDC perhaps, we have 50 toxicologists in Southampton insuring only the right ingredients get to consumers.
QUEST: But I guess what I'm questioning is whether vaping per se -- you can have the right ingredients, you can have the best toxicology, you can
have everything exactly as you want, and we still shouldn't be doing it.
WHEATON: Right, because we're trying to take people who are smoking, with the serious risk of health who can't quit and provide alternative
productization. And it's not just about vaping, it's like an outreach --
QUEST: Of course --
WHEATON: It's also about tobacco-using products which are becoming very big and passing North Asia and in Europe, also about a modern take on
tobacco. We have a portfolio of solutions that supports our transformation.
QUEST: But just as much as the farmer, the opioid pharmaceutical companies could not and are now -- cannot just turn a blind eye when being told, hang
on, your product is being misused. You can't turn a blind eye when people are telling you, children are starting with vaping.
Your argument is cigarettes to vaping, or go, it's better. But if they're starting with vaping, what then?
WHEATON: No, our argument is that these products are for adult consumers only. That is absolutely the cornerstone of our responsible marketing
QUEST: But they're getting into the hands of teenagers and that is an issue.
WHEATON: I understand that, but we are doing everything we can to make sure that doesn't happen. We invest heavily in retailer education
programs. We have online age verification, we invest and where we found a member in a WeCard program in the U.S. which is to insure that consumers
are of the right age.
This is an issue not just for the industry, but also for government and regulators, and we would welcome the chance in part of our journey to work
with them on sensible regulatory frameworks.
QUEST: In our discussion here, I'm very much aware of course, that what you're selling is a perfectly legal product, and you're perfectly entitled
to sell it in accordance with the laws of any country. But I can hear people throwing things at the screen saying, well, hang on a second, all
they've done is substitute.
They saw their income going down from cigarettes and they found this new nifty ways to keep people addicted to nicotine.
WHEATON: Well, I think this is entirely different. This is about the sustainability of our organization. If you go back 10 years ago, 100
percent of our business was in cigarettes. Cigarettes as it's well known are not good for health if used as intended. And that's something we're
very clear about, people should quit.
For those that can't quit, we've embarked upon a journey with heavy investment, with a portfolio of products, with better brands to ensure that
for the next generations who are unable to quit smoking, that they have other alternative choices and we do that in a responsible way.
QUEST: I think I know the answers. If a teenager doesn't smoke, should they start vaping? Yes or no?
WHEATON: No, they absolutely should not, and I would not encourage my kids to vape or smoke. But for those people, we would never know whether they
would otherwise have smoked, providing alternatives --
QUEST: That's the problem.
WHEATON: Is an alternative --
QUEST: That is --
WHEATON: Which is alternative to the quit or die.
QUEST: Good to see you, sir.
WHEATON: Thank you, Richard --
QUEST: Thank you very much indeed --
WHEATON: Thank you very much.
QUEST: As we continue tonight, the king of Chinese e-commerce is ending his reign. Alibaba's founder Jack Ma retires after 20 years. Now, the
issue here of course is how much of Alibaba was Jack Ma? And how much -- well, what will happen now is gone -- after the break.
QUEST: Alibaba without Jack Ma, right, he's officially stepping down as the chairman and on his 55th birthday. He rang in his retirement with a
big bash in Hangzhou earlier, and Ma founded Alibaba out of his apartment 20 years ago. A teacher turned titan, he built the company into a $460
billion brand, e-commerce, banking, cloud services.
It is primarily B to B outside of China. Andrew Stevens spoke to Ma in 2016 and he told him more about his vision for the company.
(BEGIN VIDEO CLIP)
JACK MA, FOUNDER, ALIBABA: Alibaba's position is we want to position ourselves as the engine of innovation. With our engine, with our
technology, with our ideas and know-how, that we can help most of the industries.
(END VIDEO CLIP)
QUEST: Rebecca Fannin is one of the first western journalists to interview Jack Ma, her book tech titans of China came out earlier this month. She
joins me now from New York, good to see you, apologies I'm in London and not in the next city next to you in the studio.
How much of Alibaba is Jack Ma? How much of it is, you know -- now he's gone, it will be fine?
REBECCA FANNIN, AUTHOR: Well, yes, for sure. Jack Ma is definitely front and center of Alibaba. He's been the figurehead for many years. But
Alibaba has been preparing for this transition for a number of years. And it's time now, Jack founded Alibaba 20 years ago and he has put his heart
and soul into it.
And he's ready to put his heart and soul into something else now.
QUEST: Yes, but Alibaba itself -- I mean, the last -- the big companies that one thinks of, they always need a strong leader, a some sort of
guiding post and like the way forward, and Alibaba had that with Jack Ma. Who will -- who will take that role?
FANNIN: That's true, Alibaba has had that with Jack Ma, the wonderful communicator. That is just one of his real gifts, is his communication
abilities. And his visionary capabilities too, it's really hard to replace that. It's like Steve Jobs' type character that we really have never seen
from China before.
Jack Ma is the first one that is really a breakthrough person from China on the world stage. And so replacing that is going to be very tough. And the
person who has been named to succeed him is a totally different personality, someone who is, you know, a doer, not so much out there on the
QUEST: Right, but are they a visionary? I've seen -- well, you have as well and I'm sure in your business coverage, I've seen more companies go
from colorful leaders who may have a few quirks and quarks about them to technocrats, and it all goes horribly wrong thereafter.
FANNIN: Well, the new person in charge is also a visionary, I think. He came up with the idea of the singles, the 11-11 singles for Alibaba, which
really created a whole new revenue stream for the company and has become a national holiday in China now. And so, he is not just a doer or an auditor
or a technocrat, he is able to both do and be creative at the same time.
QUEST: All right now, as for Jack Ma, what is he going to do? And I've heard him speak and I've heard it a few times, he talks about what's next?
Will he become the philanthropist ALA Gates, taking on certain international issues and becoming one of the great world experts on that?
What's your feeling and knowledge?
FANNIN: I think so. I think education is one of the areas that he wants to concentrate on. And this is an area that China needs as well. It
needs more of the creative kind of thinking that goes into our classrooms here in the U.S., and less of the testing and the rigorous, you know black
and white kind of thinking. So, I think education is one area that he's very much focused on.
QUEST: Good to see you, thank you very much indeed. Allow me to show you --
FANNIN: Thank you --
QUEST: The last few minutes of trade on Wall Street where U.S. stocks are trading lower, weighed down by the continuing decline in tech shares.
Netflix is down 3 percent, reason is very simple, Apple unveiled its TV service for $5 a month, it's cheaper.
Ford has been downgraded on its credit rating, oil prices are lower, that's because President Trump fired the National Security adviser John Bolton,
and he was the largest protagonist possibly for a war with Iran, certainly for greater sanctions. Put that altogether and you have a market that
really has done very little during the day.
But I think the significant thing is, it's done very little on the down side, not the up side, and that suggests a tone, not a trend. We'll have a
profitable moment after the break.
QUEST: Tonight's profitable moment, Margrethe Vestager continuing as the competition commissioner must be getting a sleepless night all too across
Silicon Valley. She has of course sued and gotten much money from them on anti-competitive issues.
But if you look at the commission or the quality of commissioners as they're called overall, there are some interesting ones. Take for example
Paolo Gentiloni the new Economics Commissioner who comes from Italy, former Prime Minister, but a bit strange to have perhaps arguably somebody from
Italy who is now going to be in charge of running the EC's economic policy.
And what's going to happen when that's in conflict with what might be happening in the Italian banking sector or there's a far-right government
in Italy that wants to break the deficit rules. Will Gentiloni get revenge through the EC with Vestager there and Gentiloni over there?
I promise you, this commission might be more interesting than it first looks on paper when you see the names of people who have been there all
the time, and all the time before. Anyway, it takes office next month and we'll watch, wait and see. And that's QUEST MEANS BUSINESS for tonight, I
am Richard Quest in London, whatever you're up to in the hours ahead, I hope it's profitable.
The bell is ringing, the day is done.