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QUEST MEANS BUSINESS

European Markets Sideways on Earnings Disappointments; More Pressure on U.S. to Drop Cuban Embargo; Flamenco Dance Teacher's 'World at Work'

Aired October 28, 2009 - 15:00:00   ET

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


ADRIAN FINIGHAN, CNN INTERNATIONAL ANCHOR: A big step back shock earnings, knock European stock markets sideways.

It takes two to rumba, the U.S. is condemned for its trade embargo on Cuba.

And for a final flourish, a flamenco dancer teaches us some profitable moves in her "World at Work."

Hello, I'm Adrian Finighan, in for Richard Quest. This is QUEST MEANS BUSINESS.

A very good evening to you. European markets look wounded after a bruising session today. Stocks took a heavy tumble with the financial and energy sectors coming off worst of all. Disappointment over company results, and dismay at worse-than-expected economic numbers all had investors hitting the sell button. We'll tell you all about it on tonight's QUEST MEANS BUSINESS.

But first of all, that bruising session, it's not a pretty sight. Here's what happened in London. The FTSE down 2.3 percent. Insurance firm Prudential the biggest loser here, down a whopping 9.8 percent. Mining giant Xstrata lost 9.4 percent. Barclays down 6.1. Drug-maker GlaxoSmithKline announced that their net profit was up by 30 percent, helped by sales of the flu vaccine. But still their shares ended down very slightly, nearly half a percent lower.

Here is what happened over in Frankfurt. The Xetra DAX was down nearly 2.5 percent. Commerzbank shed 6 percent today. Sportswear brand Adidas lost 3.75 percent. Software giant SAP down more than 7 percent. We'll hear from the company's CEO about why in just a few moments.

Here is what happened in Paris, the CAC 40 was down over 2 percent. National car-maker Renault shedding 7 percent today. Telecoms giant Alcatel-Lucent slumping 6.4 percent. Credit Agricole down nearly 6 percent today, not a pretty sight on European markets.

So investors aren't at all happy with the latest numbers from SAP. The German software giant says that sales for the year could fall even further than previously forecast. Revenues could drop between 6 and 8 percent. That's an even worse decline than SAP predicted back in the summer.

The company also said that software sales fell by almost a third between July and September this year. And quarterly net profits missed expectations, coming in at nearly $650 million. That's 12 percent up on last year. And you would think that would be cause for celebration. Not so as far as the markets were concerned.

Earlier, I had the chance to speak with the company's CEO, Leo Apotheker, and he began by explaining the adjustment to his sales forecast.

(BEGIN VIDEOTAPE)

LEO APOTHEKER, PRES. & CEO, SAP AG: Well, let me try to give you a little bit of a perspective on what happened in Q3 and actually over the entire nine months of 2009. We set out in the beginning of the year telling everyone 2009 is going to be a tough year. Pretty obvious the environment (INAUDIBLE).

We then said what we really want to do is to adjust to new market conditions and actually rebound in these market conditions and take benefit out of these changes. Let's maybe look at the change first and then at the number.

The change in the market condition is, is that people, our customers - - and we have 92,000 customers, actually would like to start to consume our type of software in a different manner than ever before. It means more -- larger volume of deals, more flexibility in the way people buy and acquire software. And we want to make it as easy as we can for our customers to buy our software.

FINIGHAN: You've cut costs. You got 10,000 new customers in the first nine months of the year. As you say, though, it -- they're doing smaller deals with you. How do you take this forward? How do you increase that profit margin in the years to come?

APOTHEKER: Well, that's the whole point. We have been focusing on making SAP a leaner, more agile, and more efficient company so that we can actually drive more volume through our own channels and the channels of our partners.

What I see happening is, is that the volumes are stabilizing. I would hope that in the foreseeable future, the line of the volume increase and the average deal sizes will cross, and we will actually generate significantly more business to a larger volume of deals. That is a very healthy situation, because that creates a very much predictable business model for our company.

For very large customers, we are driving in an environment where people can actually engage with us in a long-term fashion. And in that long-term fashion, we can inject their other flexibility, and again, that is good for our customers and good for us because we are creating a long- term sustainable recurring revenue.

FINIGHAN: You mention the disappointment in the performance of emerging markets in particular. What can you do about that? I mean, surely future growth is going to come, particularly from emerging markets.

APOTHEKER: Absolutely. And just to put things into perspective, Adrian, SAP is a very large player in the emerging market. If you look at Asia, and just at Asia alone, we do about 1.4 billion, 1.5 billion euro sales. In Asia we are the largest enterprise software in Asia by far. And in China, we have three times more market share than the next non-Chinese software companies.

So we are in these markets. We are going to expand our footprint. We're pushing a lot of innovation into the Asian markets in particular, but also in other emerging markets. And we had a particular situation in Japan, not unique to SAP.

As you know, there has been a political change, lots of investments have been reviewed, but like any other company, I hope we can rebound in Japan as well.

FINIGHAN: So here we are, end of the third quarter. What -- you're maintaining your guidance for the full year.

APOTHEKER: Yes, we are. We are maintaining our margin guidance for the whole year. We actually increased it from the beginning of the year. We're now talking 25.5 to 27 percent non-GAAP (INAUDIBLE) currency.

I'm also very happy to report that our free cash flow for the first nine months went up to 2.2 billion euros. That's up 28 percent compared to the equivalent period last year. So we are geared towards that. And I hope that as the economy will start to improve, our situation will improve equally well, if not better than the economy.

(END VIDEOTAPE)

FINIGHAN: That's the CEO of the software giant SAP.

Well, SAP may be seeing tough times ahead, but some other companies are feeling more bullish about the months to come. And what companies say about their expectations for the future, as we saw today, has to power to move share prices. It also tells us a lot about the economy.

Jim Boulden takes a look now at some of the predictions that we've heard this week.

(BEGIN VIDEOTAPE)

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Oil giants are reporting this week and are saying in tandem they expect cash flow to increase as oil prices continue to rise, even if profits are down compared to last year.

The same is being heard from the likes of Heineken. It reported a fall in beer volumes, but thanks to cost-cutting, it raised its outlook. Computer giant IBM raised its full-year earnings target, though steel-maker Arcelor-Mittal revealed a muted Q4 guidance, dragging its stock lower.

STEPHEN POPE, CANTOR FITZGERALD: Well, I think that any company that's actually giving you a nugget of, you know, comforting information, they'll be putting that against the backdrop that times are tough, and no particular geographic region is being stellar in its performance for us.

But we can find one or two usually glimmers of light that we can draw encouragement from.

BOULDEN: That's what Cadbury said last week. It raised its full-year revenue and profits forecasts, citing increase in sales of gum and confectionery in developing nations. This means that Kraft or any other suitor might have to raise a bid to take over Cadbury, as Kraft already tried once this year.

As Q3 numbers come in, analysts say watch the income numbers. Income is revenue minus expenses. And as companies continue to slash costs, that helps income to rise, even if the sector is still mired in recession. As these sectors recover, if the company keeps its costs down, then...

POPE: They're in a great position that even a small pick-up in their top line growth will go straight through to the bottom line. So I think there is reason to be encouraged as to how quarter four, and then going into next year, will look.

BOULDEN: Not all companies are giving bullish guidance, of course. Airlines, aircraft-makers, and auto-makers come to mind. But for the first time in many quarters, a variety of companies in a variety of sectors are sticking their necks out ever so delicately to hint that there are a few bright sparks.

(END VIDEOTAPE)

FINIGHAN: And Jim Boulden is with me now live in the studio.

Jim, that was -- I mean, despite the bit about the airline manufacturers there, on the whole, that was quite an optimistic piece. And yet here you are sitting here with a little black cloud above your head.

BOULDEN: Yes. As the day went on, more and more companies seemed to have come out and do what SAP did, which is actually give some rather negative sentiment, which is fair enough. They're being honest. But Goodyear in the States, well, they had a third-quarter profit that came out with some poor guidance, and their shares have tanked.

You saw what happened to SAP. Lufthansa actually had a worse outlook than results. So the results were not bad, the outlook was bad. And so it's -- you know, obviously it's a mixed bag here. So it's really hard to generalize about what's going on.

FINIGHAN: Yes, we've got the CEO of Lufthansa on the show a little bit later on. But what companies say, at the bottom of their report, it doesn't matter what the results themselves say it seems, I mean, look at Glaxo today, it's what they say at the end of this.

And I've a feeling, I mean, looking at some of those that you've talked about there, that a lot of these companies who are saying positive things about the full year and their outlook, it's not because they're doing better business, it's because they're being more efficient, isn't it?

BOULDEN: Yes, if they have slashed and burned, if they have cut a lot of employees, well, then that helps in the very end. It doesn't mean that their business itself is necessarily improving. It's just that they're doing really drastic cuts.

We saw that with BP yesterday, and they were rewarded yesterday because of these cuts to their staffing costs and et cetera. So companies have continued to do that. In other words, don't expect these companies to start increasing employment anytime soon, because they are seeing the benefits, those that are, from continuing to cut without necessarily seeing a growth in their own businesses.

FINIGHAN: Jim, many thanks indeed. Jim Boulden and his little black cloud.

Well, earnings are no longer setting the pace for investors on Wall Street. Instead, it is the economy and the hardiness of the recovery. And we're getting some very significant numbers throughout the week, which Jim has just been talking about. They should in theory provide a crucial reading. And Maggie Lake joins us now from New York to walk us all through it.

Markets not best pleased with what they're hearing. It wasn't all bad news though, today, was it, Maggie?

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: It wasn't, Adrian. But I'm afraid I have a little black cloud above my head. Jim and making quite a duo this evening. And here is the problem. We had a reading coming from housing. That has actually been a sort of bright spot, a green shoot, whatever people have been calling them lately. And the U.S. new home sales have been rising for five months steadily.

They dropped unexpectedly today. Why? A lot of analysts are pointing to the potential expiration of these government rebates. The U.S. government has been giving first-time home-buyers $8,000 towards the purchase price of a new house. That was really helping spur things.

That was set to expire in November. Not clear whether it's going to be extended. And once you see that start to go ebb and go away, so the home sales fall. And that's really worrying. Now you're right, it wasn't all bad news.

Durable goods number came in with a rise. The biggest jump in machinery ordering, which is sort of interesting, that's a very business-y side of things that we've seen in 18 months, but is not enough to offset this overarching worry that if you take away some of this temporary government stimulus programs, that the economy won't stand on its own feet.

That you still need that lifeline. That element we saw reflected in the home sales today really a worry that is weighing on these U.S. markets -- Adrian.

FINIGHAN: And, Maggie, amidst all of this, I spotted today there is trouble with the big auto lender GMAC, or is it "G-M-A-C," causing some stress.

LAKE: That's right. And it's for the same exact reason. It looks like GMAC, "G-MAC" we call it both, it's a big auto lender, very critical to getting consumers, people like me, like you, auto loans here in the U.S., it looks like they're going to be looking to the government for a third bailout for funds.

They were told during the stress tests with other financial institutions and banks they needed to raise about $5.5 billion. They can't get it from the private market. It looks like they're going to have to see if the government regulators will pony up, which means taxpayers pony up the money.

The fact they can't tap the private market, and they need to do that, is worrying. Again, the idea that the government lifelines are the only thing propping up the economy, some of these institutions. That does not bode well if you're looking at a really robust recovery.

So it's very much connected to the home sales, and it's very much the reason that you are seeing some of the pressure in the markets that we've been seeing and some of these worries about the shape of the economic recovery here.

FINIGHAN: All right. Maggie, and your little black cloud, thanks, I think. I was in quite a good mood before we started this show today. I'm not so sure any more.

Let's change the subject for a while and get you up-to-date with what else is making news around the world. Max Foster joins us live from the London newsroom.

MAX FOSTER, CNN INTERNATIONAL ANCHOR: Adrian, another devastating terrorist attack in Pakistan. At least 100 people were killed, many of them women and children, when a massive car bomb exploded in a crowded marketplace in Peshawar on Wednesday. The attack came just hours after U.S. Secretary of State Hillary Clinton arrived in Islamabad for talks with Pakistani leaders about battling the rising Taliban insurgency.

In neighboring Afghanistan, the United Nations is reviewing its security procedures after five U.N. staff members were killed in a Taliban raid on a guest house where they were staying in Kabul. In all, eight people were killed and nine others wounded. U.N. Secretary-General Ban Ki- moon said the attack would not deter the United Nations from accomplishing what he called its "noble mission" in Afghanistan.

NASA has finally launched its new Ares rocket after several failed attempts. Around two minutes later, the reusable rocket booster fell into the Atlantic. The test flight was three years in the making and cost $445 million. The Ares is designed to replace the aging space shuttle fleet.

A bombshell lobbed by Andre Agassi. The retired tennis legend has admitted to using crystal meth during his playing days in 1997. In his autobiography, Agassi says he used the drug with an assistant before his marriage to Brooke Shields, and then lied about it to tennis officials.

Those are the headlines, Adrian. We'll have more news on "WORLD ONE" at 8:30 p.m. London time. For now though, it's back to you in the studio.

FINIGHAN: All right. Max, see you a little later.

Now, is it time for America to end its trade embargo against Cuba? There is a growing call for the U.S. to start doing business with the communist nation. So what is hold-up? We'll have a live report from Havana when we come back.

(COMMERCIAL BREAK)

FINIGHAN: Now the United Nations has just approved a resolution demanding an end to the 47-year-old U.S. trade embargo against Cuba. CNN's Shasta Darlington is live at CNN Havana. We're the only American-based TV network with a bureau on the island.

Shasta, give us some indication as to what impact this embargo has been having on people there in Cuba.

SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Well, Adrian, it's really hard to overestimate that. You know, this victory today is a huge diplomatic victory for Cuba, but it doesn't change the equation. And the fact is that the government here, many of the people, and as we see, many foreign governments blame many of the economic problems that Cuba has on this embargo.

It's 47 years old. It's wide-ranging. And it really shows that most of the world is against the hardline sanctions that the United States imposes on Cuba.

(BEGIN VIDEOTAPE)

DARLINGTON (voice-over): Adolfo Casa is beginning to get his voice back. The Cuban tenor gave up singing when he underwent chemotherapy for colon cancer. A painful experience, made worse by the U.S. embargo against Cuba, he says.

ADOLFO CASA, DIRECTOR, CUBA'S OPERA THEATER (through translator): The best thing for me in the beginning of the chemotherapy would have been a more comfortable, less aggressive treatment with pills.

DARLINGTON: But those pills, he says, are only made by U.S. drug companies, which means they can't be imported by Cuba.

CASA (through translator): You don't have to be political or apolitical to suffer from an illness. We should all have a right to the cure.

DARLINGTON: Washington imposed the tough sanctions on its Cold War foe almost 50 years ago in a bid to topple Fidel Castro. But it has found itself increasingly isolated on the issue. For 17 years in a row, members of the U.N. have voted overwhelmingly against the embargo. We asked the U.N. resident coordinator in Cuba if President Obama changed the equation.

SUSAN MCDADE, U.N. RESIDENT COORDINATOR: Well, I'm not an expert on U.S. politics, but what I do know is that any head of state, if they are to see the overwhelming majority of countries being against a domestic policy, would use that as part of their domestic discourse.

DARLINGTON: The embargo has blocked almost all bilateral trade, making it hard to get many medicines and spare parts for everything from cars to refrigerators. Cargo ships from any country that dock at Cuban ports can't trade in U.S. ports for the following six months.

Cuba says the embargo has caused $96 billion in losses. And even many Cuban dissidents call it a failure. They argue it gives the Castro brothers an excuse for the country's economic woes.

In America, backers of the embargo say it keeps money out of the hands of a repressive regime. The political strength of the Cuban-American community in South Florida has deterred both Republican and Democratic presidents from lifting the embargo.

(END VIDEOTAPE)

DARLINGTON: But support for the embargo is waning even in Florida. A recent poll showed that as many Cuban Americans wanted the embargo lifted as those who wanted it maintained. And that's because younger generations of exiles are more worried about the economic impact on the people than they are with the politics -- Adrian.

FINIGHAN: So, Shasta, a question that I suppose is impossible to answer at this stage, how long do you give this embargo now? How long before the U.S. caves into pressure?

DARLINGTON: That is a question that is very difficult to answer. I think what we can say is it certainly won't be the next step. As we've seen, President Obama has already lifted some restrictions on Cuban- Americans sending remittances and traveling back to the island. And many people think that the next step will be lifting restrictions on all Americans. And that, of course, could really boost tourism on the island. It would help the economy.

But the broader lifting of the embargo takes an act of Congress. So it's really not up just to President Obama. And that will take time. Even if there is the support for it, there also has to be the incentive, the idea that this has more good to be done for the Americans than it does, you know, bad in Florida. And that won't happen right away -- Adrian.

FINIGHAN: Absolutely. Shasta, many thanks, indeed. And thanks for manfully having a go at answering the unanswerable. I really appreciate it. Shasta Darlington, live from CNN in Havana.

Well, even if the embargo is lifted, the financial crisis has put its own stranglehold on Cuban trade. Let's show you what is happening. According to reuters.com, U.S. sales to Cuba dropped some 23 percent through August this year, totaling $383 million.

Now the U.S. is the fifth trading partner with Cuba, despite that 47- year-old embargo. And that's because agricultural products aren't subject to that embargo. Trade with China, that's the -- one of the big trading partners for Cuba, Beijing reported that imports though from Cuba itself dropped some 48 percent through -- to $468 million through August.

China the second-biggest trading partner with Cuba after Venezuela. China showing some of the world's strongest growth rates, of course, on target for 8 percent this year. And taking a look at the 2009 decline, reuters.com says that the Cuban government predicts export revenues to decline by some $500 million this year.

Castro says that growth will be just 1.7 percent this year, this is Raul Castro, of course. Two back-to-back hurricanes in 2008 also caused major economic damage for the Caribbean island nation.

Now then, goods are moving less in this recession. And so are people. As the decline in travel hits Europe's airlines, Lufthansa, the largest airline, their CEO says that he sees a break in the clouds. Oh yes, he does. We'll tell you more when we come back on QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

FINIGHAN: Hello again.

The German airline Lufthansa says that it's starting a -- staring a full-year loss in the face after earnings for the first nine months turned negative. Europe's largest carrier plunged to a net loss of more than $47 million for the first nine months of the year. Compare that to a profit of $781 million in the same period last year.

Lufthansa says that stagnant travel demand and rising oil prices led to the fall. It says the full-year operating profit it previously predicted is now at very considerable risk.

Well, Richard caught up with Lufthansa CEO Wolfgang Mayrhuber in Newark, New Jersey, before the earnings announcement was made public. And he asked him what factors he'll be watching in the next crucial months for the airline.

(BEGIN VIDEOTAPE)

WOLFGANG MAYRHUBER, CEO, LUFTHANSA: The oil price is a big issue, of course, we don't know where the oil price is going. You mentioned yourself where it was and why it went up. It's not clear why it went up again. So oil prices not depending on supply and demand anymore, there are other factors driving the prices up and down.

And that's why we, our company is very cautious in hedging, that's why we have to pay a higher price, but relative to the market, we are always a little bit in a (INAUDIBLE) situation.

RICHARD QUEST, CNN INTERNATIONAL ANCHOR: And if you look at, for example, the low-cost carriers within Europe, the Ryanairs, or the EasyJets of this world, where do you see your biggest threat coming from, moving onwards?

Is it from these new -- from these upstart entrants? Is it from long- haul carriers? Where is the main threat, do you think?

MAYRHUBER: Well, I'm not think too much about main threats, because competition is healthy, and you have to be alert every day. And the new start-ups have a competitive advantage because of their lower cost structure that any start-up has, even if we would start up, we would be a lower -- would have a lower cost structure.

Yet on the other hand, we have other advantages. We have a bigger network. We have a diverse service, et cetera, and I take on any competition. And despite the whistles and bells that were blown up in the past, we survived it, made money, and we're growing the company. Even this year we put in the new airplanes and didn't divert from our strategy plan. So competition is welcome and ignites also our own people.

QUEST: And, finally, if you had to look to the winter, which is traditionally a difficult time for European airlines, what is your biggest concern as you move into this -- into the winter?

MAYRHUBER: Well, we have prepared for the winter. We can adapt. We can further downsize if we want, because we have written off our airplanes very fast. So I could even ground 100 airplanes.

On the other hand, the capacity adoption (ph) is one element, I think looking forward it's important that like in every season that you adapt to the demand and make sure that where there are new opportunities, grasp them.

For instance, in Africa, they've invested there in the last six months, and we see this business growing.

(END VIDEOTAPE)

FINIGHAN: Richard talking to the CEO of Lufthansa, and that was, as we said, before the results came out today. That was when we were doing our Newark, New Jersey, special yesterday. Richard back on the show tomorrow.

In the meantime, it's mysterious, passionate, and it brings in the pennies. No, I'm not talking about Richard Quest, a historic dance form turned day job. We continue our tour of the "World at Work" with a look at the toe-tapping world of flamenco in just a moment.

(COMMERCIAL BREAK)

FINIGHAN: Welcome back.

Live from London, this is QUEST MEANS BUSINESS from CNN.

In for Richard Quest, I'm Adrian Finighan.

Let's take a look at what's happening on the U.S. markets right now -- not a pretty picture. The Dow Jones down about 1 percent.

Joining us live from New York is Susan Lisovicz, who can hopefully tell us what's going on there -- is this an indication, Susan, perhaps, that the rally, perhaps, was a little bit over done?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, it certainly would suggest that, especially, Adrian, when you think about it, the Dow now -- well, the three major averages had session lows with 30 minutes to go in the session. This would be, if we close right here, the third triple digit decline in four sessions for the Dow.

So you're seeing something going on. We haven't seen two back to back sessions like that since June. So investors clearly taking pause and there's reason to. Today, I think that the bears could argue on this report -- a disappointing report on new home sales. The market was expecting a sixth straight increase. Instead, what we saw is a fall of 3.6 percent.

Why was that?

Well, sales were hit by that upcoming expiration of that first time tax credit. It takes a while to close a house in this kind of environment. This is for the month of September. You have to close by November 30th to collect on that credit.

So there are a lot of folks that say if that credit does expire at the end of next month that. You're going to see a different situation in the housing market. There is talk of extending the credit through March and then gradually phasing it out to prevent a dramatic decline in sales. First time buyers taking advantage of the credit and historically low mortgage rates, but are more likely to buy existing homes. And last week - - that's a bigger part of the market -- we showed sales spiked 9 percent.

But this one is troubling to investors -- Adrian, no question about it.

FINIGHAN: All right. OK. So the market not liking what it's hearing today.

Now, tomorrow, Thursday, Wall Street gets, perhaps, its best indicator yet as to whether the economy really is in recovery.

What are we expecting from the GDP report?

LISOVICZ: Well, the GDP, as you well know, Adrian, is the mother of all economic reports. It measures all economic activity. And for the third quarter, the consensus is growth of more than 3 percent. So if that holds true, it would be the first growth for the U.S. economy in more than a year.

Today, Goldman Sachs cut its estimate to below 3 percent growth, citing a weaker than expected report on big ticket items. That was out earlier today. We did see growth there, 1 percent. Some analysts were hoping for better. Goldman said it was encouraged by the fact that the increase in orders wasn't dependent on volatile sectors like transportation and defense. But the gains were based more on an up tick in manufacturing activity and less on increased consumer demand.

This week's data showing the U.S. economy not out of the woods yet. Growth in GDP would certainly be a welcome sign. Of course, it's a backward looking report, no question about it. But that is the quarter that a lot of economists say we actually saw growth in the United States.

FINIGHAN: OK. Tomorrow is going to be a big day.

Susan, many thanks, indeed.

Susan Lisovicz live in New York.

Now, Norway's central bank is raising interest rates, becoming the first in Europe to do so since the financial crisis began. Norges Bank update -- upped its deposit rate by a .25 point, to 1.5 percent today. The hikes meant to help the economy offset the government's fiscal stimulus, as policymakers start to worry about inflation, would you believe?

Elsewhere, the financial earthquake which has torn through the global economy continues to reshape the commercial banking world, breaking apart huge organizations and pushing others together.

Take a look over here. Deutsche Bank says that it's buying the private bank, Sal Oppenheim. Deutsche says that it will acquire 100 percent of Oppenheim in a $1.5 billion deal.

Now, here in the UK, Northern Rock is to split. No surprise there. The European Union has approved the plans that have been in the offing for a while for the nationalized bank to be split in two, paving the way for a partial sale.

And, of course, banks were among those taking their toll on the market today. Deutsche dived by 6.5 percent. In the UK, Lloyds lost 4.6. And in Switzerland, UBS lost 3.9 percent.

Now, ever thought about starting your own business?

Millions of Americans, of course, dream about starting their own.

But in these tough financial times, financing is hardly easy to come by.

CNNMoney.com's Poppy Harlow has tracked down an important resource for anyone thinking about going to it -- going it alone.

(BEGIN VIDEOTAPE)

POPPY HARLOW, ANCHOR, CNNMONEY.COM (voice-over): You know one of these people, but all four are critical in the success of small business.

First, President Obama.

(BEGIN VIDEO CLIP FROM OCTOBER 21, 2009)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This administration is going to stand behind small businesses. You are our highest priority because we are confident that when you are succeeding, America succeeds.

(END VIDEO CLIP)

HARLOW: No one disputes that fact. More than half of working Americans are employed by or own a small business, which brings us to Mike Tracy.

MIKE TRACY, SMALL BUSINESS OWNER: It just was always my dream to own my own business. I think that I just wanted to work for myself.

HARLOW: While working at Lehman Brothers in 2004, Mike Tracy decided he wanted to open a bar and lounge in New York City. He went to a local small business development center for help and he was teamed up with a business counselor.

TRACY: Without their assistance, this would not have been possible for me on my own as far as the financing, capital.

HARLOW: And that brings us to Greg Callender, who left his job on Wall Street years ago to counsel small business owners.

GREG CALLENDER, BUSINESS CONSULTANT: Well, in Mike's case, I guess my primary concern was whether or not the deal made sense. So it really began with the due diligence process. And Mike and I, we ran through the financials trying to get to the reality behind some of the numbers and trying to translate it into something that a bank would do.

HARLOW: There's help like this at 900 government run small business centers across the country. Karen Mills is the head of the Small Business Administration.

KAREN MILLS, ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION: We think we have a small business development center within 45 minutes to an hour of most small businesses. We want to provide the capital, the counseling, the other tools that a business might need to get started or maybe grow to that next level.

HARLOW: Lending through the Small Business Administration has increased since the Recovery Act was passed. $12 billion has been doled out over the past six months. But its loans only make up a small percent of total small business lending.

UNIDENTIFIED MALE: We're seeing a whole lot different type of client right now. We're seeing clients that are struggling to survive. People are coming to us and they're saying I know the credit environment is tight, what can I do, what can I do?

And, unfortunately, we don't have a whole lot of good answers for them right now.

(END VIDEO TAPE)

FINIGHAN: That's a real shame.

And Poppy joins us now live from New York -- Poppy, I mean it's tough on this side of the Atlantic.

Just how tough is it there in the States to get banks to loan to small businesses?

HARLOW: You know, it's very difficult, from what we've heard for a lot of folks. I mean there are success stories -- people that get their loans through what we profiled, the Small Business Administration.

But when you look at the total loan portfolio, that only makes up a really small amount of those government-backed loans. The rest, when you look at the lending through the 22 U.S. banks that received the most TARP money or when you dig through the Treasury documents and you look at the numbers, here's what we found.

The latest numbers show us from April through August, so that five month period. Lending at those major banks to these businesses fell by $8 billion. So TARP, which was meant and which was said by the Bush administration and then the Obama administration to increase lending may have, on some levels. But in terms of those TARP banks that have gotten the most funding, lending there is down by $8 billion, or down 3 percent.

When you look at the man that we profiled in the piece, Mike Tracy, right now he's looking to open another business, relying on a small business loan to do that.

So the lending question is one of the biggest problems facing those in America who want to start their small businesses or keep them afloat right now.

There are some grants out there -- and I want to push you to this page, CNNMoney.com/smallbusiness -- a new story today on some grants out there that people need to know about to get some of that funding.

But there are resources. There are all these government offices, Adrian. But when you look at the lending picture, they're still relying on the U.S. banks to do the lending and it's really questionable about how much lending is actually out there right now -- Adrian.

FINIGHAN: So there is help at hand, Poppy. But it must be pretty dispiriting. As we said, perhaps in America more so than anywhere else, people dream about starting their own business.

HARLOW: Yes.

FINIGHAN: It's part of the American dream, isn't it?

But if -- if someone is looking at, perhaps, a great business idea to help get them out of this -- this financial whole that a lot of people find themselves in thanks to the recession right now, it's pretty tough. They can't get the financing.

HARLOW: Yes, you know, it's tough. I mean you heard the business counselor in our piece say that, the financing is very hard to come by. What they'll do, if you work with the Small Business Administration, they'll take you around different banks, shop you around.

But, again, it's very hard. What you're seeing in the United States is more government guarantees of those loans through the SBA. There's 90 percent guarantees now. But, again, we're seeing more and more sort of credit cards issued for these small business owners, with relatively high interest rates, than we are necessarily with lending.

It's really a case by case basis, whether you're dealing with a big bank or you're dealing with a regional bank. But, again, what we're hearing from a lot of folks is, yes, it's very difficult to come by this lending. It's a questionable environment. The banks don't want to take on the possible default. And they're also being told, Adrian, by Treasury, you need a strong capital base, you need a strong capital cushion in case there is another downturn in the economy; at the same time, we want you to lend.

So it's a really tough challenge. The banks sort of, in my opinion, stuck between a rock and a hard place right now, Treasury telling them lend but also make sure you have enough in your capital reserves.

So it's going to be interesting to watch how it unfolds -- Adrian.

FINIGHAN: Poppy Harlow at CNNMoney.com.

Poppy, may I have the next dance?

HARLOW: You will -- flamenco?

FINIGHAN: Absolutely. Absolutely. Flamenco. Oh, look, you know -- no. You'll get your feet trampled on. I've got -- I've got two left feet. But -- but thank you anyway. I'll take you up on the offer some time.

Yes, we're off on our tour of World At Work, which continues now with a quick step to Madrid, where daily drudgery gives way, yes, to dancing.

(BEGIN VIDEO CLIP)

INMACULADA ORTEGA, FLAMENCO DANCE TEACHER: For me, it's more interesting to teach rather than dancing.

My name is Inmaculada Ortega and I'm a flamenco dance teacher in Madrid.

I've been dancing for 31 years, but I've been teaching for 10 years. The first time that I taught, it was amazing to see the communication, the -- you know, the energy that keeps flowing between the students and me. But I mean, when I'm dancing, I don't feel that connection with the public.

I know many, many dancers that are not Spaniards and they are great. Actually, in my class, most of the students are foreigners -- Japanese people, Korean people, American people, all over the world.

What I am trying now when I teach is to teach not only steps, it's to teach the feeling, the history, the meaning of flamenco. It's to teach the language of the people that were not allowed to speak a long time ago. I think that this is flamenco.

Students used to keep studying with the same teacher for five, six years. Now, students study one month, two months, then they move. They study with different teachers. I think that people are not patient as they were and now they want to do things very fast.

(END VIDEO CLIP)

FINIGHAN: Fantastic. And I love Madrid, one of my favorite European cities.

Now, many of us complain that we'd like a little more living space, but try making your home here. It's cramped. It's unsanitary. And for many, there's no way out. We'll reveal another side of life in the shadows of a city of bright lights and billionaires.

We'll be right back.

(COMMERCIAL BREAK)

FINIGHAN: Now, it is one of Asia's leading business hubs, known for its luxury property market and boasting some 21 billionaires, according to this year's "Forbes" list -- the most of any Asian city.

But Hong Kong is living a double life. It's estimated that one third of the population of seven million lives in public housing. A study last month revealed that around half as many people, 1.23 million, live below the poverty line. And for an estimated 100,000 people, home is just about as cramped as it gets.

CNN's Eunice Yoon explains.

(BEGIN VIDEOTAPE)

EUNICE YOON, CNN CORRESPONDENT: You often hear about luxury homes in Hong Kong, but for the poor people in this city, affordable housing is often out of reach, so many of them are forced into cage home like this one.

Let me show you around. There are 19 people who live in this 625 square foot apartment. They all share a kitchen. Most of the time, the people cook their own food here because they really can't afford to go out to eat.

Over here, they share a bathroom. There are two toilets, again, for 19 people. And you can just barely get two people in here, actually. You see these taps, this is the way that they shower.

(voice-over): These cubicles are built with wooden planks and wire -- a modern version of the original cage homes made only of mesh.

(on camera): Now there's an upper as well as a lower deck. On the upper deck, people pay about $100 U.S. a month. The lower deck, they pay $150 U.S. a month. And the reason why is because on the lower decks, you can actually stand upright in one of them. That's why they charge more.

(voice-over): Some of the residents have been here for years.

UNIDENTIFIED MALE: You can follow me. You can.

UNIDENTIFIED MALE: Sixty-nine.

UNIDENTIFIED MALE: Ninety.

UNIDENTIFIED MALE: Ninety?

UNIDENTIFIED MALE: Yes.

UNIDENTIFIED MALE: That's (INAUDIBLE).

YOON: Others are younger, in their 30s and 40s, living here because the recession has left them jobless. They're camera-shy, worried the exposure could hurt their chances of employment.

(on camera): Most people have everything that they own in one of these little homes and what's surprising is they do actually have electricity. The social workers told us that that electricity and -- and some of the -- the little luxuries like the television set are donated.

(voice-over): The apartment owner didn't want to appear on camera, but says he's offering shelter to people who would otherwise be homeless. There's a long wait for public housing here. The government declined an interview with CNN, but sent a statement saying: "The government has always attached importance to meeting the needs of the grassroots, including housing needs. People choose to live in bed space apartments and cubicles because these apartments, apart from commanding a low rental level, are mostly conveniently located in the urban area."

(on camera): Most of the residents here complain about the heat. We had a thermometer in here and it's 34 degrees Celsius. They also say that they get into each other's way and that the conditions are really dirty. The social workers have been telling us, though, that because of the economic crisis, more and more people have been forced into these homes.

(END VIDEO TAPE)

FINIGHAN: CNN's Asia business editor, Eunice Yoon, reporting there from Hong Kong.

Right.

What's the weather going to do in your part of the world?

Here's the man to tell us.

Guillermo Arduino is at the CNN International Weather Center -- hey, Guillermo.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Hey, Adrian, remember, we were talking about the warm conditions in London?

Did you feel that?

Or in England, I must say.

Do you feel that?

FINIGHAN: Absolutely. It's like summer.

ARDUINO: You know what -- ah, come on. Don't exaggerate.

But you know what?

We -- we actually beat records and I have the details. So I'll show you in a second. Yesterday we did. So what we have in here is the same pattern. It's going to remain fine. Look at England.

Where are the clouds?

Where are they?

Well, this is radar so there are some clouds, but we don't see them there. But this is it. London, the U.K. and Ireland -- London, Birmingham, Dublin, Belfast -- all records -- amazing, right -- on Wednesday. So because of the mild conditions. The pattern continues to be the same. The jet divides two air masses and we have the warmer conditions -- warmer than average in the same areas.

Beautiful in Madrid. If Richard is there, if I understood correctly, it's a gorgeous time. And, also, here in the east, below average. And we see the storms still in Turkey, in coastal parts in the Middle East.

But back to London, some clouds there. But the temperatures are going to remain the same. And look at that low, 14 degrees. There is practically no contrast between the low and the high. OK, so we see some clouds, but especially Ireland and Northern Ireland are going to see some storms. Elsewhere in Britain, we're going to be fine -- 18 is the high we estimate for tomorrow; 13 in Vienna, not bad at all; 10 in Berlin. And here's where we have the cold air. But 20 in Athens; 25 in Madrid. That sounds pretty good.

Nothing significant in the way of delays at the airports, weather- introduced. Dublin with some winds, then, look, Spain, Italy, Germany looking fine. Some clouds in Berlin. Copenhagen, well, that's part of the other story, right, the cold air and so (INAUDIBLE). And then Zurich with OK conditions.

So I hope you enjoy it while it lasts, because winter will finally arrive one day or another.

Stay with us.

After the break, more QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

FINIGHAN: Well, the first reviews are in and it looks like the king of pop has pulled off a last great show, even in death. Thousands of fans around the world turned out for the simultaneous global primer of "This Is It." The rights to the footage reportedly cost some $60 million. And for fans, it was a chance to see the final days of the king of pop.

Our Kareen Wynter was there.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP)

MICHAEL JACKSON: That - that's a cool move.

(END VIDEO CLIP)

WYNTER (voice-over): When the king of pop died suddenly on June 25th, countless variables were thrown into question, including what to do with more than 50 hours of rehearsal footage shot for his sold out London concert dates.

An all-out bidding war resulted, with Sony Pictures Entertainment paying a whopping $60 million for the right to turn the video into Michael Jackson's "This Is It" -- a behind the scenes documentary style film of the singer's last days on stage.

(on camera): What's tonight mean to you, being here?

JERMAINE JACKSON, MICHAEL JACKSON'S BROTHER: Tonight means everything. The whole tragic thing was -- is just a -- a big buildup. But this was going to show the humane side to -- to him and to show people what he was prepared to do.

PAULA ABDUL, SINGER: It's an important movie to see, because even though Michael would never want anyone to see him, like, halfway rehearse, but he gave full-out even during rehearse -- rehearsals.

KENNY ORTEGA, DIRECTOR/CHOREOGRAPHER: Absolutely no body doubles and it's all Michael. And it's unguarded and raw and real. And he's beautiful.

WYNTER: From Director Kenny Ortega, the Jacksons' brothers, those closest to the late superstar were all on hand for this historic event. My producer and I also snagged tickets. We're about to go in to check out the film.

(MUSIC)

WYNTER: (voice-over): Immediately following the packed screening, crowds of Jackson fans, friends and family made their way to the after party.

MICHAEL BEARDEN, MUSICIAN/PRODUCER: Michael really would have loved the response that the audience gave. They laughed in places that I didn't think they were going to laugh. They cried and they -- they applauded. It was wonderful.

JACKIE JACKSON, MICHAEL JACKSON'S BROTHER: It's kind of hard for me, at times. But that's why I keep this with me at all times.

WYNTER (on camera): Tell me what that is.

JACKIE JACKSON: It's a token of my brother. I keep it in my pocket at all times, you know? It's M.J. Right here.

(MUSIC)

WYNTER: Kareen Wynter, CNN, Los Angeles.

(END VIDEOTAPE)

FINIGHAN: Wow!

This is QUEST MEANS BUSINESS.

We'll be right back in just a few moments.

We'll take a final check on what's happening on the markets today.

Stay with us.

(COMMERCIAL BREAK)

FINIGHAN: Disappointing home sales weighing on investors' minds on Wall Street today. Take a look at the Dow Jones. It is down by some 112 points.

Could the rally be over bought?

We'll find out tomorrow, when we get some indication as to what GDP is -- has been doing the last quarter.

Here in Europe, here's how we ended the day -- not a good day. Disappointing earnings dragging on the region's main markets. In London, the FTSE 100 shed more than 2 percent. The Paris CAC around 2.25. And it was a similar story in Frankfurt.

And that is QUEST MEANS BUSINESS for Wednesday, the midweek edition.

In London, I'm Adrian Finighan.

As the man himself would say, whatever you're up to in the hours ahead, I do hope it's profitable.

He's back tomorrow.

Christiane Amanpour is next, right after the headlines from Isha at the I Desk.

See you again.

END