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QUEST MEANS BUSINESS
Interview with Vyomesh Joshi; Interview with Harold Goddijn; In Focus: African Contemporary Art; Warren Buffet, At The NYSE, On The Buffet Rule, U.S. Political Gridlock, European Debt Crisis
Aired September 30, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS: So in terms of the markets, if you think today is bad, wait until you see the end of the quarter, the worst in almost a decade.
Aid Greece to protect Europe, Sarkozy says, we have no choice.
And tonight Tom-tom's chief executive tells me he has a traffic stopping idea.
I'm Richard Quest. It is a Friday, but I still mean business.
Expect to pay more just don't look to the economy to go any faster. It is all aboard the Eurozone, where prices are rising at their fastest rate in three years. And growth is slowing to a crawl. Look at the numbers. Inflation has hit a 3 percent high this month, from 2.5 in August. The highest annual rate since October 2008.
The significance of that 3 percent, the ECB, the European Central Bank, targeting a 2 percent give or take rate the inflation rate for the Eurozone. At that, as you can see then, if it is expecting a 2 percent rate, and it is at 3 percent, that is 50 percent higher. Well, in round numbers, but anything above this, of course, at this level should mean higher interest rates to bring it down. But, of course, things are far form normal and policymakers meeting next week have been thinking about actually making a cut because they are so worried about growth.
This problem, of course, of what to do? Stocks in Europe have just ended their worst quarter in nine years. In the space of three months both the CAC, the DAX, have lost a quarter of their value.
If you join me in the library, you will see exactly what I'm talking about. Put it in perspective. In just one quarter, the DAX is down 25.4 percent. Now, why is that particularly significant? It is the biggest quarterly fall we have seen since the third quarter of 2002. And worse in many ways than that we saw during the financial crisis. It is obviously been industrials and it has been banks. And it was particularly banks, in Paris, with the CAC 40, down 25 percent. Soc Gen, Credit Suisse, all the- sorry, not Suisse, of course, Soc Gen and BNP Paribas, all the big banks in Paris have been clobbered, along with the industrials.
In London, not quite so bad, mining extraction shares, some banks, have held up better. So the London FTSE is down 13.74 percent. Over on Wall Street, and you'll see the number. Actually, the Dow Jones is only off for the quarter, 9 percent. But 9 percent, excuse me, is a lot better, than people had feared earlier on. The billionaire investor George Soros said the financial markets are driving the world towards another great depression. The authorities need to gain control. Angel Gurria, secretary-general of OECD, agrees. What we are now seeing should raise alarm bells.
(BEGIN VIDEO CLIP)
ANGEL GURRIA, SECRETARY-GENERAL, OECD: I think the markets are playing a very important role. It is like-it's the wake up call. It is the warning signals. It is saying, first of all, Big Brother is watching. The market is looking at whether you are going to get it right or not. But second, there are consequences which are quite immediate. If the language is not consistent, if the message is not consistent, and if the goals and the instruments are not credible, so that subjects countries and officials to a much greater discipline than we had before. And that is good.
(END VIDEO CLIP)
QUEST: Angel Gurria, of the OECD. We know the reason why, it is not only in Europe. Europe's political leaders are still struggling to find a solution to the debt crisis. The French president has been meeting the Greek prime minister in Paris today. Sarkozy told reporters there is no alternative, but to aid Greece, because the failure of Greece would be a failure of all of Europe. Now the Greek Prime Minister George Papandreou, who yesterday met Angela Merkel said today, Greece is doing all it can to improve matters.
(BEGIN VIDEO CLIP)
GEORGE PAPANDREOU, GREEK PRIME MINISTER: I had a very constructive discussion with President Sarkozy on the ongoing crisis. I want to make it very clear that Greece is determined. I, myself, our government, the Greek people, are determined to make the necessary changes. We are making the sacrifices and we will live up to our part of the decisions we have taken; our responsibilities, making all the necessary reforms, first of all, because we want to change Greece and make Greece a competitive, socially just and transparent country.
(END VIDEO CLIP)
QUEST: Now, obviously, President Sarkozy having seen French banks and French stocks slaughtered, and then having to worry about whether the French taxpayer is going to have to bailout Greece, even further, made it quite clear, helping Greece was essential.
(BEGIN VIDEO CLIP)
NICOLAS SARKOZY, PRESIDENT OF FRANCE (through translator): Ladies and gentlemen, I just met with Mr. Papandreou, the Greek prime minister. I asked him to put in place reform efforts and savings to which, on behalf of the Greek government he pledged to take. I know that the Greek people have suffered a lot the last month, and these last weeks. But for too many years, reforms have been deferred, and bad habits been adopted. The Greek prime minister assured me of the total determination of the Greek government to scrupulously put in place the totality of the engagements that the Greeks took. He also pointed out the concern of transparency from Greek authorities who are ready to welcome European collaborators, and from other countries in Europe, to check step by step that the commitments that Europe asked Greece to take, be held scrupulously.
(END VIDEO CLIP)
QUEST: President Sarkozy.
So, what a quarter. Sam Stovall is a chief equity strategist at S&P Capital IQ. Sam is with me in New York.
I read your comments this morning. In your briefing notes on the third quarter. I mean, Sam, there is very-you try to find the odd, the odd bright spark in there. But the fact is as long as Greece continues, well, there is not much to be cheerful about.
SAM STOVALL, CHIEF EQUITY ANALYST, S&P CAPITAL IQ: You are right, Richard. The only thing to be cheerful about is to be on your show. But you look to Asia, you look to worries about China, and whether their growth is slowing. You look to Europe and you'll see that inflation is high and the ECB might not be able lower interest rates. You look here in the U.S., you see that personal income has declined for the first time in three years. And it seems as if global recession is the likely next step. And then you say to yourself, well, how are we going to prepare ourselves for that. And how deeply will the markets decline in anticipation. So, right now investors are very concerned.
QUEST: But what should be particularly disturbing, as we saw in those numbers, I just went through, the DAX and CAC, the French and the Frankfurt market, off nearly 25 or plus percent. New York, U.S., down 9 percent, and yet the perception is that the U.S. market is where the problem is because that is where the sluggish growth goes. Square that circle for me, Sam.
STOVALL: Well, I think it is more of a parochial viewpoint. Here in the U.S., yes we are concerned about recession. But we are also very concerned about what is going on in Europe and whether that will actually be triggering a global recession that will help to bring down the U.S. While the Dow is down 9 percent, the S&P 500 is down 12.5 percent. And this is only the 10th time since World War II that we have seen the third quarter down by more than 10 percent.
So, I really think it depends on where you are sitting, to then say, what is the primary cause for this global concern? But I think knowing that this really is one long economic train that is being pulled a variety of sovereign engines; that this globe is certainly a lot smaller than it really is perceived by many people.
QUEST: Right, so we need to factor it in. Let's-what would you expect. What do you expect to see as we start to get earnings results for Q3? Now, if I think back to when we had the Q25, which is our own barometer, we were starting to see a lot more reds than greens, companies failing to meet numbers, failing year on year, or Q on Q, and failing on margins. Would you expect to see that continue against forecasts for Q3?
STOVALL: Heading into Q3 the bar is still set pretty high. S&P Capital IQ estimates that we will probably see a 14.5 percent year over year increase in operating results for the S&P 500. Certainly that is lower than the more then 15 percent growth that was anticipated as of the early part of August. So estimates have definitely come down. We're still looking for very strong earnings growth in the energy and the basic materials sectors. And only one, utilities, is expected to show a year over year decline of less than 2 percent.
QUEST: But you'd agree with me that that earnings and those numbers and that slightly better outlook is predicated because of overseas business that these companies are doing. Non-U.S., non-EU, it is basically BRICS emerging markets that is driving this, that is fueling this train.
STOVALL: Exactly. We estimate that about 50 percent of the revenues for companies in the S&P come from overseas operations, so the only way you can really sort of come to grips with a 15 percent increase in earnings as compared with a less than 2 percent growth in real GDP here in the U.S., is because of share buybacks, cost cutting efforts, as well as the exposure overseas. But that is what investors are going to be looking for. Their worry is that we are going to see a traditional 15 to 20 percent decline in earnings as we historically have during recessions.
QUEST: Ouch! Final question, because I want to leave people on a happy note, it is Friday, Europe is enjoying the most magnificent late summer weather. So, please do not pour too much rain here. There is a glimmer of hope that Q4 might be, historically, isn't there? Just a glimmer, and it does have to ride on a wing and a prayer.
STOVALL: Absolutely right. There are nine times since World War II that the S&P fell by 10 percent or more in the third quarter. In the fourth quarter, the average price change was a gain of 7.2 percent, and the market rose in eight of nine observations. Past performance is no guarantee of future results.
QUEST: Oh, you had to throw that in! But we appreciate it anyway. Sam, have a good weekend. Hope you are getting some good weather yourself. Sam Stovall making sense.
I would love to know who actually has the unfortunate task of delving in and working out, nine out of (AUDIO GAP) times since 1945.
When we come back in just a moment, it is the billionaire who is fighting for the little guy. Warren Buffet talking to CNN. Why the rich must pay more.
(BEGIN VIDEO CLIP)
WARREN BUFFET, CHAIRMAN & CEO, BERKSHIRE HATHAWAY: The juices of capitalism work. And people are out everyday trying to figure out how to turn out better products, do things more efficiently. And that goes on everyday and it is going on right today.
(END VIDEO CLIP)
QUEST: So, it is a simple statement, if there is a class warfare the rich have won.
(DESK BELL CHIMES)
Warren Buffet has been saying that to CNN. The billionaire investor has been taking criticism from the rich recently, when he said that millionaires should pay at least as much tax as the middle class. CNN's Alison Kosik caught up with the head of Berkshire Hathaway a few hours ago. She joins me now from the New York Stock Exchange.
I have met Warren Buffet. When you meet the man it is quite an experience, isn't it? Not only because he is the sage of Omaha, but-he's worth so much money.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: I know, it is truly amazing. But you know what? He's really a nice guy. He was walking around the stock exchange. He had a bottle of Coca-Cola in his pocket, which I thought was really funny. He took it out, took a drink and put it to the side. Yeah, you know, he is an everyday guy, despite the fact that he is a billionaire.
And he's been getting a lot of flack, Richard, from other millionaires on tax reform. President Obama, you remember, proposed the Buffett Rule just a few weeks ago, and that is the idea that the uber rich should pay more in taxes. And some millionaires are out there crying foul. You know, they say, you know what, you shouldn't lump us with Buffet, who is a multi-billionaire, and in a class above everybody else. Now, I talked to Buffet about that and a lot more from the floor of the New York Stock Exchange earlier today. Take a listen.
WARREN BUFFETT, CHAIRMAN & CEO, BERKSHIRE HATHAWAY: There will only be a minimum tax on people who make lots of money and pay very low tax rates, at the same time. Anybody who is paying normal tax rates, it wouldn't touch. So, in aggregate there is probably 50,000 people in the whole United States out of 310 million that it would affect.
KOSIK: But it is really not going to make much of a difference, then, in the deficit. I mean, 0.3 of 1 percent it would affect, of the population in this country. So, why do this?
BUFFETT: Well, it probably would come in at about $20 billion a year. But no one thing is going to solve the deficit of over $1 trillion. But I think when you are going to ask the poor and the middle class to give up things in terms of Medicare, or whatever it maybe, as part of a shared sacrifice, the idea that you don't get $20 million from this group-for whom it is only 10 points on a very low tax rate to start with-I think is simply unfair, and I think that getting people to buy in, in this country, to the kind of shared sacrifice that is going to be needed, it is going to be very important that they feel there is fairness to what is going on, overall.
KOSIK: All right. Let's talk Bank of America, back in the headlines today announcing a $5 fee on debit card holders who use their debit cards to make purchases. You are a big stakeholder in Bank of America. This is upsetting a lot of Bank of America customers, especially after Bank of America got a $40 billion bailout. You know, what do you think of this outrage? What do you think of Bank of America doing this?
BUFFETT: Well, I think that they paid back the $40 billion and at a very good profit to the United States government for doing it. The Bank of America will be charging fees of one sort or another and there are 7,000 banks in the United States. And if somebody else offers a better deal people can got to that. I mean, it is just like you can change channels on television.
KOSIK: OK, OK, obviously the economy, we are in a real rough patch for the economy. You have a direct pipeline to President Obama these days what would you tell him? What would you tell him to fix this economy? What is it going to take to turn this economy around?
BUFFETT: It is going to take a lot to fix it and it is going to take the cooperation of Congress and administration. And the difficult thing, so far-I mean, you know, the problems over raising the debt limit were a disgrace. And people need to feel confidence in their leaders. And they have not been given much reason to feel confidence, in terms of how Congress generally has behaved in recent months.
So, I think it is very important that leaders of both sides come together, make some concessions on both sides. Do what is needed for the country, which certainly, there are certainly taxes on the ultra rich, who are paying a tiny rate, is certainly called for. But that is a small part of the whole thing. There are a lot of things that needed to be done on the spending side. And they are going to affect a lot of Americans. And it is going to take some political courage on both sides of the aisle to get those things done. I hope that happens.
QUEST: I'm envious of you Alison. I'm certain to sit and talk these issues with the great Warren Buffett.
But what majesty? I mean, shared sacrifice, going to take time to do these things. He is being very honest on these issues. When we look at Europe, which is the number one issue at the moment, is he quite so concerned?
KOSIK: You know what, he's not. He down played it big time. You know, he really doesn't think it has had a huge impact on the U.S. as many may think it has. It really came as a big surprise to me. Listen to what he said when I asked him about Europe.
(BEGIN VIDEO CLIP)
BUFFETT: People are worried here about what is going on in Europe. It is not-business is still improving, not at a very rapid rate in the United States, but we have 70 plus businesses, and I see the figures every day on what is going on. And our recovery is still underway, but at a very small incline. And what-Europe has a lot of problems to work through, but I don't worry about that in terms of where we will be in three years, or five years, or 10 years, or even where Europe will be. The juices of capitalism work. And people are out everyday trying to figure out how to turn out better products, do things more efficiently. And that goes on everyday and it is going on right today.
KOSIK: But we are interconnected.
BUFFETT: We're interconnected but, those problems are centered over there. It is nothing like the fall of 2008, in terms of the United States.
(END VIDEO CLIP)
KOSIK: And Buffett also said it is very unlikely the U.S. is headed for another recession. Even though a forecast came out today from an economic institute saying a double-dip was eminent. I'll tell you what, Richard, investors are hoping that Buffett is the one who is right with that.
QUEST: Not today they're not. The market is down, off over 1 percent on the Dow. Listen, we were talking earlier. We have about a second or two longer. We can just enjoy chatting to each other.
QUEST: The Dow off 9 percent, the S&P of 12 percent on the quarter, whoa. What damage?
KOSIK: Yes, you know that the investors are telling me good riddance to the third quarter. It is been a real rough one. You know what all we can do is look at the next quarter and hope that it is looking a little sunnier, Richard.
QUEST: Lovely, we are having great sun over here. Hope you are having a lovely autumn, summer in New York. Alison is in New York for us tonight.
It is an immigration victory for Hong Kong's maid and domestic staff. Next, why a high court ruling means domestic staff have the same rights as other professionals. And we meet someone who is just delighted by what she does.
QUEST: A Filipino maid working in Hong Kong has won a landmark immigration case. Evangeline Vallejos, who has lived in the city since 1986, was fighting a law that excluded foreign domestic workers from settling permanently. Well, today, Hong Kong's high court overturned the rule, saying it violated the basic law. The case isn't over yet. The chief executive says the government will appeal against the ruling.
One question is whether Beijing will be called on to make a final ruling, thereby putting Hong Kong's status as an autonomous region of China in some jeopardy.
Well, Hong Kong is home to around 300,000 domestic workers. And some of them, of course, are in the world's highest hotel. At 490 meters above the ground, the view from the Ritz-Carlton over the competition is somewhat dizzying. And working at those heights, is the room attendant, Jessica, who makes sure that rooms are spic, span, and ready for business. Jessica joined me, and I joined her, as we learned about her high altitude "World At Work".
QUEST (On camera): Jessica, where do we start? Look at it! Look a it!
JESSICA, ROOM ATTENDANT, RITZ-CARLTON, HK: Yes?
QUEST: Where do we start?
JESSICA: We start first to collect the rubbish.
JESSICA: Pick up all the things.
QUEST: Why did you become a room attendant?
JESSICA: Because I like it tidy. The room is tidy and-I don't know why, this job-I love it very much. And everything I want to do, everything is from my heart.
QUEST: How long does it take you to a room?
JESSICA: One hour.
QUEST: One hour?
QUEST: That is a long time.
JESSICA: Because we have to do details, not like a lousy, lousy job (ph).
When I see the room, the room is so nice. So it means our last look is against first look (ph).
QUEST: I have a confession. I never like to be in the room when the attendant is making the room. Do you know why?
QUEST: Because I feel guilty. I look around and-
QUEST: And I think this poor person is having to clean up the mess that I've made. So do you know what I do?
QUEST: I start tidying it up, while they are there.
JESSICA: So, we have a logo.
JESSICA: Ritz-Carlton logo. So, we have to fold.
QUEST: Do you get tired of folding towels?
JESSICA: I don't get tired. I feel tired when I make a bed.
QUEST: Whew! What a lot of work that was.
JESSICA: We started at 9:00 and we have a lineup in the morning. And we did an exercise class before work. If we do the exercises even five minutes or 10 minutes, we will do nice with our -- our body and we can do it easily.
QUEST: What is the most difficult part about being a room attendant, do you think?
JESSICA: I don't think so the -- the difficult in room attendant. Because we make -- make a room, it's like a -- we make a home. It's like we make our home and it is right there. L (END VIDEO TAPE)
QUEST: Ah, brilliant.
And I promise you, I am not the only person who cleans the room whilst the other person is cleaning it. And I love the idea of all these exercises before we start work.
Coming up next, the changing place of H.P. -- Leo Apotheker has been jettisoned from his CEO job. The golden parachute and what they make of it in the company.
QUEST: Hello, I'm Richard Quest.
QUEST MEANS BUSINESS in a moment.
This is CNN. And here, whatever the day, we always have the news first.
We are now told it was a U.S. drone attack that killed the American al Qaeda leader, Anwar al-Awlaki. Officials in Yemen and the U.S. say the drone struck the radical cleric's vehicle east of the Yemeni capital. He and three others were killed. President Obama calls al-Awlaki death a major blow to al Qaeda.
The Greek prime minister, George Papandreou, in Paris, making his case that Greece is doing everything it can to get its financial house in order. The meeting with the French president comes as Greece works to secure its next installment of bailout cash and avoid default.
Day four of the manslaughter trial of Michael Jackson's doctor. Prosecutors are trying to prove Conrad Murray was criminally negligent in his treatment of the pop star. One of the paramedics who responded to the scene has been testifying about their attempts to revive the pop star.
QUEST: All right, you don't need to be a lover of the financial world to know that Hewlett Packard is a basket case at the moment. The shares are trading at near six year lows in New York. It's a continuation of a free-fall that's cut H.P. 's share price in half since February.
When I say basket case, of course, I'm not referring in any shape or form to the excellent products that they no doubt make, or, indeed, the tens of thousands of customers and employees around the world who are working hard in the service of the corporation.
No, I'm referring to the way the company is being run. The board is hoping a new boss, Meg Whitman, will be changing the company's fortunes. But getting rid of the last one wasn't cheap.
If you join me at -- in the library, I'll show you exactly what I'm talking about.
So, he went. He was fired after his strategy of moving things in and out was accepted but rejected in terms of execution. Leo Apotheker's exit package is worth nearly $10 million. An SEC filing shows $7.2 million severance, bonuses. And he was only 11 months into the job. He reshaped the company to this IBM services driven, less manufacturing base.
It might have been a good strategy. It cost him his job. And Meg Whitman, former eBay chief, has moved in. She's energy considerably less. She did run, of course, for politics. She's energy just $1 as a base salary.
Oracle's CEO, Larry Ellison, has been dipping his
Oar in. He's accusing Autonomy that HP is planning to buy, of lying and HP overpaying.
Now, why should Ellison be concerned what he's paying for a company?
What's going on here?
Very simple. Ellison says that Autonomy actually wanted to go to Oracle before he moved in. Oracle says at $6 billion, it was absurdly high.
Now, Autonomy's chief executive denying it all. "Ellison has either a very poor memory or he's lying."
Fascinating stuff. Oracle hired former HP's CEO, Mark Hurd, as its print -- as its printer president last year.
In all of this, you may be well wondering what's actually happening with the company, HP, the bit that makes things. Well, Vyomesh Joshi is the executive vice president of HP's imaging and printing group. It's worth $26 billion a year to the company.
He was in Dublin for a meeting and printing conference.
He told me that there will still be a place for HP as the company evolves.
VYOMESH JOSHI, EXECUTIVE VICE PRESIDENT, IMAGING AND PRINTING GROUP: I think, you know, imaging and printing is an integral part of Hewlett Packard. It's not just about hardware and supplies. It's about software, services and cloud. And, you know, what we introduced today are two big cloud-based architectures.
So we think that, you know, this is an integral part of Hewlett Packard. And being an IT company makes tremendous value proposition for imaging and printing and H.P. .
QUEST: Right. But do you expect H.P. to still sell hardware in 12 months, 24 months time, the actual printers themselves?
JOSHI: Well, I think so, because, you know, if you think about what all, we've got a $130 billion company. You know, $4 billion in software. The remaining part is hardware and services. And we need to continue to innovate and continue to grow all the businesses.
JOSHI: You know, customers always expect...
QUEST: So, the -- the board of directors, the board -- well, yes, right. But the board has set out its policy and there is this shift to cloud services, to a more service-oriented company, whether or not PCs and the others get hived off will be decided in the future.
But for IPG, imaging and printing, how are you going to translate that vision from the board into your division?
JOSHI: Well, I think, you know, for imaging and printing, we have a big services business. And, you know, to think about the introduction that we have, we already have 10 million cloud able printers. And that number will go to 20 million this year, end of the year, and 50 million by the end of next year.
So, you know, cloud, the services, the Web services are an integral part of IPG and Hewlett Packard.
So I really don't see any reason to get IPG separated from HP.
QUEST: Finally, if anybody watching this interview today says, well, he would say all of this, he's an executive vice president, but the fact is, HP is perceived to be a company that's lost its way.
Would they be right?
JOSHI: No, absolutely not. You know, if you think about innovation, let me give you an example. You know, we had 5,000 patents in 2001. In 2011, we have 14,700 patents. We added, every year, 1,000 patents. In the last three years, most of the patents were in software and services for imaging and printing.
So, you know, it's all about innovation. In the last nine months, in every single category, we gained market share. So it's all about, you know, focusing on execution.
The great thing about Hewlett Packard is our employees. You know, that's what we do. We, every day, get up in the morning, innovate and make a contribution.
(END VIDEO TAPE)
QUEST: You've got to admit, at least it's the bravery of coming on board and actually answering the questions.
TomTom pounding the pavement, looking for a way to grow. We'll be looking and talking to the chief executive to see if he knows the way.
QUEST: TomTom is on a mission. Look at this. This is a live map of London's traffic tonight. It's the TomTom latest idea. Search one of these things and it shows you where all the problems are actually taking place at the moment and what sort of delay the lights are.
It's a clever idea and TomTom says it is theirs.
It was the king among roads -- among satnavs. Smartphone competition has the company issuing profit warnings. And now TomTom is trying to use this sort of technology and make it much wider and European and actually develop it as part of a traffic information foundation.
It's designed to cut congestion, which TomTom says is crucial.
I sat down with TomTom's chief exec here in London and I discussed. This is all very good, but frankly, what about the Smartphone and the tablet, where TomTom is losing out?
HAROLD GODDIJN, CEO, TOMTOM: An important part of our business is our retail business and the conditions and retail are not good. And -- and our revenues have gone down.
On the other hand, we're very active in the auto industry, in licensing content and technologies to make cars efficient and safer. And that has seen very strong growth.
So on one hand, we see a decline of a very big market, arguably, that's going down. And on the other hand, we see big growth, almost 40 percent plus year-on-year of growth in other elements, in other segments we are doing.
QUEST: And, of course, you have to hope that as new devices come online and people shift to other devices and more modern things, that your personal device market returns, don't you?
Do you see any evidence of that?
Or has it gone?
GODDIJN: No, it's not gone, I don't think...
QUEST: It's dying?
GODDIJN: -- at all...
QUEST: It's dying?
GODDIJN: And I don't think it's dying. It will stabilize at some point. The -- the -- the products we do for the consumer market are well accepted. There's an awful -- there's a very big installed base. And people will continue...
QUEST: All right...
GODDIJN: -- to use it as a form factor.
But there are other ways you can get navigation, as well.
QUEST: And that's...
GODDIJN: It's built in. It's available in Smartphones. It's available in tablets. It's available in a number of form factors.
QUEST: Have you moved fast enough with tablets and Smartphones?
GODDIJN: You know, in general, the -- the changes in the industry that we've witnessed are phenomenal and with an incredible speed. And if you say are you happy as a CEO about the -- the speed of transition in your own business, I say, well, we need to work harder. We need to be faster, more nimble and more aggressive.
And there is chaos out there. And chaos creates opportunities, also, for us. And we need to grab those opportunities.
QUEST: Yes, I mean if I look at the competitors on the mobile phones and the Googles of this world, they, with ferociously aggressive policies and exceptionally deep pockets. So you have to build a better mouse trap.
GODDIJN: We need to continue to do what we're doing, continue to provide drivers with the information they need. We are quite unique in that -- in that area. We have an awful lot of information that is not easy to get hold of. We've collected it over a number of years. We have a lot of information that is valuable for drivers. And we are looking and expanding the way and the platforms in which we can bring that information to our customers.
QUEST: So as the chief executive, how do you -- to put it -- yes, to put it bluntly, sir, how do you put a rocket up the company and tell them, you know, there is a war on and if we're not careful, we'll lose it?
GODDIJN: Yes. You know, I think it's -- it's very important that you have a clear strategy. Don't spread yourself too thin. You do what you're good at and find the right business models to capitalize on your investment and your assets. And that's what we're trying to do.
(END VIDEO TAPE)
QUEST: The CEO of TomTom.
And that is QUEST MEANS BUSINESS for tonight.
I thank you for joining us this week.
It's always good to have you.
Whatever you're up to in the hours ahead, I hope it's profitable.
"MARKETPLACE AFRICA" is next.
ROBYN CURNOW, HOST: You're watching MARKETPLACE AFRICA.
I'm Robyn Curnow.
This week, we're bringing you the show from the Johannesburg Art Fair, the only one of its kind on the African continent. It's been going for four years now. And each year, the art community gathers here to celebrate African art. And while artistic endeavor is always in the eye of the beholder, there's no doubt that African contemporary art is becoming both more attractive and more accessible to buyers and fans around the world.
CURNOW (voice-over): At the Gallery MOMO in Johannesburg, owner Monna Mokoena and artist Ransome Stanley, critique his latest exhibition.
UNIDENTIFIED MALE: I like this. I like the word or the meaning.
CURNOW: The art is provocative, bold and challenging, not typical African art, says Mokoena.
MONNA MOKOENA, GALLERY MOMO: I'm looking more for contemporary art. You know, that's -- that's the main type of art that, you know, of -- of my generation, that sticks. But, you know, our current affairs, you know, rather than taking it back to the old days.
CURNOW: New art for a new generation of collectors.
MOKOENA: I see us growing really now the middle class and (INAUDIBLE) to the black economic empowerment, we've seen a lot of people of color who are not collecting, but who are not, you know, coming up, you know, given the fact that, you know, they're -- they are also mobile. You know, they travel extensively. And, you know, things change, you know, in terms of, you know, their social standing.
CURNOW: The Joburg Art Fair is one way to promote Africa's creativity, by introducing the continent's art to the global market, which helps to push up the value of pieces like these.
In these tough economic times, the fair is smaller than previous years, but it still gets sponsorship from the South African banking giant, FMB, and it's starting to attract international buyers, such as Chris Dercon, director of the Tate Modern in London. He's in Johannesburg to buy contemporary and modern African art for the gallery.
CHRIS DERCON, DIRECTOR, TALE MODERN: We just announced that we started with an African acquisitions committee with major collectors living all over Africa. And they're going to help Tate to acquire works of art, African contemporary art, African contemporary photography installations that they get to be seen, not just in Tate Modern, but because it's Tate Modern, they will also get to be seen all over the world.
CURNOW: Dercon says he's excited by the art scenes in Zimbabwe, Ethiopia and Mozambique.
DERCON: Abundar is coming from Aputo (ph), Mozambique. And he's making these beautiful sculptures with scraps, metal scraps, which are leftovers from the civil wars and the struggles in Mozambique. And I think this is absolutely exceptional material. But this is really, really interesting, because African masks as we know them are now put together with these souvenirs, to say so, souvenirs of struggle and conflict. And this look, this work might look beautiful, but it's also hurting. It's dangerous work.
So we are interested in work which is expressing these tensions, which is expressing fear, which is expressing the disruption and the confrontation of the daily existence in -- in Africa.
CURNOW: The scrap metal of Africa's past now valuable in a different form.
DERCON: Because, you know, art is only a good investment over many years. You have to wait 20 to 40 years when you really want to make a buck, let's say. And I'm not an investor. I represent the symbolic value.
But yet, I have to deal with the financial value. So it's rising. African photography is on the rise, yes. And there are some works which are really not inexpensive.
I mean this kind of stuff, I think it's worth it. It's 6,000 euros. And I think people should try to buy this. It's a bargain.
CURNOW: Maybe the bargain label will tempt Africans into the market.
Back at the Gallery MOMO, Mokoena hopes so.
MOKOENA: I think it's for Africans themselves to invest in their own artists. China, for starters. Most of the collectors of Chinese art are Chinese. Indian art, the same thing.
But yet, as Africans, we try not to -- I do think whether we avoid it, but we don't invest in our own heritage.
CURNOW: Times have been tough, but new art continues to be displayed, admired and bought.
(END VIDEO TAPE)
CURNOW: OK, let's take a look at the South African art market by the numbers.
Auctionvault.co.za, an online database of auction results here in South Africa, says that in the last two years, the market has dipped. Sale volumes and prices are down.
Nevertheless, some record prices have been paid at auction for some of South Africa's old masters.
An Irma Stern, for example, sold in March for $4 million US. For contemporary artists such as William Kentridge sell for as much as $300,000 US.
Up next, more from the Joburg Art Fair and what's being done to help African artists create and sustain an artful enterprise.
CURNOW: It can be difficult for aspiring artists to get their work exhibited in a show like this. They need support. They need capital for their vision to be turned into reality. That's where organizations such as the Sovereign Art Foundation come in.
For our Face Time interview this week, I chatted to Howard Bilton.
He's the chairman of the Sovereign Group.
And I asked him why he's now investing in an African art prize.
CURNOW: This is her prize money. It's -- it's a huge amount of money for an African artist, for any artist, isn't it?
HOWARD BILTON, CHAIRMAN, SOVEREIGN GROUP: I think it's -- it's a good amount of money, yes.
CURNOW: $25,000 US.
BILTON: It's a good amount, yes. I mean to put it in perspective, I suppose if they were to get that money for a work, they would not be selling in a gallery for $50,000 US. Now, there's not many artists in the world who can achieve those prices.
If they do achieve those prices, they're almost certainly internationally famous and probably beyond entering art prizes.
So for the artists we're looking for, who are going to be probably well known and established in their own country but not known internationally, this is going to be a worthy sum, I think. And, of course, we'd like to think that more important is the kudos of being the -- the prize winner.
CURNOW: And how important are these sorts of things in terms of stimulating creativity?
BILTON: Well, I think this works...
CURNOW: And does it make business sense?
BILTON: I don't think it does make business sense. No, it doesn't at all. I mean there is much better ways of spending your money if you're a businessman. But that's not the point. The point is it's a charitable enterprise. So we don't need it to make sense I don't need it to make sense. And if I did, it doesn't. So that's -- that's for sure.
But I think we're trying to achieve three things. We're trying to help the artists by giving them international exposure and -- and you can see we have achieved that already by -- by displaying the work here. And I think the organizers are quite pleased we're here, because we're showing art from all over the Africa region, whereas if you look around, most of what's here is South African.
We're trying to raise money through the sale of the art because these pieces are all for sale. The artists will get half the normal gallery cuts, if you like. And the other half will go straight to the charity without deduction for overhead or any expenses.
And -- and we will make a difference in the community using that money.
And we'd like to think that we're helping art investors, because it's a fairly unique opportunity to purchase art which has been vetted by two levels of independent expert. First, nominees propose these pieces, and second, we have judges who are undoubtedly world experts, unlike many.
CURNOW: You're based in Asia?
CURNOW: Are there similarities between what was happening with the Asian art market 10 years ago with the African art market, the contemporary art market, now?
BILTON: I think there probably are. I mean when we started 10 years ago, the -- there was not a boom in Asian art, which there is now, particularly in Chinese art. I think that started probably about five or six years ago. And art has become an asset class for investors in the Far East. So it has boomed massively.
Now, I sense that Africa could be the next big thing. And certainly there is growing interest in African art. So we might be at a similar stage. We might be.
I think the supporters and buyers are a lot less numerous here. But - - and -- and there are a lot fewer artists, as well. But if you match those two together, we might well be in a similar phase.
CURNOW: Buying art as an investment is not a good idea, is it?
I mean you've got to buy something you love.
Or do you -- do you really look at something and say, listen, I'm buying this because I hope there's going to be an extra (INAUDIBLE)?
BILTON: I -- I don't, personally. I buy what I like, because I want to live with it and I want to hang it.
If you're asked to pay quite a lot of money for a piece, I think it's important that it has value in it. And that almost certainly means it has an investment value. Otherwise, you're really over paying for it, which is not the same as trying to make money out of it. You just don't want to blow your cash away, really.
I think that the two are irrevocably entwined, really.
(END VIDEO TAPE)
CURNOW: Howard Bilton there of the Sovereign Group.
Now, let's take a look at what's trending in African business news.
Clean Energy Plan
South African power utility Eskom has signed two loan arguments worth a total of $365 million for large-scale renewable wind and solar projects.
The deal with the African Development Bank comes a year after Eskom received a controversial $3.75 billion loan from the World Bank, to help built a coal-fired power plant in South Africa.
Zimbabwe Equity Law
Zimbabwe plans to probe about 700 foreign companies after they missed a deadline to submit plans on how they will meet the country's indigenization law.
Foreign-owned companies are required to sell 51 percent of their shares to black Zimbabweans.
Firms that do not comply risk having their licenses suspended or cancelled.
CURNOW: So are you a fan of African contemporary art and design?
Well, log onto our Facebook page and join the discussion on who you think will be Africa's next up and coming artist.
I'm Robyn Curnow at the Joburg Art Fair.
See you again next week.