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QUEST MEANS BUSINESS
Former Barclays CEO Forgoes $31 Million Bonus; Barclays Chairman Testifies Before Parliamentary Committee; US Barclays Probe; BlackBerry Blues; Dollar and Pound Gain Against Euro; The Millennials: Young London Entrepreneurs Make Money from Jelly
Aired July 10, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: There's no bonus for Bob, but the Barclays ex- chief still leaves with a big payout.
It's a case of research in commotion. The chief exec behind BlackBerry has some explaining to do.
And the box office strikes back. IMAX tonight tells us the cinema needs to be an experience again.
I'm Richard Quest. I mean business.
Good evening. He walked away from the bank he loved. Now, Bob Diamond is turning his back on more than $30 million. The former Barclays chief executive has voluntarily given up his deferred bonuses. He still received the equivalent of a year's salary plus benefits. In all, around $3 million.
QUEST: Today, Barclays' outgoing chairman Marcus Agius took the hot seat in a parliamentary inquiry into the rate-fixing scandal that led to Diamond's resignation. CNN's Jim Boulden looks at what Agius revealed.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): If it's been hard to understand the bank rate-fixing scandal brewing in London, Tuesday's testimony was easier to follow. The term "libor" was hardly mentioned. Instead, the focus was on the management style at Barclays bank and its dealing with regulators under now former-CEO Bob Diamond.
The soon-to-be former chairman of the bank, Marcus Agius, did at least allay fears that Diamond would get a huge payout to leave.
MARCUS AGIUS, OUTGOING CHAIRMAN, BARCLAYS: What has happened is that Bob Diamond has voluntarily decided to forgo any deferred consideration and deferred bonuses to which he otherwise would have been entitled.
UNIDENTIFIED MALE: What's the value of them?
AGIUS: Well, it's not a precise figure, because it depends on --
UNIDENTIFIED MALE: At current valuations?
AGIUS: The maximum amount would be 20 million pounds.
BOULDEN: That's upwards of $31 million the man who helped Barclays into a financial powerhouse will not take. Instead, he will leave with around $3 million in salary and other payments, Agius said.
BOB DIAMOND, FORMER CEO, BARCLAYS: And I got to some of the e-mails, I got physically ill.
BOULDEN: Diamond, who testified last week, will likely face more questions from lawmakers and even in court if Barclays becomes the focus of lawsuits or a criminal investigation. Those on the committee expect the investigation to widen.
STEWART HOSIE, TRESURY SELECT COMMITTEE: And even when Barclays identified in other banks, nobody sought to check whether it was going on inside Barclays or what the scale or scope of the problem in the whole system was.
So yes, we need to understand this properly and put in place the correct regulation and supervision to fix it.
BOULDEN: In testimony Tuesday, Agius was asked to clear up why exactly he decided to resign as chairman one day before Diamond resigned as CEO, only to mean Agius stays on until he finds a replacement for Diamond.
AGIUS: He went because it became clear he had lost the support of his regulators.
BOULDEN: That support evaporated last Monday. Diamond went on Tuesday, and Barclays now says Diamond won't get a dazzling payoff. Jim Boulden, CNN, London.
QUEST: John Mann is a Labor member of the UK parliament and sits on the treasury select committee. Mr. Mann joins us now live from London. John Mann, the answers you got today were more -- more detailed and fuller, one could say, then we heard from Bob Diamond. Were you satisfied with what you heard?
JOHN MANN, UK MEMBER OF PARLIAMENT: Well, the answers today were honest. They weren't very detailed. But unlike Mr. Diamond, who misled our parliamentary committee, at least we got some answers today and a bit of progress.
QUEST: What would you like to know now that you don't know? I realize that's sort of, how can you not know what you don't know? But you know where I'm going with that question.
MANN: In particular, I'd like to know which other banks Barclays were in league in in some of the fraudulent operations that were going on, and I'd like to know what exactly happened on their trading floors.
Because I don't believe all these people, offered the prospects of criminal action, weren't actually reporting what was going on upwards. I don't believe that.
QUEST: Now, you raised a good point here, because in some ways, this saga has moved on from Barclays. We can wax lyrical about whether he should get $2 million or $3 million and was it right to give up $30 million, whatever it is. But surely it now really hinges on how many more were involved in it, how many other banks, on which side of the Atlantic?
MANN: It seems very clear that at least 20 other major banks were involved here, of course, including the pretty much government-owned Royal Bank of Scotland, which hit huge problems in the crisis. But plenty of other banks across the world were involved in doing exactly the same thing. That's very, very clear.
QUEST: If this is as big, we have to be careful, don't we, that Bob Diamond doesn't become the touchstone, doesn't become the cause celebre, a witch hunt over Diamond? He is, at the end of the day, one CEO of one bank, and he's already admitted it was abhorrent what took place.
MANN: He was brasher and bolder than the others, but I want to know about the others, because we shouldn't just concentrate on the one. If there were 20 banks involved, we need to know what was happening in those banks, and especially --
MANN: -- was there a cartel going on between banks in order to excessively and potentially illegally profit from their customers?
QUEST: Do you think the governor of the Bank of England, Sir Mervyn, has any -- I know -- I heard Paul Tucker yesterday. Do you think the governor has any questions to answer?
MANN: The governor has got questions to answer, not least about why he didn't spot what was going on. And he's been rather reluctant to provide Parliament with documents, and that always gives some suspicion, in my mind. I can understand why Barclays would hide things, it's a bad, bad story for them. But the governor of the Bank of England shouldn't be hiding things from the British Parliament.
QUEST: John Mann, we'll talk more about it. Thank you for coming on the program tonight and putting it into perspective. Much appreciate your time.
We've just been talking about which other banks were involved. Who knew what? It's the old question. Well, the New York Federal Reserve, the New York division of the central bank, was asking questions about Barclays libor practices four years before the scandal broke. Felicia Taylor joins us from New York.
Felicia, we know that some of the requests for libor fiddling came from US banks. We know that already. And we now know that the US Fed clearly smelled something unpleasant in the libor cesspit, to cause -- to paraphrase Paul Tucker. So, what are they going to do about it?
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: Well, the issue here is, of course, if they were aware of this, why didn't they do something sooner? And in particular, you said this was going back four years ago, and now this is Congress asking US regulators what they knew about it and why they didn't do something to stop this manipulation of the libor rates.
As you well know, these rates are in tentacles in everything, whether it's mortgage rates, loans, on cars, no matter -- student loans. Everything that the American consumer is concerned with. And I'll get to that in a minute.
What's of real concern here is, were the financial health of the banks artificially inflated? If these rates were lower, and this is a reflection of the stresses of the financial banks during those periods between 2007 and 2009, that's very critical. And the Federal Reserve has asked for --
QUEST: All right.
TAYLOR: -- excuse me, Congress has asked for 12 contacts between the New York Federal Reserve and Barclays that were very interesting that talks about the health of those financial banks. And that's exactly the time when Bear Stearns was taken over by JPMorgan Chase and also Lehman Brothers went down. Were the health of these banks artificially inflated?
QUEST: That is, to some extent, the second tranche of libor fiddling. The first trance was, of course, when the traders were doing it for their own -- that was the 2006 -- 2005 to 2007 period. Are there allegations, other than we know from individual traders, that the US banks may have been involved in that, if you like, more venal fiddling for their own private pocketbook?
TAYLOR: We don't know it on the record, but I've certainly spoken to a number of different contacts, and the phrase is that it's a "well-known secret," and that this is a story that's going to explode. There is certainly a lot of fiddling that, evidently, went on behind the closed doors in terms of these rates.
And it's kind of a twofold thing, because if libor goes up, then monthly interest rates payments may go up with it. That's obviously not a good thing. If it goes down, some borrowers enjoy lower rates. But the question is, how were these mutual funds affected? How were pension systems affected? And that's going to be the real critical point.
So, yes, definitely, I've heard this sort of whisper out there on the street that there were individuals and perhaps some people that have already been accused of these things internally, and they have to be let go.
In some people's opinion, there are a lot of people that are going to have to take the fall for this, and Michael Weinstein, who is a former federal prosecutor, says this could happen over the next week, not month. Take a listen.
(BEGIN VIDEO CLIP)
MICHAEL WEINSTEIN, FORMER FEDERAL PROSECUTOR: Certainly there's going to be more evidence that comes out, there's going to be more e-mail traffic that comes out, and you may have whistle-blowers come out from any of these banks that talk about what was going on in the manipulation in the market.
One of the things I think you're going to have to watch is what other cooperation these banks provide to the US government now that Barclays' domino has essentially fallen. And these American banks are going to feel extreme pressure to step up to the plate and acknowledge what they did if they did anything and recognize that it was wrong and ultimately pay a huge fine.
(END VIDEO CLIP)
TAYLOR: We already know that Barclays had to pay some $450 million. And what's incredible to me, Richard, is that they actually took a 30 percent discount for coming forward quickly -- or quickly -- that's relative, frankly, because this investigation has been going on for years - - but they got a 30 percent discount for manipulating the markets by coming forward and admitting it. Really?
QUEST: You sound -- I hear the scales falling from your eyes. Felicia Taylor, who wasn't born under the mulberry bush yesterday. Many thanks indeed for joining us.
When we come back, we all -- well, a lot of use -- I was going to say the BlackBerry, all of us. A lot of us do use the BlackBerry. It's still the backbone of our e-mail communication. After the break, RIM's new chief executive faces a hard fight in the SmartPhone war, and his first tact is to win over mutinous shareholders. It's Waterloo, the one in Canada. It's the battle for BlackBerry.
QUEST: It's next, QUEST MEANS BUSINESS, good evening.
QUEST: Research In Motion's new chief executive admits he is not satisfied with the situation at the company. Thorsten Heins warned the next three quarters will be challenging for the BlackBerry maker, speaking to shareholders at the annual general meeting.
(BEGIN AUDIO CLIP)
THORSTEN HEINS, CEO, RIM: This was a disappointing quarter following a difficult year, and we are focused on stabilizing our financial performance as we transition toward the BlackBerry 10 platform.
The successful launch of BlackBerry 10 and the delivery of high- quality, full-feature BlackBerry 10 SmartPhones in the fourth calendar quarter of 2013 remains the company's number one priority.
(END AUDIO CLIP)
QUEST: He talks there about the BlackBerry 10. Earlier this month, it announced that the BlackBerry 10, the operating system it's pinning its hopes on, will be delayed until 2013, a full year after it was originally due out.
RIM also revealed it's laying off 5,000 people -- 5,000. Earnings for the past few months were significantly worse than expected. The company reported a first quarter loss of $518 million. Sales are down 40 percent from last year. The company's stock price, 70 percent down in the past year. Those three numbers alone tell the story.
CNN Money's Julianne Pepitone is at the RIM AGM in Waterloo in Canada. I mean -- one hates to kick a company when it's down, Julianne, but was there any good news from this AGM?
JULIANNE PEPITONE, CNNMONEY.COM CORRESOPNDENT (via telephone): Well, yes, especially you heard there Thorsten saying it was really disingenuous for him to pretend that RIM did not have a terrible quarter with the layoffs and the quarterly loss.
But even though the BlackBerry 10 system, the delay is really concerning, critics are concerned that the company might not even survive to even get BlackBerry 10 out the door, but Heins really tried to focus on saying, "We're taking the time to get this right. It's not a money issue, it's not a workforce issue, it's not that we're not confident in the product. We're really waiting to get this right."
And they really do need to get it right, because this is the lynchpin of RIM's turnaround. If they really are going to get this company to turn around, they really need this operating system to be excellent.
QUEST: OK. They may need it -- you say if not -- that the money's not the problem and time's not the problem, but whenever a company has the stench of death about it, or at least the stench of disability about it, it's not long before it becomes a self-fulfilling prophesy.
PEPITONE: Sure. It's true. Heins is really -- he kept pushing that RIM does have $2.2 billion in cash and cash equivalents, which is -- that's a hefty wallet for them.
But they lost $518 million last quarter, so that -- the money that they do have, that's not going to last forever. They definitely need to do something with that money and do what they can to turn the company around.
They're really hoping that BlackBerry 10 will be it, but the delay was just so disappointing. No one expected that RIM was going to do well last quarter, but another delay to BlackBerry 10 was really shocking.
QUEST: Julianne Pepitone in Waterloo in Canada at the BlackBerry AGM. Thank you.
Now, tonight's Currency Conundrum. The super dollar is the name given to an almost perfect forgery of an American bank note. Where did the super dollar -- where is thought to have come from? Spain, North Korea, or the United States? The answer later in the program on the super dollar.
The other dollar is perhaps not super, but at least powerful tonight. The real dollar gained against the euro on concerns the latest EU plan won't do enough for Spain. It's back to a two-year low, while sterling is at a fresh three-and-a-half-year high against the euro. Those are the rates --
QUEST: This is the break.
QUEST: You know the old saying, some make their money from gold, others make it from oil. Millennials today can make it out of anything, even jelly. For months, we've been following the lives of this new generation, and tonight, we start to follow to new Millennials and -- ha ha! -- wobbling as they go. Just look at it! Have a little wobble!
Believe it or not, for our new Millennials, jelly is their prized commodity. With enough confidence and enough conviction, whether it's buildings or Buckingham Palace or St. Paul's or a bit of old jelly, our new Millennials have turned this wobble into a viable business. No wobbles for our new Millennials.
UNIDENTIFIED CORRESPONDENT (voice-over): Previously on The Millennials, we bid farewell to Joe Braidwood.
JOE BRAIDWOOD, MARKETING DIRECTOR, SWIFTKEY: We work hard, we play hard, but ultimately we achieve because we're good at what we're doing.
UNIDENTIFIED CORRESPONDENT: Today, we meet two new faces abounding with style, substance, and entrepreneurial spirit. They are The Millennials.
It's in these stylish streets of North London that we meet our quirky duo, Sam Bompas and Harry Parr as they pace the streets looking for color, flavor, and inspiration.
HARRY PARR, FOUNDER, BOMPAS & PARR: That'll be the belt in the cocktail.
SAM BOMPAS, FOUNDER, BOMPAS & PARR: You have two quids. Oh, thank you.
UNIDENTIFIED CORRESPONDENT: One thing is clear: these two know each other well.
BOMPAS: We've known each other since childhood, since we were in our first year at public school. But we've been working together for -- well, five years, now, actually.
PARR: Five years and ten days.
UNIDENTIFIED CORRESPONDENT: With dashing white jackets and ice creams on hand, these modern-day Willy Wonkas make their way to the office. Work is calling. Inside, it's an artist's cave. Books, tools and, of course, the jelly molds. They're everywhere.
BOUPAS: Mm, yes, yum, yum, yum.
UNIDENTIFIED CORRESPONDENT: After all, it's here where they've made their mark.
PARR: Our first big project with Jelly was the London Festival of Architecture. It was in 2008. My professor, he thought it would be fun to see if we could get the world's foremost architects, all the great and the good. He was like, "Why don't you see if you can get them to design a jelly and put on a competition?"
UNIDENTIFIED CORRESPONDENT: The university challenge sparked their creativity, so they joined forces, exploiting each other's talents.
PARR: When you look at it and you can see there.
I tend to do things that are to do with design and getting things built and trying to solve problems, and Sam tends to do meeting people and creating opportunities. We always like to think that Sam's front of house and I'm back of house.
UNIDENTIFIED CORRESPONDENT: Their partnership delivered phenomenal results.
PARR: And Lord Foster did a version of his Millennium Bridge, which was kind of funny, because it's the wobbly bridge. And Lord Rogers did Barajas Airport in Spain. So, we had these great, great people putting their efforts into designing these jelly molds.
UNIDENTIFIED CORRESPONDENT: With these molds in hand, one thing dawned on them. How would they actually make them? Easy. They faked it to make it.
PARR: At that point, we promised that we can make any mold that someone could conceive. But of course, this was a lie, so I had to work out how to do it. And the process I used came out of -- came out of architecture, so it was using 3D programming to create these forms.
UNIDENTIFIED CORRESPONDENT: This project sparked an idea.
BOMPAS: We saw there was a need for jelly.
UNIDENTIFIED CORRESPONDENT: To open their own jelly business. And in the process, make a fortune.
BOMPAS: When we start off, things were on the scale of a plate. Now we're doing things at the level of entire buildings, and we've got plans to do things at the scope of a whole cityscape, now.
UNIDENTIFIED CORRESPONDENT: Their success with jelly enticed companies to their innovative and ingenious world. Soon, they had fun projects to create and deliver, such as a chocolate climbing wall and a punch bowl on an architectural scale.
BOMPAS: We cook, we work as artists, we write, we work as event producers, we work as consultants. But to be honest with you, we don't really care what it is or how it is we're labeled, as long as we're doing something that's really interesting and inspiring.
UNIDENTIFIED CORRESPONDENT: Now, these two Millennials are growing up, they're cooking up a storm, and looking to take it global.
PARR: We're starting now to do projects abroad, as well. Big scale projects. It's a whole new leap of not only how do we get it built with the quality that we need, but really it's a cultural thing, as well. That's a really, really big challenge in the work going forward.
UNIDENTIFIED CORRESPONDENT: Next week on The Millennials, in Johannesburg, taking on a new job, Milli gets ready for the next stage of her new blog. And in Santiago, Chile, taking on Latin America, David Lloyd sets out his strategy for expansion.
QUEST: The Millennials. The jelly's gone.
After the break, release the funds. Not the jelly. That's already gone. The EU gives Spain a break from the bond market. And from the bond market to the real market, a real Spanish market. What do they make? Are they feeling the pinch?
QUEST: QUEST MEANS BUSINESS.
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN, and on this network, the news always comes first.
A justice official in Egypt is telling CNN that the country's constitutional court has halted the president's decision to recall Parliament. The court also said it affirmed its rule to dissolve Parliament and considers it invalid. Parliament met briefly on Tuesday for a session called by the new president, Mohamed Morsi, but the session only lasted a few moments before members dispersed.
The International Criminal Court has sentenced the notorious African warlord Thomas Lubanga to 14 years in prison. In March, the court found him guilty of recruiting and using child soldiers to help fight a brutal war in the Democratic Republic of Congo. Some critics say the sentence is too light.
Barclays' chairman has become the latest executive to tell the UK parliament he's sorry for the interest rate scandal. However, he echoed other Barclays officials by saying only a few people were involved in actually manipulating the interest rate known as libor. Marcus Agius also testified that the former chief exec, Bob Diamond, wasn't amongst them.
The Olympics flame got a brush with royalty today. The queen presided over the passing of the torch at Windsor Castle. The torch relay is making its way across almost 13,000 kilometers of Britain before the London Olympic Games start on July the 27th.
QUEST: It was late in the day when they announced that Spain was to get money, and now we have flesh on the bones of Spain's banking bailout. Overnight at the meeting, they agreed that Spain via the EFSF and ESM (ph) would get the first slice of money. It's about 30 billion euros, $37 billion. The initial slice, and it is a payout but is expected to be sooner rather than later.
The money is being used to recapitalize Spanish banks. They've still got the memorandum understanding to sign, dot the I's and cross the T's, but it now seems certain Spain's banks will get the money, although it will have to go through the sovereign at least for the time being.
Mr. Juncker has been reelected for a new term as head of the Eurozone. He says he'll step down in late 2012-early 2013 and as head of the Eurozone group, he said Spain should get the money, and it should be sooner rather than later.
(BEGIN VIDEO CLIP)
JEAN-CLAUDE JUNCKER, EUROGROUP PRESIDENT: We are aiming at reaching a formal agreement in the second half of July, taking into account national parliamentary procedures allowing for a first disbursement of 30 billion euros per year in an amount to be mobilized as a contingency in case urgent needs in the Spanish banking sector.
(END VIDEO CLIP)
QUEST: So not only did Spain get the extra money, and not only will it get the money sooner rather than later, 2014 is the new level, new date, new deadline for Spain to reach the 3 percent deficit target in exchange for more cost-cutting, higher taxes on certain parts, the foreign ministers have agreed to go along with that.
And at the same time, the Greek foreign minister, the new Greek foreign minister Aionnas Suranadas (ph) says Greece will also need more time. But that's a story for, if you like, another day.
So this is how it looks on the big picture. The big markets, the overall situation, but are ordinary Spanish people feeling the pinch? El Rastro del Madrid is the most popular market, most popular flea market, and it takes place every Sunday and public holiday in Madrid.
This weekend, as you may know, I was in Madrid on assignment and I took the opportunity to ask the weekend shopping and the weekend shoppers if they're feeling the pinch.
(BEGIN VIDEO CLIP)
QUEST (voice-over): At Madrid's El Rastro flea market, there are bargains to be had. Not much to sing about.
UNIDENTIFIED MALE: (Inaudible) position we are trying to struggle as hard as we can to at least to survive. So now after this difficult three years, the only thing that we are thinking of is how to manage ourself with food and also with college for the small boys and we're waiting for this position (ph) to get finished.
QUEST (voice-over): On every stall, there are economic tales of hardship.
UNIDENTIFIED MALE: Well, right now there is no consumption at all because the economy is slow down. It worsen day by day. We believe that it seems would be worse in the next year, at least for one to two years. We have problems to pay the expenses.
QUEST (voice-over): People rummaging for that bargain, even sellers struggling to make a sale.
QUEST: Are people buying less? Are the bargaining the price down?
UNIDENTIFIED MALE: We're focusing only on tourists. The Spanish people are not -- buying less and less.
QUEST: And do they fear it's going to get worse?
UNIDENTIFIED MALE: Yes, yes. Definitely.
QUEST (voice-over): In a country where the young persons' unemployment rate is at least 50 percent, the economic picture is even bleaker.
UNIDENTIFIED MALE: Well, you think that the real problem here is unemployment, especially among young people, because there is a lack of opportunity for people that are just coming out of university and they're trying to get new jobs. But the life is still pretty good.
QUEST: It just hasn't hit home yet. It has -- people haven't realized what's about to come their way.
UNIDENTIFIED MALE: Well, I think that they do. They just don't worry that much about it, because at the same time, what can they do to stop it, right? At the end of the day, this country's now belong to IMF anyway, right? Like most -- like Greece, right? Well, I don't think we need to be rescued. I just think that it's going to take some discipline.
QUEST: So people are not going `round here as if it's the end of the world?
UNIDENTIFIED MALE: Look around you. Look around you. I don't think so.
QUEST (voice-over): Looking around, there are many stories of struggle and the (inaudible) optimism.
(END VIDEO CLIP)
QUEST: A morning in the market. A multispeed Europe could soon become a reality, according to the leaders of France and the U.K. The French president, Francois Hollande, is with the British prime minister, David Cameron, for talks in London and both leaders said they felt different European countries could be allowed to follow different sets of standards.
(BEGIN VIDEO CLIP)
FRANCOIS HOLLANDE, PRESIDENT OF FRANCE (through translator): We should see Europe as having different speeds, and each (inaudible) act (inaudible) own speed while respecting the other country and this is the way to build the relationship of trust and strong relationship.
DAVID CAMERON, PRIME MINISTER OF GREAT BRITAIN: In my view, the changes that are taking place will mean that there are opportunities for different European countries to have different sorts of European relationships.
There will be, whether you want to call it different speeds or different types of membership, I think that will be possible in the future, and we discussed those, the sorts of ideas in the meeting that we've just had.
(END VIDEO CLIP)
QUEST: Now onto the European market, Barclays is one of the top gainers on the FTSE this Tuesday. It gained 2.2 percent. That's a rollicking good session. Most of Europe's major indices ended the session in the black. The U.K. Italian manufacturing unexpectedly rose in May. Tyson Crook (ph), the biggest gainer on the DAX and the nearly 4 percent after an upgrade from McCurry (ph) mining and metals rallied (inaudible) -- I beg your pardon -- up 2 percent and Vedanta (ph) resources also up 2 percent.
We'll be back in a moment from black and white talkies to the Technicolor of the yellow brick road. We get a look back at the evolution of the cinema and from the past to the present and the future, IMAX we're heading next.
QUEST: Now so from "Citizen Kane" to "Casablanca," Bond to "Batman," the magic of Hollywood has been captivating us for more than 100 years.
The classic storylines that we know so well, the timeless quality of the cinema that just seems to never change, now when we look at the music, which all started, of course, when we look at the movies, it usually is accompanied from the silent days by musicians, gramophones and orchestras.
The first narrative film was "The Great Train Robbery" of 1903. It was produced by Thomas Edison and Edwin Porter. It was the first real big box office success. So if that's what it was -- oh, look, at the poor dear. Help, help!
Then we move to the talkies. "The Jazz Singer" in 1927, starring Al Jolson; Warner Bros.' own Vitaphone technology and it put language into the movie. Now we know this one, of course, because it went talkie in the middle of the movie. A budge of half a million dollars -- half a million - - this was expensive in the Hollywood studios history.
But from silents to talkies to color, and when we look at color, the golden age of Hollywood first "Becky Sharp" in 1934. Critics praised the film's beautiful splashes of multitoned visual delight. This, of course, is from the yellow brick road.
Now as we move forward, what's next on the big screen? What can we look forward to, having had color, talkies and movies? Join me as we come and examine an experience, the next big thing in the movies.
IMAX is the pioneer of the large screen cinema, and it's begun testing a prototype form of projection. It's a laser projection system. The company's (inaudible) president says the technology provides the best experience you can imagine. So movies and -- oh, where's me glasses? I'm going to enjoy it. The movies and Jim Boulden reports.
(BEGIN VIDEO CLIP)
ANDREW CRIPPS, PRESIDENT, IMAX EMEA: I think as people's technology gets better and better in the home, there has to be a bigger reason for them to go out at night. There has to be a bigger reason for them to pay the babysitter, get in their car, drive to the multiplex. And I think IMAX gives them that reason to do that.
I think IMAX is an affordable luxury for people. You know, times are difficult in certain parts of the world. But it's still relatively a cheap night out. And I think when people are looking for a night out, they're looking for the best possible experience that they can have.
JIM BOULDEN, CNN CORRESPONDENT: So far as growth in the business, is it about getting more cinemas built? Or is it about getting more films made for IMAX?
CRIPPS: I think it's about both. I think it -- primarily it's about expanding the theater network. We've been incredibly successful in America. We've been very successful in Asia, as there's been a huge multiplex development expansion in that part of the world.
I think the next challenge and big growth opportunity for us is in Europe, to grow the network. At the same time, we're finding more and more filmmakers are coming to us because they love what IMAX projects on screen. So we're getting more opportunities to do the big blockbuster movies.
BOULDEN: So they're coming to you; you're not having to knock on the door as much?
CRIPPS: That's a great position to be in, when they do. But we've got some, you know, people like Chris Nolan, J.J. Abrams, are huge IMAX fans. So they do come to us, and they want to do their movies in IMAX.
BOULDEN: So the next "Star Trek" will definitely be in IMAX?
CRIPPS: The next "Star Trek," J.J. Abrams is shooting with the IMAX cameras, as we speak, and it comes out next May.
BOULDEN: And the force expanding throughout Europe right here in London with this beautiful IMAX. But not everybody in Europe has one within reasonable distance. How quickly do you think you can spread the model around Europe?
CRIPPS: Europe's a big region. We've got 99 theaters open at the moment. We'll have -- you know, we've contracted 129 theaters. So, but, you know, the network is expanding. I think the great thing about the network is, you know, certainly what I've learned is, you know, we signed on a worldwide basis over 440 theaters in the last two years.
Eighty-three percent of those were with existing customers. So when an exhibitor gets involved in the IMAX business, they see the business benefit of that, and they come back for more IMAXes.
You know, the potential universe of IMAX theaters is somewhere between 400 and 500 in the region. We're at 129. So we've got a lot of growth to go. I think, you know, it'll take awhile. The economy, you know, plays into that in terms of an investment. But the model clearly works.
BOULDEN: So, right now, it's all about 3-D and I hear laser is the next projection technology.
CRIPPS: Yes. Laser is a very exciting development for us. It's the biggest R&D project ever undertaken by IMAX. We bought 10,000 patents from Kodak, who developed the product originally. And we're in the process now of developing a laser projection system to introduce in the fourth quarter of 2013 that will allow us to put far more light on the screen, a broader range of colors, greater contrast.
A great thing for the filmmakers is, you know, when you project a black image on the screen, they like it to be really black. And I think the laser technology will enable us to do that.
BOULDEN: So for here in a few years, with this huge screen here, I'll be able to see the colors more realistic --
CRIPPS: You absolutely will.
BOULDEN: -- with a laser projection.
CRIPPS: Yes. And when you put on your 3-D glasses, you'll see much more light on the screen, which will give a much better viewing experience.
(END VIDEO CLIP)
QUEST: The world of the IMAX cinema.
What happened to the audience that was meant to be here earlier?
The weather forecast now. Jenny Harrison's at the World Weather Center.
You know, I'm imagining in the 10 plagues each time I get a weather forecast now, with floods and pestilence and -- oh, you name it.
JENNY HARRISON, CNN METEOROLOGIST: Yes, well, I know. It's not been good, has it? And yes, well, I'll get to it. I'll tell you, not a huge amount of change, unfortunately, Richard, not across the northwest of Europe in particular.
The southeast, the temperature's actually beginning to ease a little bit, but look again on the satellite, just more and more cloud across the U.K. in particular. It is that same area of low pressure. If there have been quite a few thunderstorms across into eastern France, central western areas of Germany and also eastern regions of the U.K. as well. But the low itself is really sitting across the U.K. and Scotland for a change, getting some very persistent rainfall.
So this is what's going on, this one area of low pressure. it's fairly widespread, as you can see, and it'll just produce these scattered showers and scattered thunderstorms as we go through the next couple of days. But it's squeezing the heat away from the southeast. But unfortunately, just bringing more of the same.
But typically this time of year, the jet stream is normally a little bit further to the north. So when that happens, these areas of low pressure coming in across the Atlantic, they take a much more northerly route. And that means that the bulk of the U.K., certainly, should see some better, finer, drier weather. But what's been happening this year is the jet stream has plunged further south. It's staying further south. And so all these systems are literally making a beeline for the U.K. and also across into Scandinavia.
So until that changes, the forecast is pretty likely going to stay very much the same. But it's not all doom and gloom. Look at this from our iReporter, Mira (ph). This is Scarborough, just a day ago, and it looks glorious, even some hazy sunshine, not even low cloud. That really is hazy sunshine.
And as I say, at the same time, the southeast of Europe, although the temperatures are still above average, 38 degrees, 37, so above average. But the area that's suffering from that heat is actually being squeezed as that area of low pressure moves across the north. Now you can see more rain in the forecast, and although the low does move its way fairly eastward, we get these systems sort of on the wraparound areas. So I'm afraid still more rain in the forecast.
Temperature wise, nice and sunny and not too hot in the central Med, 33 in Rome and 32 across in Madrid, but cooler in London and Paris, just 18 degrees Celsius. Nothing like the heat across the western U.S., 45 degrees Celsius, 42 in Boise, Idaho.
So the heat that was in the southeast out towards the southwest, 49 degrees Celsius, could be expected as we go through this week. That is 120 degree Fahrenheit. The warnings, of course, are in place.
You can see the temperatures over the next few days, 44 in Vegas and also very warm across in Phoenix at 42. But, Richard, this day the temperature like 1913 in Death Valley, the highest temperature ever was recorded, 57 degrees Celsius. That's 134 degrees Fahrenheit. So you've got some way to go yet before we actually beat that.
QUEST: I'm looking down, Ms. Harrison, not because I'm not listening to what you're saying. I'm looking down because I have a monitor here, and I can see properly those numbers that you are referring to.
Now, I have a question which I'd like you to answer tomorrow. So tomorrow --
QUEST: -- for me, please. It's this: why in Europe are we having a bad summer? And obviously, it's high pressure and low pressure, but is there a particular reason --
HARRISON: You were not paying attention. You were not paying attention.
QUEST: Tomorrow (inaudible).
HARRISON: It was in there today.
QUEST: I was paying attention. Tomorrow. I'm going to question you closely on this, closely.
Jenny Harrison, World Weather Center.
The deals are rolling in at Farnborough. And the battle in between now for some Boeing. One company is running away with the prices. After the break (inaudible).
(BEGIN VIDEO CLIP)
QUEST (voice-over): The answer to the "Currency Conundrum," the "Superdollar," it's C. Although North Korea claims (inaudible) claimed the almost perfect forgery originated there, according to U.S. intelligence, but the North Korean government had acquired the information and (inaudible) printing press similar to the one used for printing money in the U.S. That is the "Superdollar."
(END VIDEO CLIP)
Airbus and Bombardier have made their first big deals of this year's Farnborough Air Show. It's Boeing that took most of the orders for the second straight day. The superscreen shows how they -- in this sort of vision -- Boeing has sold 195 planes so far, mainly 737s and nearly 100 of those were sold to Gekas (ph) today.
If you put this into context in terms of relative size, Bombardier has sold just 10 planes so far. And Airbus has sold 15 planes so far. And as the week goes on, you will see those numbers alter.
In terms of the one that we are really looking for closely, it'll be the 320 and the 737. I'll update you with those numbers tomorrow.
The chief exec of EgyptAir says he hopes to buy new planes for his fleet, and even build a brand new hub in Cairo. Hossam Kamal hopes that stability is returning to Egypt. And I asked after the Arab Spring where things stood.
(BEGIN VIDEO CLIP)
HOSSAM KAMAL, CEO AND CHAIRMAN, EGYPTAIR: (Inaudible) performance. The worst for the 2011 also recovery then starts to improve by July. And the most goods months was in August. We carried almost 750,000 passengers.
That was -- all that was 2011. In 2012, now there is some improvement, especially stopping the last month for the Omra (ph) season, when the Egyptians that they are coming from the Middle East area for holidays in Egypt.
QUEST: How difficult is it for you to balance (ph) this? Because it's one thing to have economic crisis; it's another thing to have, you know, all these other issues. But you had to contend with running an airline through civil unrest and revolution.
KAMAL: Yes, actually, (inaudible) now seven (ph) years old, and -- oh, it's eight years old now, and it's a very known (ph) airline in the Middle East. (Inaudible) seventh (inaudible) IATA. Problems (ph) for two years has not (inaudible) too much like that. We can handle it.
What we are doing now is that we are standing our network as a hub group, Egypt from Cairo airport. We have almost 30 percent from our passengers now Arab transit passengers from the Far East to Europe via Cairo.
QUEST: So when you look at the -- we'll come to that in a second. When you look at the new president, the new -- I mean, it's hard to say whether there's a period of stability or a period of continuing uncertainty. But from running an airline's point of view, how would you cope with that?
KAMAL: We are looking for the future. We're are looking for improvements, especially with the (inaudible) election of the new president. We are seeing that within the next two, three months from now, we are looking for stability as before the revolution, for the number of passengers.
We are looking for 12 million passengers in 2012, and we're extending our network so we have almost 18 percent increase in our network in the (inaudible) summer schedule.
QUEST: Are you trying to attempting to thinking of doing a Turkish?
QUEST: Doing a Turkish airlines?
Creating a hub carrier --
QUEST: -- through your main hub --
KAMAL: (Inaudible), yes.
QUEST: -- (inaudible) Cairo?
KAMAL: That's what we are looking for, so be a hub in Cairo airport, should be a hub for the Middle East only because we are -- we exit for -- we are the (inaudible) for Africa and the Middle East area. We have a combination that nobody else has.
QUEST: Have you got the deep pockets necessary and the fleet necessary to start building that hub and spokes system out of -- ?
KAMAL: We have our plans that stand our fleets, our receiving our (inaudible) 800s number (inaudible) aircrafts coming this month. There's another one coming in August. And with the 330 (ph) coming to -- going to be delivered in 2014, and we are looking out for a future that for the new aircrafts, the new generations from Airbus and Boeing. Yes, we have the plans.
QUEST: And, finally, if the -- as you put together this hub idea and (inaudible) hub carrier in the Middle East, it all relies on stability, though, doesn't it?
KAMAL: Yes, of course --
QUEST: And the geopolitical structures in Egypt?
KAMAL: There is a stability. There is expansion. If there is no stability, of course, there will be problems. So we are looking for the future with a good solution. We hope so.
(END VIDEO CLIP)
QUEST: CEO/chairman of EgyptAir. Back after the break.
QUEST: I have adjourned "Profitable Moment" for tonight because you need to know what's happening on the U.S. markets at this hour. And we're off 106 points, down 12,631. It is, of course, economic woes and worries once again, and it's Eurozone issues that are taking the toll. And the market's off nearly 1 percentage point in New York with just an hour and change still to trade.
So you are up to date and that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. As always, whatever you're up to in the hours ahead, I hope it's profitable. I'll have the headlines next.
QUEST: A justice official in Egypt is telling CNN the country's constitutional court has halted a decision by President Mohammed Morsi to recall parliament. The court also affirmed its ruling to dissolve the legislative body and its parliament met briefly on Tuesday. The session lasted only a few minutes (inaudible) before members dispersed.
The International Criminal Court has sentenced notorious African warlord Thomas Lubanga to 14 years in prison. In March, the court found him guilty of recruiting and using child soldiers to help fight a brutal war in the Democratic Republic of Congo. Some critics said the sentence is too lenient.
Barclays chairman has become the latest bank official to tell Parliament he's sorry for the scandal on interest rates. He echoed other Barclays officials, saying only a few people were involved in actually manipulating the rate, and that CEO Bob Diamond wasn't amongst them.
The former captain of England's National football team has told a London court he couldn't control his emotions when he thought an opponent called him a racist. John Terry denied charges that he racially abused Anton Ferdinand during a match last year. Terry took the stand after his defense team tried and failed to have the case dismissed.
You are up to date. Those are the news headlines on CNN. Now, live from New York, "AMANPOUR."