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Intel CEO Steps Down; Rally on Wall Street; European Markets Rebound; European Leaders Finally Ready to Move on Next Round of Bailout for Greece; US President Visits Cambodia, Myanmar; Jaguar in China; Yen Rebounding; Obama's Asian Tour

Aired November 19, 2012 - 14:00   ET


NINA DOS SANTOS, HOST: Farewell, Intel. Chief Executive Paul Otellini announces his retirement.

A rally built on the hopes of a budget deal. Stock markets rise for the first day of trading this week.

And looking back at the Marikana Massacre. All this week, we're investigating how a labor dispute turned quite so deadly.

Hello, I'm Nina Dos Santos, and this is QUEST MEANS BUSINESS.

Good evening. The head of the world's largest chip maker is stepping down. Paul Otellini, CEO of Intel for the past eight years, will now leave the company in May. So far, there's no word as yet who will be set to replace him.

Otellini says that after nearly four decades at the company, well, it's time for a new generation of leadership. CNN's Maggie Lake joins us now, live, with the latest on the story from New York.

So, Maggie, obviously, no word on who's going to replace him yet. I suppose it's big boots and big shoes to fill?

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: That's right, Nina. And it's interesting, the market really taken by surprise. You'd think someone who's been at the company for 40 years certainly deserves to retire, but the timing was not expected.

And frankly, this isn't the way, we're told by analysts, that Intel usually operates. They would have expected them to really telegraph this to the market well ahead of time that the news was even coming, have a successor ready to introduce to them, to do the transition that way.

Instead, it's not. They've got six months, now, to figure out what to do. So, some are seeing this as an indication that -- indicative, really, of these larger problems that Intel's struggling with. Mainly, something you and I have talked about a lot on the business shows here, the sort of decline of the PC market.

Intel, that symbol that is all over, every time we turn on a computer, the laptop on my desk, here, has it right on the outside. They dominate the PC market. Of course, PC sales are declining and they are behind in the area that is growing rapidly, that is that shift to tablets and to SmartPhones.

That has really impacted the stock, as you can see, down 17 percent year-to-date in a market that has been trading higher, if you look at the broader S&P 500 market. And in fact, today, the market's on fire and Intel, again, lagging.

That's because a lot of analysts are looking at this and trying to figure out what needs to be done. What are they going to do in terms of strategy? And I asked analysts, what are they looking for in terms of the CEO? Have a listen.


DOUG FREEDMAN, RBC CAPITAL MARKETS: The fact they're willing to look for an outsider, I think, is a positive signal. Bringing an outsider in, it's a huge task. It's somebody that's going to have to know how to run a large organization. Somebody that maybe made some changes in a large organization, because trying to turn an organization the size of Intel is an extreme challenge.

The question now becomes, do we need that pace of innovation? Should we slow it down? Should we push ahead in certain areas? Focus more on uniqueness versus once-size-fits-all type of strategies?


LAKE: And Nina, it really strikes me, this is a very similar story when I talked to Steve Ballmer at Microsoft a few weeks ago with the launch of Windows 8, all of these companies, these big horsemen of technology, the powerhouses -- Cisco, Microsoft, Intel -- have really been, in a way, left behind by this rapid shift, and they're trying to figure out how to reposition themselves.

And I think that analyst brings up a really good point: you have to get somebody in there who's going to not only sort of change the strategy of the company, but deal with the huge shift in culture. That's not easy.

DOS SANTOS: Does it sound like, from what the analysts are saying, that Intel is one of these companies that's just too big to be flexible? Should it now be sort of whittled down, if you like? Come eight years from now, whoever's in charge will be in charge of a very different company.

LAKE: Yes, it may be -- I don't think the size in and of itself is the problem. Heft and a healthy balance sheet will serve you well in this volatile time. But I think trying to figure out where the future is is not so easy.

There's this big shift to mobile, to mobile platforms. But that market for a chip-maker is very competitive, and the profit margins are not what they were for PC markets. So, do you want to dive into that head first? That is unclear.

And also, the analyst also bringing up a good point: do you need to vertically integrate? Do you need to make your own devices as well as chips? And does a chip company do that well? It's something we see Microsoft, again, struggling with. They decided to make their own tablet.

So, these are huge questions, a very disruptive time, and these companies really scrambling to find their way forward. So, it's going to be very, very interesting to see whether they go with an insider or whether they do choose to pick somebody outside Intel's traditional culture, Nina.

DOS SANTS: Well, if he's leaving in May, they've got a couple of months to put the executive search out there. Maggie Lake, there, in New York. Thanks every so much for that.

Up next, new leadership and new opportunities. We speak to the former US ambassador to China, Jon Huntsman, about what's next for relations with Beijing. And in South Africa --


UNIDENTIFIED MALE: I think it's going to shake up a lot of things in the country. It's making us ask a lot of hard questions.


DOS SANTOS: We examine what happened on one day of blood shed, which sent shockwaves right round the world.





DOS SANTOS: Welcome back. Well, US stock markets are making some gains tonight. Let's go over to Maribel Aber for the latest on the action at the New York Stock Exchange. Hi, there, Maribel. So, what's keeping these markets up so a second straight session?

MARIBEL ABER, CNN MONEY CORRESPONDENT: Hi, Nina. Well, as you're saying here, major averages surged out of the starting gate and never looked back. The Dow's up about 160 points right now, again, mainly thanks to optimism that fiscal cliff talks are progressing.

The rally started on Friday after President Obama met with congressional leaders for the first time since the election. And you know what, Nina? Wall Street has been expecting a deal to come at the very last minute. So, it's great news that things seem to be moving along faster than expected.

Still, stocks will likely remain under pressure until an actual deal, of course, is finalized. Even factoring in today's gains, the major indices are well off the multi-year highs they hit a couple months ago.

Also in focus today, I want to mention, are some better-than-expected readings from the housing front. Existing home sales rose more than 2 percent last month, and home builder confidence rose to a six-year high. And that's really helping add to the gains as we go into the final two hours of the session.

But we could see market movement a bit choppy as the week goes on. It's a holiday-shortened week on Wall Street. The market is closed Thursday for Thanksgiving and open just half a day on Friday. But for now, Nina, we'll take those gains.

DOS SANTOS: Yes. Seems those stock markets very much in a rally mode despite the fact that we have had a weekend between Friday and now. They're still extending those gains. Maribel Aber at the New York Stock Exchange. Actually, at CNN -- I should say, CNN New York. I stand corrected. Thanks ever so much for that.

Well, European markets seem hopeful of a deal on that US fiscal cliff, as Maribel was just mentioning, and Monday's session was the strongest we saw in literally weeks. Each of the main indices across the region was up about 2 percent or more.

And investors also took in reports that European leaders are finally - - yes, finally -- perhaps ready to give Greece its next round of badly- needed bailout money. One report coming from Reuters suggests that Greece may even get several loads of bailout cash in one go. It's up to around about $56 billion.

Well, the euro group will be meeting in Brussels tomorrow to decide. Certainly a story we'll bring you here on QUEST MEANS BUSINESS this time tomorrow.

Now, moving elsewhere in the world, though, tense meetings earlier between the US president Barack Obama and the Cambodian prime minister as the two presidents met, as the US president continued his Asia tour.

Now, Mr. Obama arrived in Cambodia a few hours ago and he spoke to the prime minister, Hun Sen, of the country's human rights record. That was one of the main issues they debated, and a meeting later described as tense by the president's staff, that was.

Mr. Obama earlier became the first sitting US president to visit Myanmar, where he paid tribute to the Burmese activists Aung San Suu Kyi, who you can see, he was talking to earlier today in a warm meeting in Yangon, Myanmar.

Well, you can add one more item to the list of things that are made in China. This time, Jaguar cars. The luxury car maker is expanding into its biggest market. It's all part of a joint venture with the Chinese company Chery Automobiles. Ramy Inocencio has more on the deal and also the price tag.


RAMY INOCENCIO, CNN INTERNATIONAL CORRESPONDENT: China is not just Jaguar's biggest market, it's also the world's biggest auto market, and that's why Jaguar is jumping to China. And starting in 2014, you might see this famous icon more and more on cars made just for China's domestic market.

Now, the price tag for this deal is $1.75 billion. And this is for a joint venture with China's Chery Automobile Group, which says it's China's largest auto exporter.

Now, this deal will be based right outside of this city right here, Shanghai, which is, of course, China's financial capital. A new car factory is going to be built along with a new research and development facility as well as a new engine plant.

Now, in a joint press release, Jaguar and Chery both hailed the deal as a milestone, but online, as you might imagine, people are not all that happy. For example, one person named Tim Cliffe said this: "Jaguar, Landrover 2 manufacturer in China, notorious for poor quality. Why do that to best performing marque? Bang goes my Defender," which is a type of Landrover.

Someone else said, a little big cheeky here, just asked this, "To be re-branded Tiger and Land Panda?"

And someone else asked this: "Truth be told, how much jobs would the UK lose for Jaguar Landrover moving operations to China? Definitely some #unemployment."

Now, Jaguar has said it is not exporting jobs to China, but that is clearly the fear when you hear about companies setting up new operations in China, known for its cheap labor. And China isn't known just for that, but also, of course, for its growing wealth. And clearly, that's why Jaguar is making the jump to Asia to tap that market there.

Now, year-to-date, its China sales have already jumped by this much: 78 percent. Another luxury brand, BMW, coming in at 35 percent year-to- date. And Mercedes, still clocking in a fairly respectable 8 percent in growth, there. So, definitely, China's consumers are buying more cars.

And take a look at this and you'll get an idea of that. This is traffic in China during one of the country's long holidays, known as Golden Week.

Now, interestingly, the "China Daily" reports there are 114 million vehicles in China, but as a percentage of the population, 1.3 billion, that's actually quite a small number. We're looking at less than 1 car for every 10 people. But in the US, there are about 8 cars for every 10 people.

So, the takeaway: US car market is pretty saturated, but China, well, it has a lot of room for car sales to grow even if there's not enough room on China's roads, as you saw.

Ramy Inocencio, CNN, Hong Kong.


DOS SANTOS: Let's see today's Currency Conundrum. This is a Japanese 500 yen coin minted before the year 2000. Now, our question to you this evening is, why won't Japanese vending machines accept these coins? We'll have the answer for you later on in the program.

Speaking of the yen, it's coming back from a seven-month low against the US dollar. This as traders bet on more monetary easing coming from Japan's next government.

Well, the fiscal cliff in the United States and fears that have seem to have abated over that have managed to boost the euro. The single currency has actually put on about half of one percent against the greenback so far today on the back of that.


DOS SANTOS: Hello and welcome back. You're watching QUEST MEANS BUSINESS. Earlier in the show, we were telling you about the US president's historic visit to countries like Myanmar in Southeast Asia, and Cambodia as well. Now, with China in political flux, some analysts saw this as part of a strategy to try and weaken Chinese influence in this crucial region.

Jon Huntsman is the former US ambassador to China, and he joins us, now, live from CNN Washington with his perspective. So, thank you very much for coming on the show, Jon Huntsman. It's great to get your insight here, because you know China inside-out.

Let's start out with the president's historic visit to places like Myanmar. Now, China has been gaining a significant foothold in Southeast Asia, particularly in Myanmar. How significant is the choice by Barack Obama to go there?

JON HUNTSMAN, FORMER US AMBASSADOR TO CHINA: Oh, I think it's rather significant, both in terms of Myanmar opening up and allowing the kind of give-and-take diplomatically that we have seen with the United States. This is altogether unprecedented in recent history.

And so, from a Myanmar standpoint, unilaterally, it's quite remarkable. From an Asian standpoint, it really does play to their strength, which is to remain a cohesive body in Southeast Asia.

And in terms of our strategy in the region, it's exactly the right thing to be doing because we need to work to keep those sea lanes open for the free flow of trade and commerce, which has benefited practically every major country in the region.

And we do that by a level of open engagement with most all of the Asian countries, the ten nations that make up Southeast Asia, which now probably constitute maybe our third or fourth largest trading partner in the world and 600 million people strong.

DOS SANTOS: Now, the United States has repeatedly become concerned about China's growing dominance over parts of Southeast Asia and its port regions that aren't part of China, but they exert huge amounts of influence over. What kind of relationship is the United States and China going to have going forward with the new Politburo in charge, especially on that key point?

HUNTSMAN: Well, it's a rather historic opening for both the United States and China for the simple reason that we now have had our elections, they've now finished the leadership changes in China, and presumably, there's some open space here over the next two to three, maybe four years to be able to forge a truly 21st century strategic relationship between the United States and China.

It's always a little problematic because you have things that get in the way, and there aren't a lot of encumbrances as you look out over the next few years. So there's a lot of run room.

Chances are the new members of the Standing Committee of the Politburo, of whom there will be not nine this go around, but seven, will clearly see that reform will be part of the next few years. The question will be how fast and what exactly they focus on for their reform agenda.

And then, the United States will play a critically important part of their agenda making as well, because they're going to have too deepen and broaden the economic dialogue with the United States, and we're going to want to deepen and broaden the strategic dialogue with China.

DOS SANTOS: You say rather casually, if I may, there may be a few things that sometimes get in the way of this relationship, but now, the reality is, the United States is the largest economy in the world and China is the second-largest and catching up pretty quickly.

HUNTSMAN: Well, you look at China's trajectory from a growth standpoint. They have 1.3 billion people, a large land mass, they've got raw materials, they have secure trade links with all of the major markets of the world. Of course they're going to grow.

And from an absolute output standpoint, they're probably going to catch the United States in terms of our own GDP size, which is probably $16 trillion to $17 trillion.

But when it comes to per capita numbers, they're probably 75 to 100 years, if ever, away from catching the United States. That's our quality of life. That's our liveable communities. That's the capita numbers that I don't think everybody is focused on.

But in terms of sheer growth, of course China will continue to keep that economic engine revved up because there's not a whole lot in the way in the future that's going to inhibit their growth other than markets that begin to sour around the world, which has already happened.

DOS SANTOS: There's another side to the US-China relationship that we should explore, here. It's the fact that, effectively, China gives -- buys an awful lot of US Treasuries, and therefore the United States has to, let's say, recognize that with China.

And we have this issue with the fiscal cliff that may cause the US to get downgraded yet again in terms of its credit rating. How do you see this playing out? Will some kind of agreement be struck in time? Because presumably, China will be looking at that very carefully. It owns an awful lot of US Treasuries.

HUNTSMAN: Well, of course they do, as does Japan, as does the UK, and a whole lot of others. So, this whole fiscal cliff discussion is going to be extremely important as we approach the end of the year and, indeed, the time leading right up to the inauguration, January 20th.

And I think the prospect of an S&P downgrade is going to focus people's attention like nothing else will. Why? Because it would be catastrophic for the marketplace to get a downgrade by S&P. I think members of Congress know that, and I suspect they're going to start looking carefully at the options that are already on the table.

We don't need more in the way of ideas. We don't need more in the way of options. They're all sitting there, whether it's Rivlin and Domenici, whether it's Simpson-Bowles, we need political leadership. That's the hard part.

And I suspect that there will be a collective view of reality on Capitol Hill in the days and weeks ahead that will kind of agree to broad parameters and an outline around spending over the next ten years around tax policy and a few other things that will be critically important to ensuring that the fiscal cliff is adequately dealt with short-term.

Perhaps leading a little bit longer to do over the first to second quarter, but between now and the end of the year, it's going to be critically important to get those broad outlines of the deal agreed to.

DOS SANTOS: Jon Huntsman, former US ambassador to China, thank you ever so much for joining us from Washington this evening.

Now, as the violence goes on in Gaza, the cease-fire negotiations continue. Up next, Italy's foreign minister explains how talks with Hamas are not necessarily off the table.


DOS SANTOS: Hello and welcome back. I'm Nina dos Santos. These are the main news headlines this hour.

Palestinian health officials say that 100 people have been killed since Israel began rocket strikes six days ago.


DOS SANTOS (voice-over): Israeli officials say that the military action is in response to rocket attacks by militants in Gaza, which have killed three in Israel.

U.S. President Barack Obama is on his final leg of his trip to Asia with a stop in Cambodia. Earlier he visited Myanmar, the first sitting U.S. president to visit either of these two countries. Mr. Obama has met the Cambodian prime minister and is expected to now attend the East Asia summit before heading back to Washington.

Rebel fighters in Congo have advanced to the city of Goma and there are reports of fresh fighting there. After months of calm, clashes have started again in the country's eastern province north of Kivu. While the rebels want to establish a small state there.



DOS SANTOS: The United Nations secretary-general Ban Ki-moon is calling on Israel and Palestine to cooperate on an Egyptian-led cease-fire plan. He's heading to the region to make a personal appeal for an end to the violence.

Hala Gorani spoke to the Israeli government spokesman, Mark Regev, earlier. He refused to confirm whether diplomatic talks were currently underway in Cairo or indeed whether a timetable had been set for ground troops to enter Palestinian territory.


MARK REGEV, ISRAELI GOVERNMENT SPOKESPERSON: We are keeping, as you said yourself, we're keeping the military option for a possible ground incursion ready. If the diplomatic process, unfortunately, doesn't bring that sort of quiet that we require, that the end of missiles, we are prepared to escalate; we are prepared to put more military pressure on Hamas.

HALA GORANI, CNN CONTRIBUTOR: So what's the timeline as far as the Israeli government is concerned, 24 hours, 48 hours, three days? When do you decide on a ground invasion, once the diplomatic option has been -- has been exhausted, has been tested?

REGEV: You know, sending in ground troops is a very serious decision. First and foremost, because it puts our young service men in the firing line. And we understand that. We will only take that decision if we understand that that is the only way to move forward, to prevent those rockets.


DOS SANTOS: Hala also spoke with Dr. Mustafa Barghouti. He's a member of the Palestinian parliament. He told CNN that if Israel does send in ground troops, nothing will stop the situation from escalating.


DR. MUSTAFA BARGHOUTI, PALESTINIAN PARLIAMENT MEMBER: I think the next 48 hours are very decisive because within the next 48 hours, if an agreement has not reach and if Israeli initiates an invasion, a ground operation, then nothing would stop the (inaudible) and if the ground operation starts, this will be a total disaster.

And the previous Israeli attack, 1,400 chesty (ph) Palestinians were killed, including 450 children. They already killed 100 Palestinians. I hope they can stop there. And we can find our way to deal not only with a cease-fire but also one should ask the question, why are we having this, the cycle of violence from time to time? The reason is the root of the problem.


DOS SANTOS: Italy's foreign minister says that Europe would be prepared to negotiate with Hamas, that is if it can resolve its differences with the Palestinian authority and (inaudible) security for Israel. The E.U. is one of many international bodies that lists Hamas currently as a terrorist organization. As things stand, well, that prevents official negotiations from actually taking place.

I asked the minister a short while ago if a cease-fire between Israel and Hamas was indeed possible.


GIULIO TERZI DI SANT'AGATA, ITALIAN FOREIGN MINISTER: Yes, I believe that is realistic. Today, the Council of Foreign Affairs (inaudible) in Brussels discussed extensively this question of a cease-fire in Gaza. Of course, European Union is not directly involved in negotiation.

But we are very much supportive of the major actors, Turkey, Egypt, the Arab League, Qatar, the countries of the region. And that need to bring immediate cease-fire between Gaza and Israel. The cease-fire must be inclusive, that is to say it must encompass all the forces, Islamic Jihad, Hamas and the other splinter groups in the -- in the street, and must also be sustainable.

In a sense, it must give the Israeli the security in the longer term, that it will not be hit any more by hundreds of rockets per day and be hit by terrorists' attacks. So I think this is the framework that is currently discussed.

(Inaudible) that I have directly from the region, from my colleagues, from the -- my Arab colleagues, is that there is an intense negotiation in Cairo tomorrow, seven ministers, seven Arab foreign ministers will go to sleep together with the same return of the Arab League and I hope that will be bringing some positives up.

DOS SANTOS: So are you saying you're confident that this won't escalate into a ground offensive?

SANT'AGATA: I believe that is why we have absolutely to avoid the escalation. The situation is too dangerous. We are in a different condition from where we were already, difficult conditions four years ago, with the (inaudible) operation.

But now with all the evolution in the Arab world, the situation is exponentially more dangerous. So the crisis must be stopped. And from the understanding that I have of the Israeli position, they are willing to stop their operation, even the land operation, provided that they are given sufficient guarantees from the -- from the Hamas side.

DOS SANTOS: Well, it must be difficult for the E.U., because obviously with Hamas being on the terrorist list, you can't actually sit around the negotiating table and negotiate with them. So how do you view this situation deescalating from here on if obviously you can't converse with that side?

SANT'AGATA: The negotiation (inaudible) carried on by countries which have relationship, which have a dialogue with Hamas. Of course, this is not possible for the European Union in official terms because, as you probably said, Hamas is on the list of terrorist organizations.

And it's on the list of terrorist organizations since 2003 because they, Hamas, recognize that they're carrying on terrorist attacks.

But if a national intra-Palestinian reconciliation process is going to be achieved at a certain point and if the Palestinian authority will join with Hamas under the condition which are foreseen by Oslo, that is to say recognition of the security of Israel and the existence of Israel, I don't see any problem in a future opening of dialogue also between the European and Hamas, but on a very different background than the background which exists now.


DOS SANTOS: Well, tonight on "AMANPOUR," Christiane speaks with key players in the urgent negotiations to try and broker a cease-fire between Israel and Hamas. It's on a special edition of "AMANPOUR" from Jerusalem in about 20 minutes from now here on CNN International.

Now South Africa recently saw some of the worst violence in its post- apartheid era. After the break, we'll have a special report on the deaths at the Marikana mine.


DOS SANTOS: In South Africa, the inquiry into the fatal shooting of 34 striking miners is hearing evidence from police. One of the (inaudible) police training told the Marikana inquiry that live ammunition is only to be used as a last resort. (Inaudible) said that firearms are only to be used in self-defense. He said instead that rubber bullets, water cannons are the first option for dispersing crowds.

Well, this week we're taking an in-depth look at the aftermath of the clashes at Lonmin's Marikana mine. The stories we bring you contain disturbing images and graphics from the outset. And let's just warn you that these are some pictures you may not prefer to watch.

We start by taking a look at the origins of the wildcat strikes which escalated into what locals are calling the Marikana massacre.


NKEPILE MABUSE, CNN CORRESPONDENT (voice-over): Police opening fire on striking mine workers, images of a turning point in post-apartheid South Africa. By the time the guns fell silent on August 16th, it was clear that growing inequality threatened stability in Nelson Mandela's Rainbow Nation.

It's an episode locals have dubbed the "Marikana massacre."

UNIDENTIFIED MALE: The Marikana massacre is not a simple issue. It's so hugely complex. But it's part of the dysfunctionality of our state.

UNIDENTIFIED MALE: I think it's going to shake up a lot of things in the country. It's making us ask a lot of hard questions.

MABUSE (voice-over): This was no ordinary protest. For nearly a week about 3,000 Lonmin platinum mining police, armed with machetes, clubs and police say guns as well, had embarked on a wildcat strike demanding higher pay. From the outset, there was bloodshed.

MABUSE: In the days leading up to the police shooting, three non- striking mine workers were found dead, 12 were shot and wounded. Two police officers were hacked to death, two security guards burned alive and police had killed three protesters ,wounding five in clashes.

MABUSE (voice-over): By the morning of August 16th, the air was thick with tension. Police laid down strings of barbed wire they say to divide, disarm and disperse the strikers. They then fired tear gas, water cannons and stun grenades. When the miners charged forward, chaos ensued. Thirty- four were killed and 78 wounded.

SIBONGILE SIKHUZE, MINER (through translator): The bullet went through here and came out the other side. I raised my hands to surrender, thinking they would leave us alone. But then I was hit by a rubber bullet right here. And then they ordered us to lie on the ground. People were falling all around me.

MABUSE (voice-over): A commission of inquiry investigating the incident has heard and seen damning evidence implicating the police in extrajudicial killings. Here, 16 protesters were killed by police but 18 more died deep in the hills far from the glare of the media.

Evidence presented to the commission suggests some of the miners were executed and that attempts were made to portray the victims as aggressors.

This picture, taken by the first crime scene police team, shows one of the protesters lying dead between rocks. Another picture, taken by a police team that arrived later, shows the same man, this time with a weapon alongside him.

The Lonmin strike was settled six weeks after it began with hefty pay hikes for the miners.

By then the wall carts and violence had spread to other mines, leaving a nation in shock, its international image an image of its law enforcers in tatters -- Nkepile Mabuse, CNN, Johannesburg.


DOS SANTOS: And so join us again this time tomorrow, because Nkepile will be bringing us another report from South Africa, which will focus on the working conditions of those miners, including those who went on strike.

Time now for your business travelers' forecast out there. And to do so, we'll go over to (inaudible) Jennifer Delgado, who's standing by to tell us all at the CNN International Weather Center.

Hi there, Jen.

JENNIFER DELGADO, AMS METEOROLOGIST: Hi, Nina. You're right. We are starting off right now and we begin in Europe. We've been dealing with some heavy rain at times, but looking at the radar right now, it looks fairly quiet.

But notice we're starting to see some rain working into areas, including Ireland and this is after some heavy rainfall came down yesterday. But guess what? We've led a couple of different systems that are moving through parts of Europe. You can see one of them is pulling away.

But we have this next low pressure system along with a front that's going to be bringing some rain and some storms extending anywhere from Portugal all the way up to areas including parts of Scotland and even in that very western part of Norway. This is the pattern that is going to be around for Tuesday.

Now we point out the rainfall totals because look what happened on Sunday as well as into Monday; some very heavy rain came down from areas including Scotland, a little bit of that wintry mix and some of those higher elevations.

We saw some locations picking up 55 millimeters of rainfall. And then the very southern tip of Ireland, they picked up 52 millimeters of precipitation. Here's a wider view of what is happening across those parts of Europe. You can see for yourself.

We're also following the central Med. Well, this area of low pressure has really been persistent there over the last couple of days, bringing some very heavy rainfall for areas including the east of the Adriatic Sea, including Macedonia as well as even into areas including Greece. And we're going to continue to see that as we go through the evening hours as well as through tomorrow.

But despite that messy condition I just showed you, that was setting up on the map, look at some of the delays out there. We're really just talking about some wind delays setting up for both of London's major airports. And that's going to be in the afternoon with a 45- to 60-minute delay from that front that's going to be coming through.

And also moving through parts of the Middle East, we have a pretty nice looking area of low pressure. This is going to be bringing some rain as well as a little bit of snow for areas in those higher elevations through parts of Iran.

You can see it's also pulling in some moisture and, again, it is going to be bringing the possibility of some snowflakes through parts of that region, as we go through the next 48 hours. You can see it for yourself. Send it back over to you, Nina. Hopefully business travelers are doing nice and not having too many worries traveling today.

DOS SANTOS: Yes, let's hope so. Mind you, they've got a week before the weekend (inaudible) back.

Jennifer Delgado at the CNN International Weather Center, thanks so much for that.

Now all of you out there, do stay with us, because QUEST MEANS BUSINESS will be back straight after this.



DOS SANTOS: The future of the Twinkie now rests in the hands of a U.S. bankruptcy judge.


DOS SANTOS (voice-over): The name behind the cakes, Hostess Brands, wants to shut the company down and lay off 181/2 thousand people. Hostess also wants to pay out $1.75 million in executive bonuses at the same time.

Well, unions say that that is unacceptable. And they're blaming mismanagement for the company's collapse and say that it has nothing to do with strike actions earlier this month. They're fighting to protect workers' pensions and also pay.


DOS SANTOS: Hostess chief executive Gregory Rayburn says that the strikes were a significant part of the company's demise. He spoke to Alison Kosik about what went wrong.


GREGORY RAYBURN, CEO, HOSTESS BRANDS: In the immediate sense, you know, the strike by the bakers' union, it was something that we couldn't overcome finally and couldn't overcome, you know, with our customers.

But I can't point to one thing for the demise of Hostess. I've said even in town hall meetings that I think that there's plenty of blame to go around. I think the company had more depth than it could service, which limited capital investments over the years. And that certainly hurt the cost structure.

The company has had, I think, probably not the best leadership and management over the years, and I think that when you combine that with all of the union issues, whether they relate to crazy work rules that are highly inefficient or whether they relate to multiemployer pension plans and a legacy pension cost and the exposure to those, you know, and the overall cost structure, I think there's, you know, there are a lot of factors involved. And as they typically are in cases like this.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: How much of the union factored into the downfall of the company?

RAYBURN: At the end of the day, we had rules like, you know, a driver could only drive bread and another driver had to drive cake and one person could put it in the store; somebody else had to take care of that. I mean, highly inefficient set of work rules.

You know, fortunately, we were able to get those eliminated as part of this deal and the Teamsters had agreed to those changes and the Teamsters supported this package. Unfortunately, it was the bakers that didn't, and the bakers weren't really -- you know, the work rules weren't as much of a problem on the bakers' side.

KOSIK: Did they think that this deal, this ultimatum was real?

RAYBURN: I think you have to differentiate between union leadership at the top and then the people on the lines. Yesterday, you know, was the only thing that I could do to try to provide some kind of catalyst to get people back to work.

I certainly was not appealing to union leadership because they haven't returned our calls for months and they certainly weren't going to change their mind about the strike. What I wanted to do was to try to appeal to the people that were still on the picket lines. And we did have a number of bakers cross the picket lines and come to work and they trickled in during the week.

I was hopeful that that appeal would resonate and that people would understand that, you know, look, at the end of the day, if they really didn't want to work there, they could come back to work and find another job while they have a job and make 92 percent of what they made the year before. But you know, we didn't get enough people crossing those lines yesterday.

We had a bunch of people come across; management has worked, you know, 20 hours a day to try to run the plants. But we simply had too many critical plants that aren't producing enough to keep the customers stocked.

KOSIK: What's the likelihood of finding new homes for, let's say, Twinkies?

RAYBURN: To be honest, Alison, I really haven't spent, you know, a minute this week really thinking about where the brands might go. It's been -- it's been a very sad day. I think that, you know, that this was just a monumental failure on the part of everyone involved, and it was just the wrong outcome.

KOSIK: There we are. Because after the break, it's the moment you've been waiting for here on QUEST MEANS BUSINESS, the answer to today's "Currency Conundrum."





DOS SANTOS (voice-over): Let's get you caught up on the answer to today's "Currency Conundrum." I must admit it's one of the (inaudible) best part of this show as well.

Earlier we asked you, why wouldn't Japanese vending machines accept 500 yen coins that were minted before the year 2000? Well, the answer is that these coins are just too easy to counterfeit.

They're exactly the same size and composed of exactly the same alloy as this coin here, which is the Korean 500 yuan. It's fairly easy to spot the difference with the naked eye, but a little bit more difficult it is for vending machines.


DOS SANTOS: The world's richest man is now in charge of one of Spain's most finally troubled football teams. Back in the year 2001, Oviedo was playing in the Spanish top league. But well, after years of financial mismanagement, well, it threatened to go out of business if it didn't raise about $2.5 million by this very Saturday.

A Twitter campaign met that target, but football fans from right around the world managing to buy new shares in the club. And that, in turn, got the attention of Carlos Slim. He said that he found the Twitter campaign quite so extraordinary that he would make his own investment in the club, putting in for his part another $2.5 million.

And as a result, becoming the majority shareholder, small change, then, for someone who's worth almost $70 billion. But there you have it. Interesting things do happen in the world of football and Twitter.

That's it for QUEST MEANS BUSINESS. Thanks for joining me. I'm Nina dos Santos in London.



DOS SANTOS (voice-over): Here's a roundup of the main news headlines we're watching for you.

CNN sources say that 100 people in Gaza have been killed in the conflict since it began between Palestine and Israel, and since it began escalating last week. Now Palestinian sources say at least two people were killed in this attack on a media building in Gaza City. They say that one of them was a spokesman for Islamic Jihad.

Israeli officials say that the military action comes in response to rocket attacks by militants in Gaza, which have killed three Israelis.

The international community is stepping up calls for a cease-fire. U.N. Secretary-General Ban Ki-moon is calling on both Israel and Palestine to cooperate . He's heading to Egypt to make a personal appeal now for an end to the violence.


DOS SANTOS: Well, that's a roundup of the main news headlines that we're watching for you here on CNN. "AMANPOUR" is next after this.