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Three Tablets Unveiled; Apple Debuts New iPads; Microsoft Launches Surface Pro 2; Nokia Enters Tablet Market; Triple Tablet Tuesday; US Markets; European Markets; US Jobs Report; Waning US Optimism; Betting on Emerging Markets

Aired October 22, 2013 - 16:00   ET



RICHARD QUEST, HOST: The data may be disappointing but the market is up and the closing bell has rung. Wall Street is cheered by the expectation of more stimulus. It is Tuesday the 22nd of October.

And tonight, we have not one, not two, but three new tablets in the computer market. Apple, Nokia, and Microsoft go into battle.

It's delayed and it's dismal. The US jobs report is out. We have analysis, and you'll hear from the US labor secretary tonight.

And ENI -- E-N-I's chief executive tells me there's an energy emergency in Europe.

I'm Richard Quest. I mean business.

Good evening. A bit like buses in the High Street, you wait for ages for one, and then all of a sudden, three come at once.


QUEST: Today it's Triple Tablet Tuesday as three tech giants launch new devices. And what a day it was! You had Nokia, Microsoft and Apple all in this three-way race for consumers. What did they all do? It's Triple Tablet Tuesday, and if you put into context this fierce battle now about to take place, you wonder who will be the winner and crucially, in which sector of the market?

We start off with Apple. Apple announced the upgraded iPad, it's called the iPad Air and the iPad Mini. Now of course, Tim Cook the head of Apple, the chief executive, perhaps under some pressure, made it clear he was watching the competition.


TIM COOK, CEO, APPLE: Our competition is different. They're confused.


COOK: They chased after netbooks. Now they're trying to make PCs into tablets and tablets into PCs. Who knows what they will do next?


QUEST: Now, the Apple announcement upstaged Microsoft, which had tried to keep the spotlight for a few hours with its own midnight launch parties. Microsoft announced the launch of the Surface Pro 2. It's a higher end, it costs around $449, the starting price. It's much higher, of course, at the top end. For Steve Ballmer, of course, Microsoft also faces competition from Nokia.

But here's the odd part. Nokia, with its Lumia 2520, which runs on the Windows program, the Nokia version has -- has 4G involved in it. But ironically, of course, Nokia is about to be bought by Microsoft, which means Stephen Elop, the head of Nokia, is about to go back to Microsoft.

Which begs the question, what is he doing launching a tablet when his big brother has just launched one? Leone Lakhani spoke to Stephen Elop.


STEPHEN ELOP, EXECUTIVE VICE PRESIDENT, NOKIA: And what you saw is a range of different products to appeal to different people, whether it was the introductory Asha products that we introduced? But we also went to the very large with our very first tablet introduction, the Lumia 2520.

LEONE LAKHANI, CNN INTERNATIONAL CORRESPONDENT: Now, in terms of the Lumia, I remember there was great promise when they were launched, but there were also quite a few glitches: poor sound quality, phones freezing, difficulty connecting to the wifi. Those are the type of glitches you've tackled now?

ELOP: Well, we've tackled glitches, but more importantly, we continue to introduce great new capabilities. We introduced new products that celebrated great steps forward in design, in imaging, as well as a series of new experiences on how all of these products work well together.

LAKHANI: Now, we know with SmartPhones these days, they seem almost worthless without the apps. But you still have a lot of catching up to do when you've got the Apple and the Android stores with hundreds of thousands of apps.

ELOP: I think what you also heard today, for example, the What's App application for the Asha product line or the announcement around Instagram for the Lumia family. What you're seeing is that those major applications are now coming to our product line. So we're very pleased with that.

So, our focus is very much on those applications that even take us a step beyond the other environments, beyond the competitors.

LAKHANI: The Microsoft app store has about 200,000, just under 200,000 apps. That's a lot of catching up to do.

ELOP: But I think what most people have learned is that it's not the absolute count of applications that matters. You need the most important applications, the ones that are most popular. You need the ones that differentiate you.

LAKHANI: So the next step is getting consumers to use the phones and then use those apps, which is a challenge as well.

ELOP: Yes, actually, one of the things we're very pleased about is as people use the Lumia experience, as they use a Windows phone, they absolutely love it. Our challenge is to keep getting more and more people to use that experience, and so that's what we're focused on. We have to spread the word.

LAKHANI: And so it would be remiss of me not to ask you about this. Do you know about the national outcry we've heard in Finland about the compensation package that you received. What are your thoughts on that?

ELOP: The Nokia Board of Directors made a very conscious effort when they set my compensation package to make sure it was well-aligned with the interests of Nokia shareholders. And with the announcement of this transaction, we're seeing a lot of excitement amongst the shareholders about the value that's been unlocked.

But of course, today, what I'm really focused on is making sure our message of great new designs, great imaging, and a whole family of new products delivering great experiences, that's what we're going to stay focused on is delivering great experiences to our consumers.

LAKHANI: Still, we have the Nokia chairman, the finance minister, the prime minister, all chiming in to try and quell that anger.

ELOP: Yes, and the Board of Directors made sure that my compensation was aligned with the interests of shareholders.


QUEST: Now, the tablet market has grown sevenfold since Apple released its first iPad in 2010 and, indeed, quite considerably since I bought this contraption, which looks like you could boil a nice soup out of. Shelly Palmer, what's wrong with this?

SHELLY PALMER, AUTHOR, "DIGITAL WISDOM": I love it! No, it's awesome in every way, Richard, it really is.

QUEST: And I'm not making a statement that I have an iPad. It was the first one on the market and --


PALMER: Right.

QUEST: But today was exceptional.

PALMER: It was exceptional. In every way.

QUEST: What are they doing, all announcing on the same day?

PALMER: Christmas is coming.


QUEST: The goose is getting fit.

PALMER: That's it. Christmas is coming.

QUEST: Right.

PALMER: It -- look, this is all about Christmastime. Apple is in a little bit of a kind of pickle. They used to be the entire tablet market because they really, truly invented the category, and now they're about 49 percent and falling.

They have two new devices, the iPad Air, which is thinner, happier, better, yummy yummy, and a new retina-display version of the iPad Mini, which is a great form factor, this 7-inch form factor, fantastic.

QUEST: All right.

PALMER: So, they're good. The big question is, what exactly is going on between Nokia and Microsoft.

QUEST: Why is Nokia launching a tablet when it's about to be bought by Microsoft, which has an entire suite of tablets of its own?

PALMER: And to follow that, why are they both $499 and basically the same unit? Although I would believe that both of them are crippled because they're both RT units. The Lumia 2520 and the Microsoft Surface 2 are literally both the same unit from a technology standpoint.

And then, the Surface Pro is a whole other thing, because it's expensive. Basically, it's a laptop without a keyboard that you then add a keyboard to. So, that's a completely different animal, where Tim Cook today said, well, our competitors don't really know what they're doing. Are they making tablets? Are they making laptops? Are they making Chromebooks? Are they making netbooks?

QUEST: But maybe --

PALMER: They're right about that.

QUEST: No, I don't agree.

PALMER: That's what Tim Cook said. I don't agree either.

QUEST: I mean, I think they are -- I think the merging of these two devices into something that people like you and I can use but -- sometimes I want it to be a little more this, and sometimes I want it to be a little more that.

PALMER: That's right. And truthfully, Apple is just making iPads. And they're making them great. And if you like an iPad, nothing else will do. But if you want a combination of a PC and a tablet, Microsoft's really working hard.

QUEST: As we look at this battle --


QUEST: -- some people are now starting to suggest -- actually, Microsoft might be about to win certain areas. It's got Nokia, it's going to put Nokia into a stronger position, it's got its Surface, which gets great reviews.

PALMER: Look, let's be fair. I really wish that were true. The battle's not between Microsoft and Apple, the battle is between Google and Apple and specifically it's between Android devices and iOS devices. Microsoft hopes, wishes, prays to be considered in this competition --

QUEST: Are you writing them off?


QUEST: Are you writing them off?


QUEST: In this --

PALMER: Absolutely. The short answer is yes. These guys have such a long row to hoe, they are so confused. Windows 8 versus Windows 8 on a tablet versus Windows RT. These are operating systems that people will like when they learn to use them, but Microsoft has done nothing to teach them to use them.

And you yourself know that when you walked up to Windows 8, all you did was go, "But I want it to be Windows 7." Microsoft has missed all kinds of consumer opportunities there, and what they have to do is they have to figure out how they're going to beat Apple and Google at their own game.

QUEST: Pull the strands together, then, for today.

PALMER: For today, it's really, really simple. Apple --

QUEST: Who won today?

PALMER: Apple.

QUEST: You're sure about this?

PALMER: Absolutely. Apple came out and said "We are here for Christmas" --

QUEST: All right.

PALMER: -- "and you're going to be happy."

QUEST: Who lost today?

PALMER: Who lost today is Microsoft because they're about to spend a big chunk of money for Nokia, and Nokia's sitting there going, "We don't know what we're doing," and Microsoft's going, "We don't know what you're doing" and no one knows what anybody's doing. Microsoft's got some work to do.


QUEST: Shelly, good to see you.

PALMER: Always good to see you, Richard.

QUEST: As always, many thanks.

PALMER: All right.

QUEST: Now, shares in Nokia closed more than 2.5 percent higher in New York. The activist investor Dan Loeb admitted he has now taken a stake in the company. He made the move after the deal with Microsoft was announced.

Now, the markets have just in New York been closed best part of nine minutes, and that's where we are, up 75.4 on the Dow, the Dow trading at 15,467. Alison Kosik is at the New York Stock Exchange. We were off the best of the day, but still a strong session. What was the factor moving the market on Tuesday.

ALLISON KOSIK, CNN BUSINESS CORRESPONDENT: The jobs report definitely the market mover today, Richard. We found out that in September, 148,000 jobs were added to the economy. The unemployment rate fell to 7.2 percent from 7.3 percent.

The thing is, that 148,000, it was much weaker than expected. So, bad news is good news on Wall Street, you know how that goes. So that weaker- than-expected report meaning that the Fed is likely to keep the easy flow of stimulus money coming. There was the expectation that tapering would happen.

QUEST: Right.

KOSIK: That didn't happen, so now the thinking is, maybe they'll let it drag on a little more. However, Richard, there's a second school of thought. You're seeing that unemployment rate tick lower for the right reasons. There's another school of thought thinking you're seeing this rally today because the economy is improving. Richard?

QUEST: Alison's at the Stock Exchange. That's the way the market traded, up 75 points. And if I'm not mistaken, the S&P also hit another all-time high.

In Europe, the investors bet, as Alison was saying in New York, that the Fed will keep its economic stimulus measures in place. All the major markets closed higher.

There was an interesting development in the Spanish market. Bill Gates made a multimillion-dollar investment in Spain. It's an entity controlled by Microsoft founder a 6 percent stake in the Spanish builder FCC. He's the latest investor betting on Spain's economic recovery.

When we come back, we'll put more detail into that US jobs report, and you will hear from the US labor secretary. Hear what Secretary Perez says on the question of the jobs.



QUEST: It is several days late and more than a few jobs short. You know that all saying, a dollar late -- a day late and a dollar short. Well, here in the case of the US jobs, the numbers came in well below expectations.

If you look at some of the key data as you'll see it flash up, 148,000 jobs were added in September. So, 148,000 jobs, 9,000 jobs added from July and August revisions, so those revisions. But the core thing that people were looking at was the 7.2 percent unemployment rate. Now that, of course, was just a tick down.

The 7.2 percent, the last time the labor force participation rate was this low -- in other words, the number of people actually taking part in the employment, those who are still working -- I spoke -- it's 1978, by the way.

I spoke to the US labor secretary, Thomas Perez. The Fed's questioned what these job numbers really mean. Are they real, or are people leaving the workforce? So I asked the labor secretary.


THOMAS PEREZ, US SECRETARY OF LABOR: Well, I can tell you about the numbers from last month and the numbers from previous months. The unemployment rate of 7.2 percent is again moving in the right direction. And the reason it has moved down to 7.2 percent is because more people got jobs.

Some months, the unemployment rate moves down because people have left the workforce. They've become what economists call discouraged workers. The labor force participation rate last month was flat, and the unemployment rate went down. So that is good news.

We could pick up the pace. We need to pick up the pace, and the president has a multi-prong strategy for doing that.

Investing in infrastructure, building more bridges, repairing our roads, investing in our human capital by giving people the skills to succeed, passing comprehensive immigration reform, which the nonpartisan Congressional Budget Office said would be a boon for our economy. There are ways to pick up the pace.

QUEST: The anecdotal evidence from people want speaks to, and I know one always has to be careful about anecdotal evidence because it's usually a couple of people's experience, but people seem to say the situation out there is not as good as these numbers would seem to suggest.

People are finding it difficult to find the right jobs that pay a living wage, that offer health care benefits, and that the rosier scenario is not accurate.

PEREZ: Well, we're -- the economy I slowly and steadily moving in the right direction, but too many people are being left behind, that is undeniable. Wages over the last year are up. They're not up as much as the president would like, but they are up in real terms.

QUEST: You're the first cabinet secretary I've had a chance to speak to after the shutdown, so I'm wondering, now the federal government is at full throttle, give me a feeling, a perspective, give me a gut-wrenching thought for what you think it was all about last week.

PEREZ: Well, it -- nothing about this shutdown was good. I talk to businesses day in and day out, and they talk about uncertainty. Uncertainty is not a job creator. Uncertainty undermines the morale of the federal workforce. Uncertainty resulted in billions of dollars in losses.

And not withstanding that, there's some remarkable businesses out there that are manufacturing jobs while back here in Washington there are some who are manufacturing crises. We need to move away from that.


QUEST: That's the US labor secretary. Americans are more pessimistic about the economy's future than they have been in years. A CNN-ORC poll shows only 40 percent of Americans think economic conditions will be in good shape a year from now.

It's the lowest level of optimism since October of 2011, 60 percent of people think the economy will be in poor shape. Steven Wieting is the global chief strategist for Citi Private Bank. Good to see you.


QUEST: Steven, thank you for coming in. Explain these numbers for me, this -- because the labor secretary says quite clearly there that this -- that these numbers are not a reflection of people leaving the workforce. This is not a case of disenchanted not looking for jobs.

WIETING: Yes, the latest month, I believe the numbers were 73,000 new job seekers, and there was a gain in employment that exceeded job seekers this particular month, so the unemployment rate ticked down slightly.

This is a very modest report. If you think about it, 148,000 people, that's one tenth of one percent of the US labor force. The prior month, 193,000 also rounds to 193,000 people.

QUEST: But the Fed specifically said in its month last month, as I asked the secretary, the Fed doesn't know and has questioned, members of the FOMC, whether or not these employment numbers do suggest a better employment position or is it just people leaving the workforce, disenchanted, and moving around?

WIETING: Well, by and large in this recovery thus far, the gains in the labor force have been slow. They've been positive but slow. They've been disappointing given the mass declines that we had in employment in 08, 09.

QUEST: So, what needs to be done to boost those gains in the United States? Because as you and I are talking, I look at my screen here and I see a piece of agency where S&P 500 ends at fourth straight record with a tepid jobs report.


QUEST: Now, obviously, the market's trading on more QE.

WIETING: Yes, markets try to have it both ways here. We had this early part of the year with markets rising on stronger growth expectations, higher interest rates not standing in the way, and suddenly more policy stimulus seems OK, but we still have to consider the growth disappointments. There's growth, but it's not quite as strong as expected.

The issue here is, we had 9 million job losses in the downturn. It's just much easier to demolish than to rebuild, and we need faster headline economic ripple, broader economic growth to get really stronger gains.

QUEST: So, now we come to the ultimate conundrum, and it's the same one that Europe faces, that all the economies in Europe face as well on this jobs --

WIETING: Not quite the same.

QUEST: Well, on the jobs question. It is on the jobs question --

WIETING: Well --

QUEST: -- because it's where does the growth come from?

WIETING: Yes, well, the issue is that most private industries in the United States are growing moderately. There's very widespread moderate growth. And in particular in labor markets, that's where we differ from Europe.

Growth has been a little more similar. During the downturn in the US, employers fired three times the number of workers per $1 unit of GDP in the US than they did in Europe. So, it should be -- it's a more depressed labor market in the United States with somewhat more of a cyclical component to the depression in employment right now.

QUEST: So finally, I need you to pull the strands together to today's jobs report, because it is the single most important piece of economic data that we're looking at at the moment.

WIETING: Yes, well, those of us who follow employment data and see the massive revisions over the year, sometimes changing the sign from positive to negative when the revisions come in, it's a very big factor in markets. But just to bear in mind that there are a lot of changes when they have tax records, when we adjust and look at unemployment insurance claims, they change the numbers.

QUEST: Right.

WIETING: But the bottom line here is that markets saw the Fed as very willing to wait to see a stronger threshold for employment, to stay on the sidelines even when the Congress does maddening things, and this pushed us continued in that direction.

QUEST: You are -- one final thought just occurred to me -- you are the global chief -- I'm just getting the title right.


QUEST: Global chief strategist.

WIETING: Yes, indeed.

QUEST: Take this report and strategize it for me. What do you do as a result of this report?

WIETING: Well, what's happened recently with this report adding to it is it's weakened the outlook for the US dollar.

QUEST: Right.

WIETING: It's brightened international markets by comparison. It probably will give us some relief even in the weaker balance sheet countries in the emerging world. And it's counter-trend in some respects. Interest rates have faded on it. But we don't think that will last forever.

QUEST: Many thanks for joining us.

WIETING: Thank you.

QUEST: Many thanks to you. Now, famous for its fried chicken, pizza, and tacos, Yum! Brands opened its latest retro -- restaurants --


QUEST: -- in India. It's a key market, according to the chief executive David Novak, and after the break, we'll hear from him.


QUEST: Welcome back, it's QUEST MEANS BUSINESS, it is Yum! Brands that is betting on a big emerging market. The company behind KFC, Pizza Hut, and Taco Bell plans to pour $10 billion into these markets by 2020. Yum! opened its newest restaurant, it's a KFC Kentucky Fried Chicken in Goa, in India.

Nina Dos Santos spoke to Yum! Brands chairman and chief exec, David Novak, and asked what he's hoping to get out of the Indian market.


DAVID NOVAK, CHAIRMAN AND CEO, YUM! BRANDS: Well, we're already the largest and fastest-growing restaurant company in India. We have over 650 restaurants today. By 2015, we'll have 1,000 stores. We see the opportunity to have leading brands in every significant category.

KFC is already on the verge of passing McDonald's. We win on taste, we win on value, we have a tremendous proposition. We're working very hard on Pizza Hut.

But we have a real strong opportunity to really lead in this market, just like we were leading in so many other emerging markets. We're in this business for the longterm, and when we look at India today, you have 100 million consuming class. We're really going after the three -- what will soon be 300 million, what will soon be the biggest consuming class in the world.

NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: Moving away from India, what's the outlook for Yum! Brands as a whole?

NOVAK: Well, I think we couldn't feel better about our opportunities because we feel like we're on the ground floor of global growth. If you look at the United States, we have 58 restaurants per million people. In emerging markets, we have around 2.

So we have tremendous opportunities, and the returns that our franchisees get in emerging markets and the returns that we get in emerging markets are very, very good. So, we think no one really has the longer- term opportunity that we have.

DOS SANTOS: Lawmakers in Washington have had people like you probably sitting up with a few sleepless nights after the debt debacle, the almost- default of America, the sequester, you name it. And that has an effect on consumer confidence in the world's largest economy. What would be your message to Washington as we gear up, potentially, towards another showdown in January?

NOVAK: What we try to promote in our company is having a culture where you make things happen. You get together, you -- one plus one equals three, you come up with the best possible ideas. And I think what I would suggest to Washington is that they do the same thing. We'd be happy to give them some best practices on how to work together.

DOS SANTOS: Would you like to give them a recipe for success? What would that be?

NOVAK: I think it's get different views in the room, hear everybody's point of view, and then come up with a solution. You can't stand still forever, you've got to act, and you've got to act on behalf of the whole.

DOS SANTOS: But how worried are you about consumer confidence in the American economy? Because of course it makes up two thirds of the world's largest economy, and you're right at the forefront of consumer confidence there.

NOVAK: Well, our brands have been enduring for a long period of time. We've endured a number of years because we have what people want. We have tastes that people crave, we have affordability, we have convenience.

These are enduring benefits that will be with us -- be with our consumers for years to come. So, there'll be ebbs and flows with the economy, there'll be ebbs and flows with consumer confidence, but our brands are enduring and strong, and I'm sure we'll be a growth company for years to come.


QUEST: The CEO of Yum! Brands talking to Nina Dos Santos. After the break, Europe must embrace shale gas or be left behind. A warning from the chief executive of the Italian energy firm ENI. Our interview with the chief exec next.


QUEST: Welcome back. I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.

Delegates from 11 core countries in the so-called Friends of Syria group met in London on Tuesday. They're hoping to unite the various rebel factions ahead of a planned peace conference in Geneva. Britain's foreign secretary says the delegates agreed that the Syrian president Bashar al- Assad can have no role in any future government.

Eastern Australia is bracing for what could be the worst day for dozens of bush fires. Stronger winds and warmer temperatures are forecast for Wednesday, and fire officials are urging residents to move out of the path of the fires that now stretch across 1600 kilometers.

A Greek charity says some 10 cases of missing children are now being investigated in connection with the suspected abduction of a blonde child by a Roma couple. Another blonde girl was found in a Roma home in Dublin in Ireland and is now in the care of the local social services.

The trial of a Bolshoi ballet dancer is set to pick up again. Pavel Dmitrichenko appeared in a Russian court earlier today with the start of his trial. He's accused along with two other men of an acid attack which nearly blinded the Bolshoi Ballet's artistic director back in January.

The U.S. economy added far fewer jobs than the analysts had expected in September. A hundred forty-eight thousand jobs were added while the unemployment rate dropped to its lowest ever since November of 2008. Speaking to me on this program, the U.S. Labor Secretary Thomas Perez said the U.S. needed to pick up the pace of job creation. The government shutdown delayed the report for nearly three weeks. Europe is facing an energy emergency according to the chief executive of the ENI. Paolo Scaroni says the continent could be left behind by the United States which is booming thanks to shale gas. You'll be aware it's something we saw firsthand on my trip to Midland Texas earlier this year.


QUEST: Fracking has dramatically increased energy production. American industry now has access to cheaper energy which drives manufacturing costs lower, and that of course pushes profits up. This is a revolution that we're seeing, wouldn't you agree?

UNIDENTIFIED MALE: Yes, it's a wonderful revelation. I mean, it's American capitalism its best.

QUEST: American capitalism at its best. Earlier, I asked Mr. Scaroni who joined me on the line from Rome exactly what his fear was from Europe failing to capitalize on shale gas.


PAOLO SCARONI, CHIEF EXECUTIVE OFFICER OF ENI: Well, I fear that there is a real emergency in energy in Europe. The Europeans while we speak pay gas three times as much as the U.S., and pay twice as much as the electricity. You understand with this differential, it's very hard to imagine industrial investments in Europe. This creates a major worry for the future of Europe.

QUEST: I have just been in Midland in Texas, and, yes, I've seen the size and the scale and I've heard about the effects of shale gas on the economy. Do you believe Europe could enjoy similar benefits?

SCARONI: Well, Europe probably could. And as a matter of fact, countries such as Poland or the Ukraine are making big efforts to exploit this new resource. But in Western Europe, politicians and also the public are very much against the development of shale gas in the continent. The only one notable exception are the U.K., the U.K. in which everybody seems pushing towards having the same kind of shale gas revolution that the U.S. has been in since the recent years.

QUEST: Politicians and the public are suspicious about shale gas and fracking and its long-term effects on the environment, and there is a debate to be had. Now, if that -- if there are legitimate worries, surely Europe is right to be slower than the U.S., even if it means a temporary economic disadvantage.

SCARONI: Well, yes and no, in the sense that you are right we should explore every possibility of doing fracking and exploiting shale gas in a safe manner. But in this economic environment, with Europe, which is (inaudible) energy, so much more than the U.S., we're really put in danger -- the European economy in particular industrial investments in a period in which already the economy is very much weak. So I believe find -- to find to find the best ways to do it, but we need to overcome this differential in competitiveness.

QUEST: Do you know of any companies or chief execs, chairmans who said to you, 'Well, we're either going to move away from Europe because it's too expensive or we're not going to invest any more money.' Is this a real threat?

SCARONI: For me it is a real threat that all the sectors which are really energy-intensive and particularly gas-intensive. I'm speaking sectors such as Petrochemicals as an example -- all investments which should be made in Europe are probably going to move in the U.S. where the price of gas is so much lower. And in fact, if you think that in the U.S. the economy is picking up and people (inaudible) to shale gas, even one percent of GDP, this is probably also the result of investments moving from Europe into the U.S.

QUEST: I can hear some viewers, even as we are speaking, sir, saying, 'Well, he would say that, wouldn't he? He runs an energy company. He wants to be able to exploit energy resources and cut -- get a cheaper price in energy.' That's natural for you to say that. They have a point, haven't they?

SCARONI: No, they're not because we are a global company, we're exploiting shale gas in Texas, just as an example, but also in Poland, in the Ukraine, in China, Pakistan, in Algeria. So if the Europeans don't want to exploit shale gas, we will move to other places in the world as we do already.


QUEST: Chief executive of ENI, E-N-I joining me earlier. Thick smog has shut an international airport in China. Planes are stuck on the tarmac and there's not much anyone can do about it. We'll talk about China's pollution problem after the break.


QUEST: Talk about Harbin International Airport in China remains shut, the city shrouded in thick, filthy smog. People can barely see what's in front of them, let alone down the street and around the corner. Imagine landing a plane in these sort of conditions. Visibility's down to less than 20 meters. The pollution levels are 30 times the World Health Organization's recommendation standards, and that's according to the city's own monitoring stations. The smog has effectively shut down Harbin. As David McKenzie reports, millions of people will have to wait it out. There's no quick fix.




LAU: I feel like bad -- it's bad for the people but it's good for the business. But then on a sunny day, you feel happy because you can go out and do stuff.

MCKENZIE: Lau sells an innovative face mask.

LAU: They're quite simple because it's basically just like this magic tape here.

MCKENZIE: And China's smog is good for business.

LAU: So, you clip it on like this.

MCKENZIE: Imported from the U.S., it's designed to filter out harmful particles and gasses for long-term health benefits.

LAU: You can't go back in time, right. To go back and in 10 years, OK wearing a mask -

MCKENZIE: The damage is done.

LAU: Yes, it's already done.

MCKENZIE: The difference between a blue-sky day here in Beijing and a polluted one can be dramatic. Right now, it's rated as very unhealthy by the U.S. Embassy monitoring site, but in Harbin in northeast China, the pollution's been off the charts Dense, acrid smog put this northern of 10 million to a standstill. Schools are shut, dozens of flights canceled, highways closed. Visibility down to almost zero. Pollution 40 times the WHO recommended standard. The local government blamed it on Harbin's coal-powered central heating turned on over the weekend. But critics say China's pollution is a terrifying side effect of the country's decades-long obsession with growth. Wary of social unrest, Communist Party officials have announced new stringent measures. They want to meet their own acceptable standards by 2020, WHO standards by 2015.

LAU: You have to breathe in through your nose and -

MCKENZIE: That's good news for Lau's growing business. He's struggling to keep up with demand, catering to all kinds of tastes. Selling a product for the new reality of China. Do you think people are getting used to wearing something like this?

LAU: I think it's OK.

MCKENZIE: It's a reality that could last several decades. David McKenzie, CNN Beijing.


QUEST: So, to the weather forecast. I can pretty much assist my colleague and good friend Ms. Harrison by saying matters are fairly calm in Europe and in the United States. Calm and smooth sailing which allows us to really consider those places where there's many more difficulties -- China, Australia.

JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Yes, absolutely right, Richard, yes well let's start in China, shall we, and talk about the pollution. Is it going to clear, when's it going to clear? Well, it will eventually, but let me just show you what we're figuring on (inaudible) -- as you talked about of course the visibility, well right now it has actually, believe it or not, improved in Harbin. We're up to one kilometer. The winds have improved because they've picked up seven kilometers an hour. Meanwhile, you can see Beijing, ten kilometers -- that is the visibility there, and six in Changchun, so it is not a good scenario at all. Just another image to show you so just again to give you just a really clear idea, or not clear, as to how particularly bad it is.

This is an image showing you all of the smog mixed in with the cloud of course. It should look like this, but unfortunately it doesn't. This is how it looks. And of course it is really because we've got this dense fog mixed in as well. So very, very light winds and of course that really, really heavy pollution. All of it leading to this very dangerous air quality of course, as you've been hearing. Huge and widespread travel disruption across the region. Really made worse too -- really compounded by the fact that across this region, 500 million people actually live, guess what? It actually cuts the life expectancy in this area by 5.5 years. We've talked about how much coal is actually burned. Up into the north of China is 50 percent -- 55 percent -- more coal is burned for that fuel in particular. It's that time of year. People are indeed using it to heat their homes as well as obviously for manufacturing. And, in fact, China burning almost as much coal as the rest of the world combined. So what we need is this, and it's happening -- an air of low pressure is going to come through. It'll change the wind direction, it will bring some winds. So all of this will help to actually move that air, that very stagnant air and conditions will improve. But of course, it is likely to be temporary. This time of year we often have that second air under high pressure.

Meanwhile in Australia, we're seeing quite a bit of rain come through in the last 24 hours. The cloud and the rain is in fact clearing right now. Winds coming from the north in Sydney 24 kilometers now, it's already 23 degrees Celsius. It looks as if this rain really should have helped, but unfortunately, it's not as good as looks. Just three millimeters in the last 23, 24 hours in Sydney. Thirteen millimeters in total this far in October. The average is 77. The reason the amount of rain is so needed, not of course just to help fight the fires, but look at this -- back burning. This is what they do to try and prevent the fires from spreading. Now, what they need is anything over 10 millimeters. Anything less than 10 millimeters, all it does is dampen down all of the vegetation, and it means they're not able to actually do this back burning -- it's just too damp to start the fires to help them. And there's such a deficit (inaudible). Look at this -- up to 90 percent/70 percent below the average rainfall. The fire danger remains -

QUEST: Jenny.

HARRISON: -- extreme to very, very high. Richard, yes. (Inaudible)

QUEST: Just what did -- no, sorry, on this very point that you were just saying, I just wanted to ask you -- this morning we were hearing about these fires merging, and just outside -- two of the fires. The long -- what happens next with all of this? As you look at it from the weather point of view, what happens next?

HARRISON: Well, what happens next, Richard, is Wednesday. This particular day is the worst day because of the winds and also because of the temperatures. So this is the concern today -- this is why they're concerned these two fires would actually merge, because this is the wind forecast as we go through the day. So, when you've got winds gusting as high as 60, maybe 70 kilometers an hour, as long as -- as well as -- temperatures that in Sydney are forecast to get to about 32, maybe 35 degrees Celsius, all of that is just making the firefighters' job that much more difficult. And the winds are going to come mostly from a west, southwesterly direction. That will help the firefighters because at least they know what they're dealing with. But the last few days the winds have been very, very variable. So, Wednesday is the worst day. I want to show you the forecast for the next few days. This is why it's been so bad. The front's coming through, so the winds are picking up, the temperature's picking up. Once that goes through, it's going to be hugely cooler. It's also going to be breezy. But look at the temperature drop, Richard, Wednesday to Thursday. So, that will help the firefighters. There should be a little bit of moisture in the air, but for the most part, you know, in terms of what's going to happen, they -- as we know, they've got another 1,500 firefighters on the ground -- they're hoping to have on the ground very, very soon. It's just a question of manpower and just continuing to fight these huge fires. That's all they can do, and hope that the weather it continues to be in their favor. Wednesday is the worst day. If they can get over Wednesday, it should be a better battle for them.

QUEST: Jenny Harrison at the World Weather Center with the two big stories in the world. (You're wonderful) today Jenny, many thanks, indeed. Staying with Australia weather, firefighters are preparing for weather conditions that as Jenny was outlining, will be just about as bad as it gets. Here you see what volunteer fireman (Tony Torrez) has been looking at over the past two days. More homes and lives could be lost. The weather conditions will make a bad situation worse. Damien Smith of Australia's 7 Network now looks at what some residents are doing to protect themselves.


DAMIEN SMITH, 7 NEWS REPORTER IN BILPIN: After last night's alarm, resources horde into Bilpin. As the sun shone a warning, crews worked hard to take fuel from the fire before it arrives. Locals are prepared too.

TRINA LORD, BILPIN RESIDENT: Quite good. It's amazing what you can do with water.

SMITH: And, with fire. Their efforts continued throughout today. Bilpin was still calm, the air a little humid, a few raindrops rippled the dams, but there's nothing to dampen the main fire front.

PHIL HURST, BILPIN CONTROLLER: I'm fairly confident and (firemen predict winds get up to where they're talking about, then be nice).

SMITH: Lionel Bucket runs a cattle resort on 640 acres of pristine Blue Mountains bush. Are you worried?

BUCKET: Oh, yes. I'll lose everything, so, really worried.

SMITH: Into this morning, he photographed the fire front just 800 meters away across the gorge. If the fire comes, this cabin can resist searing heat. It's double-glazed with toughened glass.

BUCKET: The stair up in the secret room exit is a really a good place, so if you're in there, you're not going to get burnt. (Inaudible).

SMITH: Doesn't take one or two looks around Lionel's property to realize that there is a lot of fuel that could go up in flames around here, but that's part of its attraction. That's why people love coming here. He's in the wilderness business. National parks fire aides are helping him protect his property and his future, inflicting a little damage to save a lot.


QUEST: Damien Smith of Channel 7 in Australia Networks have been reporting. Technology and science are dominated by men. One woman is out to change that. Meet Google's Megan Smith, up after the break.


QUEST: The woman behind Google Glass says it's time for young women to make their mark on the world of technology, and there aren't too many women in the Google world of technology. Take a look at Google's senior management team. Now, this is taken from their own web site. Yes, one, two, three, four, five, six, seven, eight, nine, 10, 11, 12 13 -- and there is just one woman. CNN's Poppy Harlow spoke to Google's Megan Smith and asked her why women are largely invisible in technology.

MEGAN SMITH, VICE PRESIDENT, GOOGLE: I think there's a couple of things. There's -- we inherit the weight of history of inherent bias. First there was conscious bias, now there's unconscious bias. Just things your brain fills in. You hear the venture capitalist talk about pattern matching. This a really good way to recognize you know the next young entrepreneur. But they're also pattern matching for things they have bias in and not realizing they're doing that, so they might be more likely to fund a young white or Asian boy or man versus minorities.

POPPY HARLOW, JOURNALIST FOR CNN: Have you seen that play out?

SMITH: Yes. I think we see it all the time, but it's less conscious. So what we have to do as an industry is -- it's no one's fault. It's not like anybody's actively doing this. It's just that we inherit it, we have it, it's systemic. So, we need to become highly educated. We're training Googlers right now in unconscious bias -- the whole company. And once you know that, then you can act differently.

HARLOW: Looking at your career and your trajectory, did you face bias? Gender bias?

SMITH: Yes, I think that one of the things that I think is really important is that young people don't know -- young women and minorities -- often don't know how amazing these careers are. For some reason when they're younger, whether it's the stereotypes in television, you know, people like me -- engineers -- women engineers -- don't exist in children's television. In fact my own grandfather -- I come from a long line of engineers, and when I decided to go to MIT and do engineering, he said to my mom, "Well, why would she want to do that?"

HARLOW: From your grandfather?

SMITH: Yes, and he had built you know much of the transportation in Indiana and bridges and -

HARLOW: So you came full circle at an early age?

SMITH: -- yes, oh, yes. And so later when I graduated, he couldn't have been more proud. So people can come full circle, but they don't think of young women doing these careers, and that's one of the things we have to shift. If you're hunting for (inaudible) and there's 10 characteristics you need, women will typically only apply if they have seven, and men will apply if they have three of the characteristics. So, as a manager, you just need to be conscious of that. So you need to notice a whole bunch of people are going to running at you who might not have as much qualifications as someone who's not raising their hand.

HARLOW: Right.

SMITH: So just be conscious of that and look at all the candidates and do a little more active work to make sure that you've got the best pool that you're going to then put into that job.

HARLOW: What have you seen that has told you we need diversity in our groups to be successful?

SMITH: Diverse teams just makes better products. It's, you know, people measure patents that are written by men and women are cited more often which is a measure to know whether the patent is better. So the research is there, it's emerging and we need to do it in companies with more diversity at the leadership level, both minorities and women have better financial performance.


QUEST: Women in technology. Now, I asked you earlier about -- or I was Tweeting you about -- the sort of tablet that you may be using and the question of Nokia, Microsoft, Apple all announcing on the same day. Manasseh Egedegbe says, "The dip Apple is experiencing in the tablet market is a sure thing to come." "Microsoft and Nokia are more available." Also with that -- which tablet did not change? "Questions would be which tablet do I need?" says Bernt Lorentzen. "Pity iPad doesn't offer facility for multiple user accounts," says Alistair, and there's many more of them. I think the best one is "Which tablet do I take when I got a headache?" It's Paracetamol. That's from A-KA$H. "Profitable Moment" after the break


QUEST: Tonight's "Profitable Moment." When the history books are written on the war in tablets, I suspect today may not even raise a footnote. But I think it was important nonetheless because on the same day, all three major manufacturers announced their own electronic tablets. You had Apple with the iPad A, you had Microsoft with one of its new Surface Pro 2s and you had Nokia jumping into the fray. I was always skeptical about the whole business of tablets. I could never work out why we needed another device to go between computer, phone and laptop. Well of course I was wrong -- roundly so. But the jury is most definitely out on who's winning and losing this battle, because it all depends on who -- which you used to start with and from where sit. Now, Shelly Palmer tonight was quite clear. He believed that Apple won today, Microsoft lost. But there are many people who believe that actually Microsoft is just gearing itself up for the long haul. Which makes it inexplicable why Nokia bothered with their tablet since eventually the Nokia/Microsoft product will be one in the same.

If you're lost in all of this, well don't worry, so am I. All I know is what I use every day, but what I use every day fundamentally is what I'm most comfortable with. I'm 51, not 21, and I don't use a tablet like a teenager. But today was one of those days we'll look back with interest. With that, this is "Quest Means Business" for tonight. I'm Richard Quest live in New York. Whatever you're up to in the hours ahead, hope it's profitable. I'll see you tomorrow.