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Obama Unveils NSA Reforms; Target Hacking Investigation; Big Week for Bank Earnings; US Investors Weigh Mixed Corporate Earnings; European Markets Up; Shell Profit Warning; Bank Chairman Dresses in Drag for Staff Speech; Chief Executives Get Creative

Aired January 17, 2014 - 16:00   ET



RICHARD QUEST, HOST: Tonight, an historic overhaul of the most powerful surveillance machine on the planet. The New York Stock Exchange bell is about to be closed. It is Friday, it's January the 17th.

Our lead story: President Barack Obama has unveiled plans to roll back reform of an intelligence program. We have all the details of that and all else.

I'm Richard Quest. I mean business.

Good evening. Tonight, an historic overhaul of the most powerful surveillance machine on the planet. President Barack Obama has unveiled plans to roll back and reform the NSA's intelligence program after an outcry from the world's largest technology companies.

In a speech invoking everything from the Cold War to the American Civil War, the president announced firstly tech companies will now have more freedom to tell their customers when they're forced to hand over information.

There'll be fewer cases where the US government will be able to take that information in secret. And the US will also scale back the program that monitors conversations between Americans and those living abroad. Leaders of America's close allies will not be placed under surveillance unless there's a national security risk.

The president said the future of technology across the world depended on measures like these.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When you cut through the noise, what's really at stake is how we remain true to who we are in a world that is remaking itself at dizzying speed.

Whether it's the ability of individuals to communicate ideas, to access information that would have once filled every great library in every country in the world, or to forge bonds with people on the other sides of the globe, technology is remaking what is possible for individuals and for institutions and for the international order.


QUEST: Wolf Blitzer from "The Situation Room" joins me now from Washington. Wolf, the president, very difficult position. On the one hand, he desperately wants to continue the idea that the government must and can and will garner information, but he had to respond to the legitimate concerns of too much, too far, too fast.

WOLF BLITZER, CNN ANCHOR: Yes, he had to thread that needle, if you will. He's angering people on the far right, the far left, libertarians and others by not going far enough or, in some cases, the critics from the right going too far and potentially undermining US national security.

So, this is a very sensitive, difficult issue for the president, for the United States right now, given the enormous changes in technological advances and the capabilities that are out there. And the president announced this series of reforms, Richard, as you well know, but he left a lot of questions unanswered.

I'll give you one for example: he said except for extraordinary circumstances, the US will no longer spy directly on foreign leaders who are close friends or allies of the United States. So, he left open a loophole, "extraordinary circumstances," but at the same time, he didn't give a list of who those countries are. Who are the leaders that would be considered friends and allies --

QUEST: All right --

BLITZER: -- of the United States. Obviously, a very sensitive subject.

QUEST: Fundamentally, Wolf, when you look -- and you've obviously looked closely today -- at what he has announced, is it a sea change in either philosophy and direction for the gathering of information, or is it tinkering the margins where it's so much will still be done in secret?

BLITZER: It's not a sea change. The US will continue to monitor -- it will continue to engage in this kind of surveillance. There will be some reforms, though.

There will be a public advocate brought into the -- when they do go to the Foreign Intelligence Surveillance Court, this FISA, there will be a public advocate who will represent the American people, if you will, by raising flags about protecting personal privacy rights and things like that. So, that's one change.

As far as the bulk collection of all these phone conversations, not the contents, but the duration, the phone numbers, and all of that --

QUEST: Right.

BLITZER: -- the president says well, maybe the National Security Agency should no longer store all those numbers, if you will. At the same time, the companies, the private telecommunications companies, they don't want to store it. So, what, are they going to outsource this to a third party? That potentially could cause greater privacy outrages out there.

So, he said by now in the end of March, they're going to have to come up with some sort of plan to come up with an idea, who's going to actually store this bulk data out there, which is so sensitive.

QUEST: Wolf, thank you. Wolf Blitzer in Washington giving us the political perspective from DC. We've been talking about what the companies -- and of course, in many ways, some of the world's most powerful technology companies have been driving the campaign for these reforms.

This is the website that was set up by eight companies, including Google, Microsoft, and Facebook. It's calling for more transparency and accountability from the government. Some but not all of those demands have been met today.

In a statement released in the past hour by the coalition, the words they said was "The commitments outlined by President Obama represent positive progress on key issues, including transparency from the government. Crucial details remain to be addressed on these issues. Additional steps are needed on other important issues, so we'll continue to work with the administration and advocate reforms."

Howard Schmidt was President Obama's head of cybersecurity until 2012. He also advised President Bush and was Microsoft's chief security officer. He -- Howard Schmidt joins me from Milwaukee in Wisconsin.

Sir, the industry -- the private sector, if you like, has been caught in the middle in all of this, because they are the conduits for many of the -- much of the information going backwards and forwards. It's inevitable, though, that they are going to get this wrong.

HOWARD SCHMIDT, FORMER US CYBERSECURITY COORDINATOR: Well, that's correct. One of the things that they've been doing is they, indeed, are the ones that have what's important to the intelligence community.

And when you start looking at the voices -- you mentioned a moment ago about the big companies talking about this regularly -- you have to look at the way this thing has unfolded. The intelligence communities, those that are sitting in Washington, DC in particular, have the only voice in the Congress or the executive branch.

Those that are from the different companies that have to do multinational business, they have to deal with other governments, when they do the talk, their voices are not heard.

QUEST: So, how do companies like Yahoo! and like Google and even Facebook and all those companies that have criticized to a marginal extent the US position, how do they proceed forward? Because the president was very clear in what he said. This collection of data will continue.

SCHMIDT: Well, some have actually been pushing back on this for a number of years. They get the warrants in, they get these other things from the government saying give us the information, and they just don't hand it over anymore.

They've been raising court discussions about it. They've been pushing back and saying, well, you're asking us to do something that doesn't conform with our service level agreements, what we believe the interpretation of the law is going to be.

So, they're in a very difficult position, especially when you start looking at moving forward, when there's the desire to create some third party business that would hold this data.

The companies have been all for, well, you can hold it, and they don't want anything to do with it. They say, hey, you've -- we'll deal with the surveillance, we'll deal with the warrants and the legal things, but we're not going to hold that data for you, because we become an agent of the government.

QUEST: Now, stay with me for just a moment, Mr. Schmidt, if you will, because US investigators say the massive security breach at Target, the US retailer, is part of a much larger cyber attack on retailers.

And what's worse is that some of those businesses which have been hacked may not even know it. The sophisticated malware at the center of the attack apparently appears to be partly written in Russian, and the hackers may have ties to Russian organized crime.

So, Mr. Schmidt, this is -- you look at this situation on cybersecurity, you are an expert on this subject, you were President Obama's advisor on the subject. On the one hand, you've got the government hoovering up anything and everything they possibly can, and on the other hand, you've got private sector being attacked in some of the worst examples of hacking. So, what happens next?

SCHMIDT: Well, I think people will start to really understand you have to do cybersecurity better. When we first heard the discussion about Target, many of us sat back and said, there's more to it. No one does this level, this massive attack, to steal information from one company. There's probably others that have been out there, whether domestic with the United States or international.

QUEST: OK, but --

SCHMIDT: So when we start looking at this -- sorry? Yes, what we keep hearing is --


QUEST: Yes, I'd love to point out --

SCHMIDT: -- there's some --

QUEST: Right. Right. Sorry, we have a delay between us, so I apologize if I'm interrupting you. But let me just jump in with a quick question on this.

Bearing in mind we're talking about very sizable retailers -- Target, Neiman Marcus, and others as yet unnamed but believed to be affected, none of whom have perhaps skimped too much on the cost of their systems -- is this a case of negligence, malfeasance, misfeasance? Or are we just learning more about the ability of these hackers to break in?

SCHMIDT: Well, it's not an issue of we just learned things, because we have been learning year after year, every time an incident like this takes place, someone says this is a wakeup call, and it's not wakeup call.

But it's not negligence. It's companies saying here's the best way I can maximize my revenue. This is something I don't need to invest in, like we've seen in Europe and the UK, the PIN and chip technology that would have, in many cases, prevented a lot of this. But it's a matter -- doesn't make business sense, so therefore, we're not going to do it.

Hopefully this incident will move people forward and say yes, we'll start adopting the PIN and chip technology. We'll pay more attention to these point of sale operations instead of just protecting the back end of the computer systems.

QUEST: Finally, sir, do you think -- and I'm going to shift the blame firmly onto the consumer, myself, yourself -- maybe not you, but -- do you think we've all been a little bit too lackadaisical? We've grown up, now, with these advancements as they've come on and only now are the scales falling from our eyes about the dangers and the risks.

And whilst we haven't treated online information and data information as valuably as our wallet, now we are. We have to.

SCHMIDT: And therein lies one of the problems. Consumers haven't been out there saying this is what we want, you need to provide us this, you need to give us better security. Anymore, it's a situation if it fits in your pocket, if it fits in your wallet, it's more secure than sitting there at a desktop, which is where most people became very afraid of computer network technology and the technology we see today.

If it's in your hand -- and mobile devices are very much a part of this -- it says, oh, it's ours, it's private, we can hold it in our hand, therefore, we don't have to worry about making any demands on companies because we do it with our mobile devices.

QUEST: Which of course is exactly what I'm doing as I clutch my mobile device and say, Mr. Schmidt, thank you for joining me this evening. What a fascinating point. @RichardQuest is where you an have your thoughts and your views on this.

Just how much more careful do we have to be? I'm holding a BlackBerry, that's just because the one I happen to have in my hand. I could use any other device that I've got lying around at the moment.

In a moment, it's all about the earnings, and that's how the Dow closed. The Dow is up quite -- that's quite a nice little gain for a Friday, up 41 points, a quarter of a percent, 16,458. More QUEST MEANS BUSINESS --


QUEST: -- in a moment.


QUEST: It's been a week and a half -- a big week for bank earnings. The six top US banks reported their Q4, and overall, the results have been solid, though the legal fallout from the financial crisis continues to weigh on the banking sector, many banks struggling with weak fixed income.

Join me as we open the vault once again to see how they have been trading. If we could open the vault. Well, if the vault would open, I would be able to tell you that we got the latest from Morgan Stanley.

Now, Morgan Stanley, of course, has reported $192 million profit for the fourth quarter, and more than 70 percent drop from last year, dragged down. But if you look overall, this is how it has proceeded over the course of the weeks.

We've had JPMorgan with $5.3 billion, $5.6 billion from Wells Fargo, Bank of America at $3.4 billion, all of which, while solid, has certainly not been ball and burner and has given cause for many people wondering what comes next.

Let's put into perspective this as how the market's traded. Alison Kosik is at the New York Stock Exchange, joins me now. We've got a 41 gain on the Dow today. It leaves the Dow in an up position, but it's hardly rip-roaring.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Right. And so are these bank earnings. Yes, they're pretty solid, but there's a lot of noise in some of these reports. Take Morgan Stanley. There's a little bad news in it, a little good news. As you said, earnings fell sharply from a year ago, but that still topped expectations on profit and sales.

Even with the big legal charge, the firm finished 2013 with four straight quarters of profit. It is the first time that's happened under its CEO, who's really been trying to diversify the bank business more. So, what's interesting is, you see how bank earnings have gone. I would say, yes, solid. More so mixed.

Just so you know, we also kept our eye on shares of UPS today, Richard. That's because they came out with this sort of pre-earnings announcement. The shipping giant cut its 2013 earnings guidance. It blamed a crush of online shopping, unprecedented crush of online shopping.

As you know, it ran into these huge delivery problems because it just couldn't handle the massive influx of packages. It's the reason -- and Wall Street's paying attention to this, because UPS is an economic bellwether. It gives us an indication about the health of the broader economy, so if we're hearing this from UPS, hey, we could hear it from others, too. Richard?

QUEST: Still fairly early in the earnings season, though, isn't it?

KOSIK: It is early. We've only had one week. But we have had a big week, because these were the big financials. But true, investors really need to see more from a broader range of companies to get what the trend is for the fourth quarter.

So, what you may be seeing this week, because we saw these triple- digit moves with the Dow, we saw lots of swings this week, I think you're seeing investors in limbo. They're not sure which way to go. They need to get more information, and that information will come with -- come with more companies reporting their earnings as earnings season continues, Richard.

QUEST: Have a good weekend, Alison.

KOSIK: You, too.

QUEST: We're in Davos next week.

KOSIK: OK, great.

QUEST: So I shall be speaking to you -- well, yes, hopefully. The snows of Davos, we'll be talking to you from there. Alison Kosik at the New York Stock Exchange.

European markets finished higher, and the shares in Zurich leading the region. The SMI has been one of the most vibrant markets, both up and down. It closed up one and a third of a percent. The FTSE, the CAC, and the DAX all closed with modest gains.

The shares in the Royal Dutch Shell slipped after the company issued a significant profit warning, blaming weak industry conditions for weaker than expected Q4.

When we come back, the chief exec who swapped a suit for stilettos. Now, I promise you, take a look at the picture. It's the chairman of the Dutch bank ABN Amro. Why he's dressed up like this and more importantly, what he said, after the break.



QUEST: Now, we've all sat through more corporate speeches than is honest and decent, and many are just a bit of a drag, literally and figuratively. So, the chairman of ABN Amro tried a novel approach to connect with his staff. Gerrit Zalm dressed up as his fictional sister, Priscilla. He was rallying the team morale at the bank's annual staff meeting.

Priscilla, who was a successful madam, a lady of the street and the night, told the bankers they could learn a lot from her business.


GERRIT ZALM, CHAIRMAN, ABN AMRO, AS "PRISCILLA" (through translator): I have a flourishing enterprise. A self-made business fitting into an age- old tradition.


ZALM AS "PRISCILLA": With a fantastic capital position, q high return on equity, and a low cost-income ratio. And also, a great ratio of men and women.


ZALM AS "PRISCILLA": As a correction to the disproportionate ratio at other businesses, like banks, my business employs almost exclusively women. At my business, "women on top" is the way to go.





QUEST: Jim Boulden is with me. He's been covering the story for us. Brilliant. It's absolutely brilliant.


QUEST: But there are some people, naysayers out there, criticizing.

BOULDEN: But not many, I have to be honest. They have said -- they're completely unapologetic about it. They said they've gotten very, very little criticism for this. The Dutch, apparently, this is their humor. They love Cabaret, they don't mind men dressing as women, and he was making a point --

QUEST: What was the point?

BOULDEN: The point was, they said, was he was trying to get to the core values of their business of banking, and he wanted to show that there are -- he wanted to look at the moral element of their banking by showing - - I don't know how, to be honest with you -- that this madam of a brothel was similar to somebody who works at a bank. I don't understand the Dutch humor --

QUEST: I was about to say, that's one I couldn't quite --


BOULDEN: I'm still not there.

QUEST: But the fictional family he's used --

BOULDEN: Oh, yes.

QUEST: -- in previous --


QUEST: -- speeches.


QUEST: And the fictional family, and this is the sister, and we're even promised that there might be another one next year.

BOULDEN: He's done a brother, he's done other ones in the past as well. He dresses as different characters. He's the former finance minister of the Netherlands, as well, so not just the chairman of the bank. But of course, we have seen other CEO's --

QUEST: Right.

BOULDEN: -- dress, haven't we?

QUEST: Now, let's talk about this.


QUEST: Because its' time for those events that we've known and loved where CEOs have decided to do more than they should and reveal more than, perhaps, they wanted to. Sir Richard Branson, tell me about -- tell me what he did.

BOULDEN: You remember when he ran a Formula 1 team that was not successful at all, he had a bet with Fernandes --

QUEST: AirAsia?

BOULDEN: AirAsia. And Richard Branson lost, so he had to dress as a female and fly a flight, and he was a flight attendant for --

QUEST: That was a bet --

BOULDEN: -- a very long flight --

QUEST: That was a bet, whichever team, Caterham or the Virgin team --


QUEST: -- whichever won came in --

BOULDEN: In Abu Dhabi, who came higher in Abu Dhabi.

QUEST: At the end of the season.


QUEST: The loser had to serve as a stewardess on the other's airline.

BOULDEN: But Branson does that a lot because he loves to perform. He loves to perform in various ways. I've seen him dress as other characters as well.

And then we had Warren Buffett. You remember, he did a GEICO commercial as Axl Rose, the hard rocker. And I thought that was really interesting, because he owns GEICO --

QUEST: Can we hear -- is there any sound on this?




BOULDEN: Now, that was clever because he owns the company, so it probably saved a bit of money by having himself in the commercial, showed a bit of fun. Also, GEICO is known for its cheeky commercials in the US.

QUEST: Right, but come on, this man is one of the top --


QUEST: -- five wealthiest men, six wealthiest men in the world.

BOULDEN: Yes. So, it was a risk, there's no doubt about it. But it went down really well. It went viral, as they say.

And then, you know Rob Fyfe. He used to run Air New Zealand, you remember him. And he appeared in one of his safety videos --

QUEST: Absolutely. He's been in several of them, I think.


QUEST: One of them in spandex. I think many of us will still have to -- but this one. All right, here it is. This is the one. Now, that's Richard Simmons.

BOULDEN: Extraordinary.

QUEST: But there's a cameo performance -- there he is --


QUEST: That's the chief exec -- or the former chief exec --


QUEST: -- of Air New Zealand. And again, he appeared again in this advert.

BOULDEN: Yes, so Gerrit Zalm is not alone doing these kind of things. And again, I said they're not apologizing for this at all.

QUEST: Right. Finally, Jim, whether it be Gerrit -- whether it be --


QUEST: -- Zalm or Branson or Buffett or Rob Fyfe, do you think it actually gives them a humanity and puts on a great personal face --

BOULDEN: Absolutely.

QUEST: Or potentially devalues their --

BOULDEN: No, it doesn't devalue it at all. It does put humanity to them, because they are chairmen -- chairman of a bank that had to be rescued and it was taken over -- parts of it taken over by Royal Bank of Scotland. That had to be rescued. There was a lot of bad for the last few years, and he's trying to motivate his staff. What's wrong with it?

QUEST: So, the question is, Jim --

BOULDEN: No, I'm not.


QUEST: I'll give money to charity on your behalf.



QUEST: I'll give --


BOULDEN: If I can ring the bell, maybe.

QUEST: You want to ring my bell?


QUEST: And then I have to give the money?


QUEST: Well well well --


QUEST: Easy, Tiger. We may be in London, but you only get one ring of it. Coming up, the race to stay on top in the tech industry. We look at the odds on Nintendo and Intel.

Don't take the pictures. Later this hour, WikiLeaks founder Julian Assange says the NSA's spying program has damaged the US tech industry. We'll have that after the break.


JULIAN ASSANGE, FOUNDER, WIKILEAKS: Any person you are dealing with in business, like Google or Facebook or Yahoo! or a telecommunications company might have become secretly an agent of the National Security Agency.



QUEST: Hello, 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.

President Barack Obama has announced major reforms for the National Security Agency's surveillance program. Technology companies will now have more freedom to tell their customers when they're being forced to hand over information to the US government. In a statement, a group of eight companies, including Google, Microsoft, and Facebook, said they would continue to push for reforms.

The Taliban is claiming responsibility for a coordinated attack on a restaurant Kabul. At least 14 people were killed, including foreigners. Officials say a suicide bomber blew himself up and two gunmen opened fire. Agence France-Presse is reporting four UN employees are missing after the attack.

Uganda's president is blocking anti-gay legislation that calls for homosexuals to be jailed for life. In a letter to parliament rejecting the bill, President Museveni made it clear he hasn't changed his mind on the topic. He wrote that there are better ways to cure what he is calling "this abnormality."

The wife of a prominent Indian minister has died after a public controversy in which she alleged her husband was having an affair. Sunanda Puskhar was found dead in a five-star hotel in New Delhi. Her husband, Shashi Tharoor, is a former UN Undersecretary-General. His personal secretary says police do not yet know the cause of death.

The Russian president, Vladimir Putin, says gay and lesbian visitors to the Sochi Olympics will be safe, but asked that they, in his words, "leave our children in peace." Russia has been criticized for a law which makes it illegal to teach children about gay equality. Mr. Putin says Russia does not criminalize homosexual relationships.

Now, we begin now with Barack Obama talking about how technology is changing our world at a dizzying pace. It's a challenge tech companies face every day as they work to keep their businesses afloat. Take for example Nintendo. I want you to join me over in the library. Now, today Nintendo managed to slash its sales forecast for two point for the -- 2.8 million from 9 million. That's a huge, huge (inaudible) from 92.8, and as a result, Nintendo expects to post a $335 million loss for the fiscal year.

So, in the technology industry, it's not all one way, but you got the profit warning from Nintendo. You've also got disappointing holiday sales, stiff competition from Microsoft's Xbox and Sony PlayStation. The (inaudible) is claiming more integrating computer devices. As for Apple, there's always news where Apple is concerned. It's often ahead of the pack in facing some challenges as it expands into China. However, the iPhone went on sale in China Mobile today. The chief executive of Apple, Tim Cook was there to celebrate the agreement which Apple has been anticipating for some time. The results from consumers -- lackluster. CNN's David McKenzie reports from China.


DAVID MCKENZIE, INTERNATIONAL CORRESPONDENT FOR CNN INTERNATIONAL BASED IN BEIJING, CHINA: We've come to this mobile store in China because finally Apple has done a deal that could give it access to 700 million new customers of the iPhone here in China. This family is buying a new iPhone on contract which they can now do in China. It's such a big deal for the American company, that the CEO, Tim Cook is were to plug it and also even give phones to customers. This could mean say analysts an extra 10 to 20 million new customers just in year one of this deal.

Male: It's a birthday for me today, so -

MCKENZIE: It's your birthday today.

Male: Yes.

MCKENZIE: Happy birthday.

Male: Thank you.

MCKENZIE: And you've got a new phone.


Male: Thank you.

MCKENZIE: We expected a crush of people here on (Inaudible) but it's business as usual, and only a handful of people looking over the new iPhone and contract. But one reason for that is around a million people ordered the iPhone before the deal was finally launched according to the company, and another is phones like this are actually more affordable to Chinese and change all the time, so guys like this will buy the cheaper phone and replace it more frequently.

Male, with MCKENZIE translating: I haven't thought about Apple, says one. There are so many Chinese brands, I pick the model based on my income.

MCKENZIE: Apple faces an uphill battle in China for the race of the mobile consumer in this country. But they hope that this deal will give them a competitive edge in time.


QUEST: More technology and demand for smartphones and tablets rises, so demand for PCs is falling. These are the results from Intel -- bad news for Intel Corporation whose shares closed down roughly 3.5 percent this session. The chief financial officer told CNN's Samuel Burke there's still room for growth in the P.C. market.


STACEY SMITH, CFO, INTEL: What we're seeing is some stabilizing. So you know it's a market that's you know on the order of 300 million units per year. It'll be down a little bit in 2014, but it certainly isn't a market that we would walk away from. In fact, we see the opportunity to reinvent it and bring great devices to the marketplace in PCs and in all these other devices as well.

SAMUEL BURKE, BUSINESS CORRESPONDENT: And why do you think the PC market is stabilizing? I look around and I see phones and tablets everywhere -- is it businesses investing in new computers for their employees? What do you think that is?

SMITH: Oh, it's across the board. What we saw in the fourth quarter was a little bit of unit growth in the PC segment of the market, what we saw in particular the desktop segment of the market was strong. It was the high- end gaming machines, it was these all in ones, it was some demand driven by enterprising corporate. So it was across the board. For us in keeping our overall unit growth, when you take PCs and then you add tablets to it, was on the order of 10 percent unit growth in the fourth quarter. So, I think it's a sign that our strategy is starting to pay off.

BURKE: What portion of the tablet market does Intel think that it can really get into?

SMITH: You know, our goal or next year is to be north of 40 million tablets. So that would put us you know as a pretty significant player across the overall volume of tablets. We're relatively small today -- I'd say we're somewhere you know in the 5 percent share range, but our plan would be to grow that significantly next year.

BURKE: Intel has made a lot of investment in data centers, but the growth slowed a little bit this quarter. You're not actually looking to compete with Cloud services as you're wanting to get more of your chips into Cloud services. So, where -- how can you regain your momentum with the data centers?

SMITH: You know, our data center business is a business that's well north of a $10 billion business. It grew 7 percent in 2013, we think that it'll grow in the order of 10 percent next year, so it's a big business growing fast -- very profitable. We've got this incredible technology lead, and I think the driver -- what's driving this business right now -- is you have all of these different devices that we've been talking about that are computing and connecting to the Internet. Ranging from wear-ables all the way to you know high-end gaming machines. They compute connect to the Internet. They're driving this build out of the Internet infrastructure and I think we're uniquely situated to participate and benefit from that trend.

BURKE: And if the PC market continues to shrink and that doesn't become a viable business anymore for Intel, what is the one section that you would see as the strongest point of the Intel portfolio moving forward. Would it be the data centers?

SMITH: Well, at the heart of all of this, our competitive advantage is our manufacturing leadership. And that manufacturing leadership allows us to do devices for any segment of the market, ranging from the highest in- server down to the most power-efficient wearable. We can do it at a level where we have a cost advantage and a performance advantage. So that's the heart of what we do.


QUEST: Now if you had any doubt about the pace of change in the technology, how about these new contact lenses which could help keep diabetes under control. This is Google's new and latest or maybe one of their latest projects. The lenses could help diabetics track their blood sugar levels without having to prick the fingers and draw blood. Needless to say, Google, when they announced it -- apparently it's got some electronics in here and some very thin wires -- well not wires. You get the idea. The idea is because the tears carry enough solution for diabetics to get a decent reading, this perhaps is the way forward for taking the proper glucose readings. It's in the testing phase at the moment. When we come back, we'll hear from the Bulgarian minister of foreign affairs who said it'd welcome help absorbing the flood of Syrian refugees. This is "Quest Means Business" in London.


QUEST: It's not clear who is behind two explosions that wounded dozens of anti-government protesters in Thailand today. CNN's obtained amateur video showing the moment one of the blasts hit the streets of Bangkok. Instability in the country is hurting the economy. Thailand's cut its 2014 growth forecast for the second time this month. CNN's Saima Mohsin (inaudible) now from Bangkok.


SAIMA MOHSIN, CORRESPONDENT FOR CNN IN ISLAMABAD: This has now become a crime scene as anti-government protesters carried out their daily march through the streets of Bangkok, somebody apparently from this derelict building threw an explosive device right into the crowd, wounding the persons below. This man told us "I was standing on the back of this van when I heard a loud bang. I looked down, and my hands were covered in blood. I thought it was mine, but then I realized it was my friend's."

While we were filming, the protesters told us they chased a man who they believed to be a suspect into a nearby building. When we got there, there was a lot of commotion. The police are trying to get into this area to search all of these buildings. This is the area where the attack took place. They want to go from door to door -- you can see people up there in the windows as well. But the protesters look very unhappy by their presence. They have a history of antagonism with the police. They were letting them in. The military appealed to them to say 'let them in to help our search.' So they've now formed a human chain -- they're trying to barricade the entrance to the building.

We've been allowed inside this derelict building the anti-government protesters are searching from room- to-room. Clearly, somebody was living here, but we can't confirm exactly who that was. But outside there's a very angry crowd who believe that inside here were the people who carried out this attack. Members of the security forces bomb disposal unit have actually come inside as well to investigate what the anti-government protesters have found in here, and this is what they've found -- parts of guns, walkie-talkies and knives. We're not allowed to touch it because they're now treating this as evidence.

(Inaudible) spokesman says they are reviewing whether he and the protesters will be marching through the streets again. Saima Mohsin, CNN Bangkok, Thailand.


QUEST: Syria's foreign minister has indicated there may soon be a cease- fire in Aleppo at a joint news conference with the Russian foreign minister Sergey Lavrov. Walid Moualem says he's given Russia a potential time and date to stop military operations in the region. The minister also says the Syrian government will cooperate and coordinate with the U.N. to deliver aid.

The Bulgarian minister of foreign affairs says the country needs help to cope with the tide of refugees coming from Syria. This week, the U.N. launched its latest push for international donations as the crisis deepens. As Kristian Vigenin told Nina Dos Santos he'd welcome any assistance.


KRISTIAN VIGENIN, BULGARIAN MINISTER OF FOREIGN AFFAIRS: Any help would be welcome. Meanwhile, we have received support from different organizations from member states but also support from the European Commission -- financial but also expert support, and we very grateful. This was a big challenge for us because it was a very sudden change in the numbers. We were not prepared for that this summer, but now I believe a few months later we are prepared perhaps and things are changing in a positive direction. And from that point of view, all this help and support was very useful. But what is most important I would say -- what we are doing is coping with the consequences. The most important issue now is to bring back peace in Syria.

NINA DOS SANTOS, NINA DOS SANTOS, NEWS ANCHOR AND CORRESPONDENT BASED IN LONDON FOR CNN INTERNATIONAL: Because the situation will get worse, how many more refugees is Bulgaria able to take?

VIGENIN: Well, we have already exceeded the limit that we've thought -- or the limit that we thought we are able to cope with. But I believe that now E.U. becomes much more serious on this issues, and the great presidency of the Council will deal specifically with that, and by the end of the presidency in June, we should have more developed EUI policy on migration. This is in our interests, and is an interest of the whole E.U. of course. And that is why I said it is very important to bring back peace in Syria, but even so, the number of migrant immigrants (inaudible) will not -- will remain also in the future because you have a number of unstable states and we should deal not only within the E.U. with this issue, managing borders is not sufficient in this case. We should work or engage much more with the transit countries, with the countries of origin. We need really a complex response because this is an issue that will remain as a problem for many years to come.


QUEST: The foreign minister of Bulgaria there. Now, in the next week, we're going to be keeping a very close eye on the peace talks in Syria next week. The peace talks will be taking place while we are at the World Economic Forum in Davos. U.S. Secretary General Ban Ki-moon will join me on Friday to discuss the talks and the ongoing refugee crisis. But of course, when we are at the World Economic Forum, the west if you like -- Christine Lagarde, managing director of the IMF -- we'll hear from her on the IMF's latest outlook for the global economy. And of course her concerns, her deep concerns, about in -- deflation. President Jim Yong Kim of the World Bank will update me on his efforts at cutting poverty and global growth.

As we continue with the world -- with the west -- on the banking system and the health of the banking system. Jacob Frenkel chairman of JPMorgan Chase International will be joining us. Dr. Frenkel will be there. So, next week, we'll be in the snows of Davos all week at the same time as we are here of course. Whatever time it where you are at the moment -- 9 London, 10 central Europe -- "Quest Means Business" -- yes. We'll even have the snowman there to live in Davos. The weather forecast now. Jenny Harrison is at the World Weather Center this evening for us.

JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Richard, I'm going to come onto Davos in just a moment. Of course you're expecting it to be (inaudible), now you know obviously every year you get there there's not as much as you'd like to see, but I will come on to that because we've had quite a change of course in weather conditions in Europe for the last few days. The temperature has been one of the main differences, and so a lot of this activity as you can see finally turning to snow across many locations across eastern Europe.

But there's also some very heavy rain in the forecast -- it's mostly across areas in the south, and in fact so much so that we could see some fairly strong thunderstorms across Portugal, portions of Spain as well, and in fact also watching southern France across into northern Italy because with these series of lows coming through, it's going to be fairly persistent rain. So some flooding is really expected in these areas. But notice a lot of this blue showing up, so plenty of snow. But as I say, these storms in Portugal already there has been some hail reported on Friday. And as we continue into Saturday morning, the warnings remain in place -- again, for the same sort of area. You can see that -- Portugal and across into western areas of Spain. Severe wind as well as that large, damaging hail and of course all the time since any heavy and persistent rain.

But as I say, the temperature has really changed. You can see by the blue here that that cold air finally in place, particularly across these areas in the east where it's actually very mild for the last few weeks. So much so, though of course, that we go from one extreme to -- so Moscow, the average is -6, and in fact on Sunday we've got -15, -11 again on Monday. Also, back to the norm really in Stockholm, but meanwhile you'll notice in Belgrade -- temperatures here well above the average. In fact, about 12 degrees above. Four is what it should be, 16 is the high expected on Saturday. And it's because of this very mild air flow coming in across much of southeast Europe.

But of course Sochi -- all eyes beginning to really concentrate here and not long before the Sochi Olympics. And temperatures actually close to the average. It's a fairly mild climate down there in the city of Sochi. Once you head up to the mountains, well, I can tell you now there's plenty of snow all ready and waiting for the Olympic athletes. But look at this just to give you an idea -- Lisbon on Friday it was 12 degrees Celsius. The high should be about 15, but Sochi in fact the same temperature as it was there. Plenty of snow as I say continuing certainly along the line of the Alps. So when it comes to Davos, I can promise you, Richard, there's plenty of snow in the forecast for the next few days, and those temperatures, as you might expect, just hovering a few degrees above freezing. So, perfect for your arrival.

QUEST: Well, you know, we -- the question is whether the snow lasts all week or does it warm up and disappear. We haven't time to go about that now, but we will -- I will be grilling you -


HARRISON: Grilling me.

QUEST: -- during the course of the (inaudible) airport.

HARRISON: All right then.

QUEST: Grilling. Jenny Harrison at the World Weather Center. Some news - - I need to update you. Moody's has just upgraded Ireland -- just a notch or two -- Baa3. That's not a huge upgrade, but it does mean that Ireland's debt is at an investment grade, and the reason Moody's said so was because of growth potential in the Irish economy that fiscal consolidation of the Irish government and the exit from the EUI and their plan, which is on schedule.

When we come back after the break, few men understand the sharp end of U.S. surveillance better than Julian Assange. An exclusive interview with the founder of WikiLeaks from the Ecuadorian Embassy in London.


QUEST: Returning to our top story tonight, Julian Assange says the American surveillance reforms offer no protection to U.S. businesses. The WikiLeaks founder was speaking exclusively to CNN from the Ecuadorian Embassy in London where he continues to seek asylum. Assange says the lack of decisive action is hurting the American technology industry.

JULIAN ASSANGE, FOUNDER, WIKILEAKS: What we didn't hear from the president was any meaningful protection of U.S. business. And, you know, I've been involved in tech industry for a long time, and I know my friends in the U.S. are really hurting as a result of NSA -- of what has happened to the NSA. As far as the outside world is concerned, the United States has become an archipelago of coercion. Where any person you are dealing with in business -- at Google or Facebook or Yahoo or a telecommunications company might have become secretly an agent of the National Security Agency because they're ordered to do so by the FISA court and they are forced to keep that secret all through the mechanism of national security (inaudible).

Female: Let me talk about -

ASSANGE: So at the moment Europe has much more competitive protections than the United States for Cloud data, IBM's exports of its mainframe computer to China this year -

Female: Right.

ASSANGE: -- cut back 40 percent --

Female: Julian, let me -- let ask you here -

ASSANGE: -- the U.S. tech industry is hemorrhaging -

Female: Right.

ASSANGE: -- and there's no protection, no meaningful protection given (inaudible).

Female: I understand. I understand your point there because there are at least a group of people from the telecommunications business who did this - - the president who complained that there were problems in terms of competition saying that their own software was being tainted -- that was a problem to get public trust --


Female: -- if you will for those particular companies. That is a valid point. But the president did acknowledge that the U.S. has gone too far in spying on world leaders. He's saying that, you know, if he wants to talk to the German chancellor Angela Merkel, he can pick up the phone and call here, that he's not necessarily going to spy on foreign leaders, but still spy on foreign governments. Now, I want you to listen to the distinction the president made.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Now let me be clear, our intelligence agencies will continue to gather information about the intentions of governments as opposed to ordinary citizens around the world in the same way that the intelligence services of every other nation does. We will not apologize simply because our services may be more effective.

Female: Isn't that an important distinction here? I mean, he does give some assurances that you know this is not going to be something that's going to be done nilly-willy here -- that they will have to have at least some sort of national security concern if they're going to look at these foreign leaders and foreign governments. And he makes that distinction.

ASSANGE: Well, we heard a lot of lies here in this speech by Obama. He said for example --

Female: How so?

ASSANGE: -- that the National Security Agency has never -- has never abused what it has done. When the FISA has found -- even the FISA court has found -- again and again and again that it has done just that. So, if the National Security Agency is interpreting what national security means, the secret court, FISA, is interpreting what national security means, well, of course these are ambiguous, woolly terms. And in a secret institution, they gradually become corrupted over time. That's precisely how we ended up in this place.

Female: But specifically talk about the world leaders if you will --

ASSANGE: But in OK, you can say that we're not going to spy on Angela Merkel or --

Female: Yes, go ahead.

ASSANGE: -- yes, we're not going to spy on Angela Merkel or David Cameron -- not going to spy on Angela Merkel or David Cameron or you could say the Australian prime minister, sure, but you don't spy -- maybe you're just going to spy on everyone else that they talk to.


QUEST: I'll have a "Profitable Moment" after the break. (RINGS BELL).


QUEST: Tonight's "Profitable Moment." As you can tell, we are in London this evening as we get ready to head off to the Swiss mountains and the annual economic forum at Davos -- the World Economic Forum. That of course is last year's broadcast. The only thing you have remember about Davos is any extremity that gets left out into the open will eventually freeze in a rather painful way. But be that as it may, people used to go to Davos because that's where the air was fresh, the sanatorium were there, and you could recover from tuberculosis, pneumonia and other nasty things.

This time we go to Davos because we're trying to recover from an economic crisis and hopefully those people who are there have the answers. We'll have the biggest names that you can imagine in politics, academia, business and government. And they will be right here on "Quest Means Business" next to me in the cold. And that's "Quest Means Business" for tonight. I'm Richard Quest in London. Whatever you're up in the hours ahead, (RINGS BELL) hope it's profitable. I'll see you in Davos on Monday.