Nov 052010
 

I am quoted in this Bloomberg article on Warren Buffett:

Berkshire Profit Declines 7.7% on Derivative Losses (Update2)

By Andrew Frye

Nov. 5 (Bloomberg) — Warren Buffett’s Berkshire Hathaway Inc., which manages a derivatives portfolio of more than $60 billion, said third-quarter profit declined 7.7 percent on losses tied to equity-linked contracts.

Net income fell to $2.99 billion, or $1,814 a share, from $3.24 billion, or $2,087, a year earlier, Omaha, Nebraska-based Berkshire said today in a statement. Operating earnings, which exclude some investment results, were $1,692 a share, missing the $1,736 average estimate of five analysts surveyed by Bloomberg.

Earnings from Berkshire’s energy and utilities unit, including MidAmerican and PacifiCorp, decreased 4.3 percent to $331 million as energy costs climbed.

Marmon’s earnings increased 9.3 percent to $212 million. The business, purchased from the Pritzker family in 2008, has operations including railroad tank cars and making wire and cable products.

Profit at furniture stores, jewelry shops and the candy business increased 36 percent to $15 million. Earnings at McLane rose 39 percent to $89 million. McLane delivers food and alcoholic beverages by truck to clients including Wal-Mart Stores Inc. and convenience shops.

The global economy is “inching forward” and Berkshire is hiring at some of its subsidiaries, Buffett said in remarks broadcast in Israel last month. Berkshire, which employs more than 200,000 people, cut about 20,000 jobs last year.

“Warren Buffett positions his company long-term,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. “He doesn’t move in and out of sectors depending on the economic cycle.”

Union Pacific

Railroads have reported earnings increases this year as the expanding economy boosts demand for freight hauling. Union Pacific Corp., the largest U.S. railroad by 2009 revenue, posted a 51 percent profit gain in the third quarter as auto shipments advanced. CSX Corp.’s Michael Ward, CEO of the country’s No. 2 publicly traded railroad, said “nearly all markets” produced volume growth in the third quarter.

Buffett, who sold stock and debt to help finance the Burlington Northern deal, is making smaller acquisitions as Berkshire’s earnings help rebuild capital. In October, McLane bought a Tennessee liquor distributor. Berkshire’s real estate brokerage said this week it had acquired a North Carolina-based home intermediary.

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net.

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net.

Last Updated: November 5, 2010 19:20 EDT

The entire article is available at: 

http://noir.bloomberg.com/apps/news?pid=20601087&sid=auIuSzNTxTsA&pos=3

 

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