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Buffett's Berkshire has first loss since 2001

hangarrat

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OUCH - this does not bode well for any of us

Buffett's Berkshire has first loss since 2001

http://www.bigsandynews.com/publica...ws.yahoo.com/s/nm/20090508/bs_nm/us_berkshire

By Jonathan Stempel Jonathan Stempel – Fri May 8, 6:49 pm ET
NEW YORK (Reuters) – Warren Buffett's Berkshire Hathaway Inc posted its first quarterly loss since 2001, hurt by losses on derivative contracts, a big investment in the oil company ConocoPhillips, and the weakening economy.
The net loss for the Omaha, Nebraska-based insurance and investment company was $1.53 billion, or $990 per Class A share, and compared with a profit of $940 million, or $607, a year earlier.
Excluding investments, operating profit fell 12 percent to $1.71 billion, or $1,100 per share, from $1.93 billion, or $1,247. That profit was in line with the $1.7 billion that Buffett estimated at Berkshire's annual meeting last Saturday.
Analysts on average expected operating profit of $1,087 per share, according to Reuters Estimates. Revenue fell 9.5 percent to $22.78 billion. Book value per Class A share fell 6.1 percent to $66,248, following a 9.6 percent drop in 2008.
Buffett said many of Berkshire's nearly 80 businesses were hurt by the recession and lower consumer spending, including housing-related units that make bricks, insulation and paint.
Berkshire last had a quarterly loss in the third quarter of 2001, because of insurance claims from the September 11 attacks. It called the global credit crisis "temporary," but said the company could face "significant" pressure if it persists.
"Results reflect the overall economy, which Buffett does not expect to recover quickly," said Michael Yoshikami, president of YCMNET Advisors in Walnut Creek, California, which owns Berkshire shares.
Two credit rating agencies took away Berkshire's "triple-A" ratings in 2009, including Moody's Investors Service. Berkshire owns 20.4 percent of Moody's parent, Moody's Corp.

WRITEDOWNS
The results reflected $2.01 billion of writedowns on investments, including $1.9 billion tied to ConocoPhillips.
Buffett invested $7.01 billion in the company's stock, but in February admitted to "terrible timing" for investing ahead of a plunge in oil prices from their record high near $150 a barrel. Berkshire said it sold 13.7 million shares in the first quarter, leaving it with 71.2 million. It said it has since sold more and is likely to keep selling shares at a loss.
Results also included $986 million of derivatives losses, including $675 million of payments tied to junk bond defaults as a result of several corporate bankruptcies. Berkshire has since paid another $450 million because of other defaults.
The company as of March 31 had $13.85 billion of paper losses on derivatives contracts designed to make money if stock indexes rise and higher-risk bonds do not default. Accounting rules require Berkshire to report these losses with earnings.
"Conoco reflected his bad decision to buy when oil prices were high and the losses reflect how Buffett is not afraid to admit a mistake," Yoshikami said. "The derivative problems seem to have accelerated, though Buffett is probably doing better this quarter with the stock index derivatives."
The stock index derivative contracts mature between 2019 and 2027 and Buffett said last week he expects them to be profitable. Contracts tied to junk bond defaults mature between 2009 and 2013, and Buffett admitted they may lose money.
The Standard & Poor's 500 fell 11.7 percent in the first quarter, while S&P said the U.S. junk bond default rate rose to 5.42 percent from 3.96 percent at year end.
In Friday trading, Berkshire Class A shares closed up $905 at $95,295, while its Class B shares rose $80 to $3,132.

INSURANCE UNITS GAIN
Insurance underwriting profit rose 21 percent to $219 million, while insurance investment income rose 29 percent to $1.03 billion. Earned premiums rose 32 percent to $8.18 billion, with most of the increase in reinsurance operations.
Pre-tax underwriting gains at auto insurer Geico Corp fell 20 percent to $148 million, as higher average claims offset a 10.3 percent increase in the number of policies.
General Re Corp had a $16 million pretax underwriting loss, hurt by storm losses, while Berkshire Hathaway Reinsurance Group's pretax underwriting gain grew sevenfold to $203 million, helped by a transaction with Swiss Re.
In other businesses, net income from utilities and energy fell 36 percent to $203 million, hurt by lower energy costs, while income from manufacturing and retailing businesses fell 47 percent to $258 million.

The economy also led to a drop in business travel, causing Berkshire's NetJets unit, which provides private jet services to executives, to lose $96 million before taxes.

Berkshire's $25.55 billion cash stake was roughly unchanged from year end. The company later invested $3 billion toward Dow Chemical Co's purchase of rival Rohm and Haas Co.
Buffett has transformed Berkshire since 1965 into a roughly $148 billion conglomerate by acquiring well-run businesses and investing in stocks such as Coca-Cola Co, Procter & Gamble Co and Wells Fargo & Co. (Reporting by Jonathan Stempel, Additional reporting by Lilla Zuill; editing by Matthew Lewis and Andre Grenon)
 

F/O

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Yeah..what's your point? Another fearmonger on the board? Who are you, Dick Cheney? What's next, another post about furloughs? Please...
 

clickclickboom

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Yeah..what's your point? Another fearmonger on the board? Who are you, Dick Cheney? What's next, another post about furloughs? Please...


Do you live in a cave or is your " not me " reality different than everyone elses?


The market is in the crapper, This country is near collapse and the hyper inflation that will detrimently affect all of us into the future has not even begun.

Nobody and I repeat Nobody is out of the woods even you..
 

glasspilot

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Stop listening to Glen Beck. You'll feel a lot better.
 

HazMat

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Netjets lost 96 million in a quarter I am not feeling good about anything. I just hope in changes soon
 

jppt2000

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Netjets lost 96 million in a quarter I am not feeling good about anything. I just hope in changes soon

Imagine that!
Less than a day or two and a topic that was discussed on union web board appears on
FI.
Flight Info has more than its share of Netjets haters.
 

gunfyter

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Buy low sell high...

Now is the time to buy NetJets stock.

In considering the $96M. I believe ... Some $40M-$45M was not operational loss. It was loss required to be reported because of Mark-to-Market accounting.

To explain ... The value of Jet airplanes is lower now than it was in the recent past. NJ has a core-fleet of several airplanes, and has possession of unsold or returned shares we receive when a contract expires. Normally the value of those assets does not decline or rise as quickly or on the scale aircraft values have declined recently ... But this past quarter they have declined adding up to about $45M.

What this means is ... unless aircraft values decline as rapidly in the future as they have in recent past ... we should not see this component of loss in future statements... And if Aircraft values rebound ... those rebounding values would be reflected in future reports of income or loss.

I personally do not see airplane values going down much more ... not sure when they will rebound. kinda like housing values in Detroit... With homes selling for $1000 ... they can only go up in value -- but when?
 

hangarrat

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News like this has a huge impact on all the fracs. U don't hav to be a hater to be concered for the industry as a whole.

Glenn Beck has been talking about the direction of the ecomomy differently than other media sources. Others are saying housing is up, unemployment is down and we are soon to recover. I think they a mischaracterizIng what is really going on.

I am not an extremist by any means but news like this is very bad for everyone. FBO's, catering maintenance, all the service industries that support what we do are being affected.

It just makes me very concerned. I would like to see some "real" signs of improvement.
 

gret

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Here is the quote from the 10-Q-

"Revenues of the other service businesses were $1,506 million in the first quarter of 2009, a decrease of $620 million (29%) compared to 2008. Pre-tax earnings were $14 million in 2009, a decrease of $195 million (93%) from 2008. Revenues of NetJets in 2009 as compared to 2008 declined significantly as a result of an 80% decline in aircraft sales as well as lower flight revenue hours. The decrease in revenues and pre-tax earnings reflects the negative impact of the global recession on substantially all of Berkshire’s other service businesses and in particular, NetJets’ fractional ownership business which reported a pre-tax loss of $96 million (includes writedowns of aircraft of approximately $55 million) as compared to pre-tax earnings of $45 million in 2008."

In another part of the filing, it said aircraft orders would be delayed.

In the 4th qtr of 2008, they wrote down aircaft by $53 million making the total for the last 6 months approximately $108 million.

Let's hope flying does pick up as annualized losses are approaching $400 million.

FlightSafety appears to have generated pre tax profits of $110 million for the qtr.
 

Andy Neill

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Buy low sell high...

Now is the time to buy NetJets stock.
Sage advice....but there is no such stock. Since it is a subsidiary of Berkshire-Hathaway, you would have to buy BRK.A at a little over $95,000 per share or BRK.B at a bargain $3100 per share.
 

sshrae

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Sage advice....but there is no such stock. Since it is a subsidiary of Berkshire-Hathaway, you would have to buy BRK.A at a little over $95,000 per share or BRK.B at a bargain $3100 per share.

I think he is metaphorically speaking.
 

jehtplane

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Imagine that!
Less than a day or two and a topic that was discussed on union web board appears on
FI.
Flight Info has more than its share of Netjets haters.

Some of you guys sure get your panties in a bunch in a hurry. Bad news about other fractionals gets put on here all of the time, so somebody put some INFORMATION about the industry up on a public board. I read this article on CNN.com yesterday.
 

jppt2000

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Some of you guys sure get your panties in a bunch in a hurry. Bad news about other fractionals gets put on here all of the time, so somebody put some INFORMATION about the industry up on a public board. I read this article on CNN.com yesterday.

I guess misery loves company.
 

DUATS

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Sage advice....but there is no such stock. Since it is a subsidiary of Berkshire-Hathaway, you would have to buy BRK.A at a little over $95,000 per share or BRK.B at a bargain $3100 per share.

But you can get in on Flexjet of about $3.50 a share for Bombardier stock - and that's in Canadian dollars!
 

o2bflyn

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Imagine that!
Less than a day or two and a topic that was discussed on union web board appears on
FI.
Flight Info has more than its share of Netjets haters.

Not sure why that shocks you so......it not like its exclusively union business. BRK is a firm that a lot of people in and out of the Aviation look to as a barometer.

That being said......not kidding they lost money....its a recession!
 

jppt2000

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Not sure why that shocks you so......it not like its exclusively union business. BRK is a firm that a lot of people in and out of the Aviation look to as a barometer.

That being said......not kidding they lost money....its a recession!

Not shocked, just impressed by the folks who can't wait to break bad news. :)
Reading the posers chime in with expert commentary is actually entertaining :)
 

o2bflyn

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Not shocked, just impressed by the folks who can't wait to break bad news. :)
Reading the posers chime in with expert commentary is actually entertaining :)

I gotcha....read your post wrong. I agree, there are some real "doomsday" people out there just waiting to be the first one to chime in.
 

SAVJagsfan

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Wow, Flight Safety made $110 million last quarter?

Flight Safety Savannah is shutting the doors for one week in July (1st week) without pay for everyone in the center. Well not everyone, a few mission critical people will be around.

You can take vacation and recieve your pay.
 
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