Berkshire Hathaway swings to $1.5-billion loss in first quarter
Billionaire Warren Buffett’s company reported a $1.5-billion first-quarter loss as it wrote down its ConocoPhillips investment and mostly unrealized derivative losses helped drag Berkshire Hathaway Inc.’s results below last year’s earnings of roughly $900 million.
Berkshire Hathaway said Friday that it recorded a loss of $990 a share in this year’s first quarter, down from profit of $607 per Class A share in the same period a year earlier. This was Berkshire’s first quarterly loss since 2001’s third quarter, when it suffered large insurance losses as a result of the Sept. 11 terrorist attacks.
Buffett has acknowledged a mistake in last year’s purchase of a large amount of ConocoPhillips stock when oil and gas prices were near their peak. Berkshire sold 13.7 million of its 79.9 million shares of ConocoPhillips during the first quarter to generate a loss that could offset past capital-gains taxes.
Berkshire’s revenue fell 9.5% in the quarter, to $22.8 billion.
Berkshire executives say the company’s operating earnings are a better measure of how the company is performing because those figures exclude derivatives and investment gains or losses. Berkshire reported $1.71 billion in operating earnings in this year’s first quarter, down nearly 12% from $1.93 billion a year earlier.
Buffett said during the company’s annual meeting last Saturday that Berkshire’s utility and insurance businesses performed fairly well during the quarter because neither was greatly affected by the recession, but two one-time items affected the utility earnings. He said insurance underwriting profit should be up because it was not tied to the recession.
Many of Berkshire’s other businesses have been hurt by the slowdown in consumer spending. Berkshire owns more than 60 subsidiaries, including insurance, clothing, furniture and candy companies, as well as restaurants, natural gas and corporate jet firms. Berkshire also has major investments in firms such as Coca-Cola Co. and Wells Fargo & Co.
