Berkshire Hathaway’s Profit Drops 8% After Derivatives Losses

[Twisted Titan]

http://www.nytimes.com/2010/11/06/business/06berkshire.html?src=busln




Berkshire Hathaway posted an 8 percent decline in third-quarter income Friday as a result of losses on its derivatives portfolio, but the Burlington Northern Santa Fe railroad and many other operating companies performed well.


The company, run by Warren E. Buffett, said it earned nearly $3 billion, or $1,814 per Class A share, during the quarter, down from $3.24 billion, or $2,087 a share, a year earlier. Revenue grew 21 percent, to $36.3 billion from $29.9 billion.

The biggest factor in the decline was a $95 million loss on Berkshire’s derivatives, some of which are tied to equity markets and credit-default swaps. Last year’s third-quarter profit was helped by a mostly unrealized $1.1 billion gain as the value of derivative contracts tied to equity indexes soared.

Mr. Buffett has said Berkshire’s operating earnings are a better measure of how the company is performing because those figures exclude the value of derivatives and investment gains or losses. Berkshire, based in Omaha, said its operating earnings rose 36 percent, to $2.8 billion in the quarter, over last year’s $2.06 billion.

On that basis, Berkshire earned $1,692 a share, exceeding the $1,676 a share estimated by three analysts surveyed by Thomson Reuters. The Burlington Northern railroad added $706 million, helped by increases in industrial, agricultural and consumer product shipping. The railroad’s revenue grew 22 percent, to $4.4 billion.

Berkshire said results at Fruit of the Loom, Iscar tools and Forest River RVs improved.

[Twisted Titan]

http://webcache.googleusercontent.com/search?q=cache:Q4lc7Hz-5HgJ:seekingalpha.com/article/34606-buffett-on-derivatives-a-fool-s-game+when+did+warren+buffet+say+derivitives+where+ were+wepons+of+mass+destruction&cd=3&hl=en&ct=clnk&gl=us




Mr. Buffet repeated his warning on the dangers of derivatives, saying that excessive borrowing by traders, investors and corporations will eventually lead to significant dislocation in the financial markets.

In fielding a question about derivatives, which he once referred to as "financial weapons of mass destruction," Mr. Buffett told shareholders that he expects derivatives and borrowing, or leverage, would inevitably end in huge losses for many financial participants.

"The introduction of derivatives has totally made any regulation of margin requirements a joke," said Mr. Buffett, referring to the U.S. government's rules limiting the amount of borrowed money an investor can apply to each trade. "I believe we may not know where exactly the danger begins and at what point it becomes a super danger. We don't know when it will end precisely, but...at some point some very unpleasant things will happen in markets."


Cleary the Old boy has lost his edge........

[kregener]

All you need to know about Buffet...

http://i152.photobucket.com/albums/s167/Kregener/Government/arnierothschild.jpg

[ShortJohnSilver]

Actually BRK lost about $2 Billion more than reported:


A new just released stunner discloses the unprecedented level of hypocrisy attained by Warren Buffett, for whom apparently accounting rules are swell, except when he actually needs to follow them. Reuters has just announced that the U.S. Securities and Exchange Commission questioned Warren Buffett's Berkshire Hathaway in the second quarter on why it was not writing down large losses on shares in Kraft and US Bancorp, but the company insisted its accounting was right. The issue arises out of $1.86 billion in "unrealized" losses in Kraft and USB, which had a duration of more than 12 months, and should have thus been written down, as is required of most non-monopolistic companies which believe the world revolves around them. Berkshire's response: "We believe it is reasonably possible that the market prices of Kraft Foods and U.S. Bancorp will recover to our cost within the next one to two years assuming that there are no material adverse events affecting these companies or the industries in which they operate."

from:

http://www.zerohedge.com/article/berkshire-takes-accounting-rules-its-own-hands-tells-sec-stuff-it

Basically, instead of earning $3B they earned $1B and lied about not taking a bath on companies they own to the tune of $2B ...

Hmmm, having assets on your books and claiming those assets at 100% of what you paid for them instead of their true value ... is old Warren going to become a bank next?

[mick silver]

he will get a bailout ... didnt we give him money to buy his train set

[Twisted Titan]

Actually BRK lost about $2 Billion more than reported:


A new just released stunner discloses the unprecedented level of hypocrisy attained by Warren Buffett, for whom apparently accounting rules are swell, except when he actually needs to follow them. Reuters has just announced that the U.S. Securities and Exchange Commission questioned Warren Buffett's Berkshire Hathaway in the second quarter on why it was not writing down large losses on shares in Kraft and US Bancorp, but the company insisted its accounting was right. The issue arises out of $1.86 billion in "unrealized" losses in Kraft and USB, which had a duration of more than 12 months, and should have thus been written down, as is required of most non-monopolistic companies which believe the world revolves around them. Berkshire's response: "We believe it is reasonably possible that the market prices of Kraft Foods and U.S. Bancorp will recover to our cost within the next one to two years assuming that there are no material adverse events affecting these companies or the industries in which they operate."

from:

http://www.zerohedge.com/article/berkshire-takes-accounting-rules-its-own-hands-tells-sec-stuff-it

Basically, instead of earning $3B they earned $1B and lied about not taking a bath on companies they own to the tune of $2B ...




Wow..................

Buffet is full of shit to likes of which I never imagined.

I cant wait for the mountain of lies to come crashing down around the sheep that fawn over this man like he is some dam genius.

T

[ShortJohnSilver]

Wow..................

Buffet is full of sh*t to likes of which I never imagined.

I cant wait for the mountain of lies to come crashing down around the sheep that fawn over this man like he is some dam genius.

T


The man is a "creature of fiat" - watch what happens if the paper-backed financial manipulation scheme merry-go-round ever stops ...