Shows & Panels
- The 2014 Big Picture on Cyber Security
- AFCEA Answers
- Ask the CIO
- Building the Hybrid Cloud
- Connected Government: How to Build and Procure Network Services for the Future
- Continuing Diagnostics and Mitigation: Discussion of Progress and Next Steps
- Federal Executive Forum
- Federal Tech Talk
- The Future of Government Data Centers
- The Future of IT: How CIOs Can Enable the Service-Oriented Enterprise
- The Intersection: Where Technology Meets Transformation
- Maximizing ROI Through Data Center Consolidation
- Moving to the Cloud. What's the best approach for me
- Navigating Tough Choices in Government Cloud Computing
- The New Generation of Database
- Satellite Communications: Acquiring SATCOM in Tight Times
- Targeting Advanced Threats: Proven Methods from Detection through Remediation
- Transformative Technology: Desktop Virtualization in Government
- The Truth About IT Opex and Software Defined Networking
- Value of Health IT
- Air Traffic Management Transformation Report
- Cloud First Report
- General Dynamics IT Enterprise Center
- Gov Cloud Minute
- Government in Technology Series
- Homeland Security Cybersecurity Market Report
- National Cybersecurity Awareness Month
- Technology Insights
- The Cyber Security Report
- The Next Generation Cyber Security Experts
Shows & Panels
Berkshire Hathaway's 2Q profit jumps 46 percent
Friday - 8/2/2013, 9:09pm EDT
AP Business Writer
OMAHA, Neb. (AP) -- Berkshire Hathaway Inc.'s second-quarter profit jumped 46 percent as Warren Buffett's company reported big paper gains on the value of its investments and derivative contracts.
On Friday, Berkshire reported net income of $4.54 billion, or $2,763 per Class A share. That's up from $3.1 billion, or $1,882 per Class A share, last year.
The biggest factor behind the big swing in earnings was the estimated value of Berkshire's investments and derivatives. This year, those were worth $622 million. Last year, Berkshire recorded a $612 million paper loss on those.
Berkshire's revenue grew 16 percent to $44.69 billion as its more than 80 subsidiaries generally performed well.
The three analysts surveyed by FactSet expected Berkshire to report earnings per Class A share of $2,163.63.
Several years ago, Berkshire sold derivative contracts that are tied to either the value of several global stock indexes or credit defaults. Berkshire must estimate the value of those contracts every time it reports earnings even though the contracts won't mature for at least several more years.
So the true value of the derivatives won't be known until later, but they can create big swings in Berkshire's net income from quarter to quarter.
Without Berkshire's investments and derivatives, the company based in Omaha, Neb., reported operating earnings of $3.92 billion, or $2,384 per Class A share. That's up from $3.72 billion a year ago, or $2,252 per Class A share.
Berkshire's BNSF railroad performed well in the quarter and contributed $884 million to the conglomerate's profits, up from $802 million a year ago.
BNSF said volume was up 3 percent this year and rates improved 2 percent as the railroad hauled more coal, crude oil and intermodal containers of products. Berkshire said higher natural gas prices and low utility stockpiles drove coal demand higher.
Edward Jones analyst Tom Lewandowski said Berkshire's 2010 acquisition of BNSF looks better and better as time passes.
"The ability to deliver consistent results that grow steadily is very attractive," said Lewandowski, who recommends buying Berkshire stock.
Berkshire's insurance businesses, which include reinsurance giant General Re and car insurer Geico, contributed $530 million to Berkshire's net income in the quarter. That was down from $619 million last year mostly because Berkshire recorded $189 million in pretax losses related to flooding in Europe.
Several of Berkshire's businesses are tied to the housing market, including Acme Brick, Shaw carpet and the HomeServices of America network of real estate brokers.
All of those companies posted stronger profits as the housing market continued to recover. Berkshire said its real estate brokerage revenues jumped 29 percent to $115 million in the quarter.
Berkshire owns an assortment of companies, including clothing, furniture and jewelry firms. Its insurance and utility businesses typically account for more than half of the company's net income. It also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.
Follow Josh Funk at www.twitter.com/funkwrite
Berkshire Hathaway Inc.: www.berkshirehathaway.com
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.