OMAHA, Neb. (AP) – Berkshire Hathaway's first-quarter profit plunged along with the paper value of its investments, but the company said Saturday that most of its wholly-owned businesses performed well.
The company reported profit of $12.7 billion, or $8.825 per Class A share, for the quarter. That's about one-third of last year's $35.5 billion, or $24,377 per A share.
This number was heavily influenced by the significant decline in the paper value of Berkshire's investments. Buffett advises investors to pay more attention to a conglomerate's operating income, which excludes the amount invested. Operating profit increased 39% to $11.222 billion from $8.065 billion a year ago, as the insurance company performed well.
On a per-share basis, operating numbers for the first quarter of this year came to $7,796.47 per Class A share, beating the expectations of three analysts surveyed by FactSet Research ($6,701.87 per Class A share).
Mr. Buffett sold $17 billion in stocks during the quarter, including cutting about 13% of Berkshire's massive Apple stake. At $135.4 billion, the iPhone maker still accounts for the largest share of Berkshire's $364 billion portfolio. Buffett said he expects this situation to continue until his successor, Greg Abel, takes over.
Berkshire's estimated value of Apple's stock suggests that Buffett has sold more than 100 million shares. Buffett has said in the past that he invested in Apple stock because consumers are passionate about the company's products, similar to other consumer brands he loves, such as Berkshire's See's Candy.
Apple CEO Tim Cook, who was attending the Berkshire meeting, told CNBC that he remains honored that Berkshire is a major shareholder and that Berkshire will reveal the sale on Saturday. He said he had known about the sale for some time.
Berkshire reported that the insurer's underwriting profit was $2.6 billion, up from $911 million a year earlier, as Geico in particular continued to improve its performance. However, BNSF Railway's profit fell 8% to $1.143 billion.
Most of Berkshire's other companies had solid results, including a 72% increase in operating income in the utilities division, which added $717 million to Berkshire's total.
Revenue for the quarter increased 5% to $89.87 billion. Two analysts who provided estimates to FactSet had expected $87.044 billion.
With no major acquisitions in sight, Berkshire's cash pile is at a record $188.993 billion, despite spending $2.6 billion on stock buybacks in the first three months of this year. increased to Its holdings, which include Geico Insurance, BNSF Railway, several major power companies and dozens of others, continue to generate mountains of cash.
“We'd love to spend money, but we won't spend money unless we do something that has little risk and will make us a lot of money,'' Buffett said.
