Berkshire Hathaway reports first loss in seven years
Filed under: Company News, Earnings
It's official. Berkshire Hathaway (BRK.A) lost money last quarter. Warren Buffett mentioned the possibility of a loss at the company' annual meeting, but the complete figures have now been given to the public and filed with the SEC.
Berkshire lost $1.53 billion compared to a profit of $940 million last year. Revenue dropped almost 10 percent to $22.78 billion.
The company said that the damage was mostly done by the weak economy and losses on derivatives contracts and high yield bonds.. Much of this was tied to junk bond losses due to bankruptcies in companies that issued the bonds, but Berkshire was hurt by investments in stock index futures. The majority of these do not mature for several years. Accounting rules force the write-downs anyway.
There is one irony in the earnings announcement. Buffett has been vocal in his criticism of derivative investments. He can explain away the part of Berkshire's losses due to the economy. He has to face the fact that he did not "walk the walk" on risky financial instruments.
Douglas A. McIntyre is an editor at 24/7 Wall St.
Why is Oprah going to cable? Hint: It's nothing to get teary about
Kisses from Hershey: Candymaker may court Cadbury with $17 billion bid
D-Day for Harry Reid: Can he wrangle 60 votes for Senate health reform bill?
