November 29, 2023

Berkshire Hathaway Reports Strong 3rd Quarter

Berkshire earned $3.92 billion, or $2,373 per Class A share, in contrast to $2.28 billion, or $1,380 per share, a year earlier. Book value, Mr. Buffett’s preferred measure of the company’s worth, rose to $111,718 per Class A share, up 11.9 percent since year end.

The conglomerate, with holdings that include ice cream and insurance companies, employs more than a quarter-million people worldwide. Berkshire said its cash holdings grew to $47.78 billion, up $10 billion from the start of the year.

Mr. Buffett told CNBC last week that he was “salivating” for a major acquisition after two deals of more than $20 billion each fell through in the last few months. He knocked off a bit of that cash on Friday with a deal to buy the toy and party supply company Oriental Trading, though at $500 million it has little chance of “moving the needle,” as he has said he would like to do.

Berkshire said in a quarterly filing with securities regulators late Friday that it spent $1.8 billion in total on smaller acquisitions in the first nine months of the year. Many of those deals are never announced.

Berkshire said underwriting profits in its insurance unit fell sharply in the third quarter compared with a year ago, when the business had a one-time gain. One bright spot was the auto insurer Geico, whose underwriting gain nearly quadrupled on a higher policy count and better pricing.

The company’s Burlington Northern Santa Fe railroad reported a gain in revenue on higher volumes, leading to stronger earnings.

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DealBook: JPMorgan’s 2011 Profit Rises 9%

JPMorgan Chase kicked off bank earnings season on Friday with news that its profit rose 9 percent last year, a report diminished modestly by the recent turmoil on Wall Street and a weak fourth quarter.

The bank turned a $19 billion profit in 2011, up from $17.4 billion a year earlier, as its credit card business and commercial lending operation showed signs of improving. The results, which amounted to $4.48 a share, fell slightly short of analysts’ estimates of $4.53 a share.

In particular, the profit engine stalled in the fourth quarter, when JPMorgan earned $3.7 billion, or 90 cents a share, down from $4.8 billion, or $1.12 cents a share, in the same quarter a year earlier. The results matched analysts’ estimates for the period.

The fourth-quarter slump was owed in part to a slowdown in JPMorgan’s sprawling investment bank, which suffered from the sluggish economic recovery in the United States and concerns that the European debt crisis will sweep across the continent.

The investment bank booked a $567 million accounting loss in the fourth quarter tied to the perceived riskiness of its own debt, reversing a one-time gain from last quarter that propped up earnings across Wall Street. In all, the group’s profits sank 52 percent to $726 million in the fourth quarter.

Despite the turmoil in the fourth quarter, Jamie Dimon, JPMorgan’s chairman and chief executive, highlighted the firm’s gradual progress amid broader economic woes.

“I am proud of the work our 260,000 employees have done this past year to continue the Firm’s 200-year tradition of showing leadership and responsibility during challenging times,” Mr. Dimon said in a statement.

The bank’s earnings report comes a day after Mr. Dimon announced the second major shuffling of his management team in a year. Jay Mandelbaum, head of strategy and business development, will leave the bank. And Barry Zubrow, JPMorgan’s risk management chief who guided the bank through the financial crisis, will now head corporate regulatory affairs, among other changes.

With the steady growth in profits last year, JPMorgan has emerged from the crisis as one of Wall Street’s most dominant firms. In 2011, JPMorgan stripped Bank of America of its title as the nation’s biggest bank by assets. Bank of America is still struggling to shed the legacy of the subprime mortgage mess.

“JPMorgan is in the best position for no other reason than they don’t have the troubles that Bank of America has,” said Jim Sinegal, an analyst with the research firm Morningstar.

But the earnings improvement last year was somewhat overshadowed by the fourth quarter woes and a drop in revenue. Revenue fell to $99.8 billion, down from $104.8 billion last year, as new federal rules reined in fees tied to overdrafts and debit cards.

The revenue struggles are not unique to JPMorgan, a diversified bank seen as a good gauge for the performance of Wall Street. When the nation’s other big banks — Goldman Sachs, Morgan Stanley, Citigroup and Bank of America — report earnings next week, most are expected to detail similar slowdowns in revenue.

“It’s hard to think of a bright spot on the revenue side,” said Mr. Sinegal. “That issue is going to linger.”

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