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Berkshire Hathaway Profit Rises 51%

May 4, 2013 by Leave a Comment

Results beat expectations, and were released after Berkshire shares earlier in the day closed at a record high. On Saturday, Warren E. Buffett, the company’s chairman, and Charlie Munger, the vice chairman, will field shareholder questions at the company’s annual meeting in its hometown, Omaha.

Net income increased to $4.89 billion, or $2,977 per Class A share, from $3.25 billion, or $1,966 a share, a year earlier. Operating profit increased 42 percent to $3.78 billion, or $2,302 a share, from $2.67 billion, or $1,615 a share.

Revenue rose 15 percent from a year ago to $43.87 billion.

Analysts on average expected profit of $1,996 a share, according to Thomson Reuters.

Book value a share, Mr. Buffett’s preferred measure of growth, increased 5.5 percent from year end to $120,525 per Class A share, and Berkshire’s cash stake grew over that period to $49.09 billion from $46.99 billion.

About $12 billion of cash is being used to finance a purchase by Berkshire and Brazil’s 3G Capital of the ketchup maker H. J. Heinz.

Operating profit from insurance operations, including the Geico car insurance and General Re reinsurance businesses, doubled to $1.7 billion from $845 million.

Nearly all of the improvement came from underwriting, where profit rose to $901 million from $54 million, in part because of a $255 million pretax gain in its reinsurance business.

Operating profit from noninsurance business rose 12 percent to $2.25 billion from $2 billion.

Berkshire owns more than 80 business units that sell things like athletic apparel, chemicals, furniture and ice cream. It also owns tens of billions of dollars of common stocks like Coca-Cola, International Business Machines and Wells Fargo.

In trading on Friday, Berkshire Class A shares closed up $2,047, or 1.2 percent, at $162,904. Its Class B shares closed up $1.34, or 1.2 percent, at $108.64.

Article source: http://www.nytimes.com/2013/05/04/business/berkshire-hathaway-profit-rises-51.html?partner=rss&emc=rss

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Bits Blog: Former BlackBerry C.E.O. Sold All Company Shares

February 14, 2013 by Leave a Comment

Jim Balsillie with the BlackBerry PlayBook in 2011.Toni Albir/European Pressphoto Agency Jim Balsillie with the BlackBerry PlayBook in 2011.

Jim Balsillie, the former co-chief executive and co-chairman of BlackBerry, has sold all of his shares in the struggling company, a regulatory filing indicated on Thursday.

Mr. Balsillie’s arrival at what was then called Research in Motion in 1992 and his personal investment of $125,000 saved the company in its early days. But Mr. Balsillie’s latest investment move means that he will not gain if the new line of BlackBerry 10 phones revive the company’s fortunes.

A filing with the Securities and Exchange Commission, dated Thursday, showed that Mr. Balsillie held no shares in the company as of the end of December. Mr. Balsillie owned up to 33 percent of the company, now called BlackBerry, before it became publicly traded and he reported holding 5.1 percent of its shares in a previous filing.

When asked about Mr. Balsillie’s pullout, Kris Thompson, a longtime BlackBerry analyst at National Bank Financial, replied: “Who cares?” BlackBerry’s shares initially slipped 7.5 percent to $12.94 in Nasdaq trading Thursday, but had recovered later in the morning.

Following a protracted and severe decline in BlackBerry’s stock price and American market share, Mr. Balsillie stepped down as both co-chief executive and co-chairman along with Mike Lazaridis in January 2012. While Mr. Lazaridis remains on the BlackBerry board as the company’s vice chairman, Mr. Balsillie resigned as a director in March.

A separate securities filing issued on Thursday indicated that Mr. Lazaridis, who co-founded the company, still holds 5.7 percent of BlackBerry’s stock.

Mr. Balsillie could not immediately be reached for comment. Adam Emery, a spokesman for BlackBerry, said the company does not “comment on holdings of individual shareholders.”

Earlier this week Mr. Thompson, the analyst, issued a report that praised many of the features on the new BlackBerry 10 phones but concluded that they will not significantly rebuild the company’s market share. He cited an impending wave of new products from larger competitors and the general lack of desirable and high quality apps for BlackBerry 10.

While Mr. Lazaridis handled the technology side of the company, Mr. Balsillie, an accountant, is widely credited with putting BlackBerry on the stable financial footing that ultimately allowed it to develop the BlackBerry device. He also played a pivotal role in convincing skeptical wireless carriers to carry the company’s first wireless e-mail devices on their networks.

Both men, however, were widely criticized for not responding more effectively and swiftly to the arrival of Apple’s iPhone and phones using Google’s Android operating system. Those smartphones now overwhelmingly dominate a market that BlackBerry created and was once leading.

At various times, Mr. Balsillie and Mr. Lazaridis have sold substantial stakes in BlackBerry to fund educational institutions in Waterloo, Ontario, the company’s hometown.

Article source: http://bits.blogs.nytimes.com/2013/02/14/former-blackberry-c-e-o-sold-all-company-shares/?partner=rss&emc=rss

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Lockheed’s Incoming Chief Forced Out Over Ethics Violation

November 10, 2012 by Leave a Comment

The official, Christopher E. Kubasik, 51, was vice chairman, president and chief operating officer of Lockheed, the world’s largest military contractor. He was to become chief executive on Jan. 1.

Robert J. Stevens, Lockheed’s current chief executive, told reporters that an employee had tipped off the company two weeks ago to Mr. Kubasik’s relationship with another employee. Mr. Stevens said an investigation by outside lawyers had confirmed the assertion, which violated company ethics codes, and led the board to demand his resignation on Friday.

Citing privacy concerns, Mr. Stevens would not disclose details of Mr. Kubasik’s relationship. But Loren Thompson, a military analyst and consultant to Lockheed, said that Mr. Kubasik, who is married, had been involved in a long-standing relationship with a female employee who has since left the company.

Lockheed’s board selected a longtime company executive, Marillyn A. Hewson, to replace Mr. Kubasik as president and chief operating officer now and to become chief executive on Jan. 1.

Mr. Kubasik’s dismissal comes at a crucial time for Lockheed and the military contracting industry in general, as President Obama and Republican leaders in Congress begin to look at ways to cut the federal budget. Military spending, which surged after the 2001 terrorist attacks, has already begun to slow, and Lockheed and other military companies have laid off thousands of workers and are consolidating operations to deal with what Mr. Stevens calls “the new reality.”

Mr. Kubasik’s departure also represents a significant change in what had been a long-anticipated succession at the top of Lockheed. He was considered the heir apparent to Mr. Stevens after forging a strong relationship with Wall Street as Lockheed’s chief financial officer from 2001 to 2007. He was known for his intelligence as well as his sharp and acerbic wit, but within the company, Mr. Thompson said, those characteristics had begun to grate on co-workers. “His sarcasm was less welcome as he rose to one of the top positions in the company,” Mr. Thompson said.

Mr. Kubasik said in a statement, “I regret that my conduct in this matter did not meet the standards to which I have always held myself.”

He earned more than $9.4 million in total compensation in 2011 and could have received substantially more as chief executive. Mr. Stevens earned about $25 million last year. In a filing with the Securities and Exchange Commission late Friday, Lockheed said Mr. Kubasik would receive a $3.5 million separation payment, but would not be entitled to his bonus for 2012. His bonus last year was $2.275 million.

Mr. Stevens, 61, has been Lockheed’s chief executive since 2004 and is retiring from that role.

The board said that Mr. Stevens’s title would shift to “executive chairman” on Jan. 1, signifying that he would play a more active, day-to-day advisory role in 2013 to help Ms. Hewson in her transition. Mr. Stevens said the company had a deep enough bench of executives that he felt comfortable planning to retire from that new role at the end of next year.

Mr. Thompson said that Mr. Stevens, who had brought the company back from financial difficulties, had had enough of dealing with the Pentagon and Congress over problematic acquisition programs and did not want to stay longer.

Ms. Hewson “is unfailingly polite and gracious,” Mr. Thompson said, “and her personality may be better suited than Mr. Kubasik’s to interacting with the government.” In a statement Friday, Mr. Stevens said, “While I am deeply disappointed and saddened by Chris’s actions, which have been inconsistent with our values and standards, our swift response to his improper conduct demonstrates our unyielding commitment to holding every employee accountable for their actions.”

Lockheed, based in Bethesda, Md., has about 120,000 employees and had sales of $46.5 billion last year. It makes the F-35 and other fighter planes, satellites and missile defense systems and provides information technology and security services to government agencies.

Mr. Kubasik had been promoted to president and chief operating officer in April. It was also announced then that he would succeed Mr. Stevens on Jan. 1.

Ms. Hewson, 58, has been an executive vice president in charge of the company’s electronic systems business since January 2010. The board had also decided in April that she would move up to president and chief operating officer when Mr. Kubasik replaced Mr. Stevens.

Ms. Hewson will join Linda Hudson of BAE Systems and Phebe Novakovic, who will become chief executive of General Dynamics in January, in the rarefied world of women who run major military companies.

Ms. Hewson was born in Junction City, Kan., and her father died when she was 9. Her mother, with three of her five children, moved to Alabama, to be near relatives who could help her. Ms. Hewson earned a bachelor’s degree in business administration and a master’s in economics from the University of Alabama and has been with Lockheed Martin since 1983. She has since had 18 management jobs at the company. She has a husband and two sons and said she moved her family eight times along the way.

She once told Fortune that when she interviewed for her first job at Lockheed, in Marietta, Ga., she loved seeing all the planes in the factory. After that, “I never really wanted to work anywhere else,” she said.

Article source: http://www.nytimes.com/2012/11/10/business/lockheed-citing-ethics-violation-says-incoming-chief-has-quit.html?partner=rss&emc=rss

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DealBook: Trial Begins in Battle Between Ronald Perelman and Donald Drapkin

January 25, 2012 by Leave a Comment

Ronald O. PerelmanYana Paskova for The New York TimesRonald O. Perelman

For more than 20 years, Ronald O. Perelman and Donald Drapkin were the best of friends, a relationship cemented as the two financiers bought and sold companies like Revlon and Marvel Comics.

On Tuesday in the Federal District Court in Manhattan, court lawyers for Mr. Drapkin accused his now former friend of being a “nitpicking” boss who reneged on a promise to pay Mr. Drapkin the millions of dollars Mr. Drapkin says he is owed under a 2007 separation agreement, signed when Mr. Drapkin left MacAndrews Forbes, Mr. Perelman’s holding company.

“The company was scrounging around for any excuse not to pay Mr. Drapkin,” Elkan Abramowitz, a lawyer for Mr. Drapkin, told the eight jurors hearing the case. “Do these nitpicking breaches really give the company the right to terminate contracts worth $16 million?”

The trial is to determine whether Mr. Perelman is required to honor Mr. Drapkin’s agreement.

While the two men are battling over roughly $16 million, this is a fight largely about ego, with each man willing to spend potentially millions of dollars in legal fees to prove he is right. Mr. Perelman’s net worth is estimated at more than $12 billion, and while Mr. Drapkin’s net worth is not known, in court he said he never bothered to add up what he made during his time at MacAndrew Forbes, estimating it was more than $200 million. Mr. Drapkin now runs a hedge fund in New York.

Mr. Perelman was not in court on Tuesday, but his name was invoked multiple times, and he is likely to testify later this week.

Mr. Drapkin did see some of his former colleagues, including Barry F. Schwartz, who is executive vice chairman and chief administrative officer of MacAndrews Forbes. The two, who had worked together for years, sat near each other at the trial but did not appear to speak. On the stand, Mr. Drapkin, who was argumentative and often refused to directly answer many questions on cross-examination, commented that Mr. Schwartz once “promoted himself” to a new post at the company after the death of a colleague. Mr. Perelman’s lawyer quickly objected to the comment.

At one point the judge overseeing the trial, Paul G. Gardephe, asked the parties to stop talking over each other.

“Try to leave the comments out,” he warned MacAndrews Forbes’s lawyer, Matthew Menchel, who grew increasingly agitated during his questioning of Mr. Drapkin. “You know what a laptop is, don’t you?” Mr. Menchel barked at Mr. Drapkin.

The trial centers on two issues: whether Mr. Drapkin failed to turn over documents required under his separation agreement and whether he tried to induce a key MacAndrews Forbes executive to leave the company. Mr. Perelman says his old friend did both these things, leaving him no choice but to stop honoring the separation agreement.

Mr. Drapkin’s lawyer argued in court that the separation agreement requires his client to hand over all corporate documents “not otherwise available to the company” and that Mr. Drapkin never had documents that weren’t otherwise available to MacAndrews Forbes.

Mr. Drapkin, however, remained in possession of hundreds of corporate documents that needed to be deleted in accordance with the separation agreement, MacAndrews Forbes argued.

The proceedings followed a colorful jury selection process. The judge peppered the prospective jurors with question about their professions and their interests, as the pool was whittled down to eight, which included an unemployed actor, a nurse who is a fan of Rachael Ray and a 59-year-old woman getting her associate degree in criminal justice.

As the judge sought to determine whether the prospective jurors could be impartial in the trial, the love life of Mr. Perelman — who has been married five times, once to the actress Ellen Barkin — provided a minor stumbling block.

“Is this the Ronald Perelman who was married to Ellen Barkin?” one juror asked the judge, eliciting laughter in the courtroom. “I have met him a few times through Ellen when they were together.”

Judge Gardephe asked whether that would prevent the juror from being impartial. “Yes, probably,” the juror responded, laughing. He was immediately excused from the jury pool.

Article source: http://feeds.nytimes.com/click.phdo?i=ef4444f42b6a9d65c055feaa3962d385

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Holiday Box Office Sputters Domestically but Explodes Overseas

July 4, 2011 by Leave a Comment

The holiday period, a marquee sales time for movie studios, saw Julia Roberts and Tom Hanks bomb in the romantic comedy “Larry Crowne” and the third installment of the “Transformers” series fall notably short of its predecessor in North America. But the international box office continued to sizzle, with fans flocking to “Transformers: Dark of the Moon.” Between Tuesday night and Sunday, that Paramount Pictures movie sold an estimated $210 million in tickets overseas, a 51 percent increase over the same opening stretch for “Transformers: Revenge of the Fallen,” the franchise’s previous entry, in 2009.

Paramount said that tickets for 3-D shows, which carry a price premium, drove the strong overseas performance for “Dark of the Moon,” which set sales records in seven countries, including South Korea with an estimated $28 million. It was Paramount’s biggest international opening (in dollars unadjusted for inflation).

“To see this kind of gigantic international start is simply amazing,” said Rob Moore, Paramount’s vice chairman. Overseas sales for “Revenge of the Fallen,” which was not released in 3-D, totaled $434 million, and “Dark of the Moon” could sharply improve on that.

The film was shown at many Imax theaters abroad, and Imax, which broke its global sales records, was jubilant. “It’s out of control,” said Greg Foster, its chairman of filmed entertainment.

Still, North America was a muddy picture. “Dark of the Moon” took in about $162 million between Tuesday night and Sunday, compared with $200 million for “Revenge of the Fallen” during the comparable period, according to Hollywood.com, which compiles ticketing statistics. Monday sales for “Dark of the Moon” were estimated at $18.8 million, lifting its domestic total to $181 million.

Analysts attributed the shortfall — which came despite higher ticket prices — to several factors. Audiences in the United States have started to tire of 3-D. About 60 percent of the domestic total for “Dark of the Moon” came from 3-D screenings; the format made up about 70 percent of sales overseas.

Americans, still feeling the pinch of a weak economy, have been going to the movies less often. For the year, domestic ticket sales stand at $5.2 billion, an 8 percent decline from the same period in 2010; attendance is down 9.4 percent.

But confusion overload from “Revenge of the Fallen” and its hard-to-decipher plot was probably the biggest factor. “We needed to win the audience back by telling a better story,” Mr. Moore said.

The good news for Paramount, aside from the overseas total, involves audience reaction to “Dark of the Moon.” Exit polls show that moviegoers are more satisfied with the film than with its predecessor, which should lead to favorable word of mouth. Sales increased from Friday to Saturday, a sign of positive chatter among fans of the series.

“Dark of the Moon,” directed by Michael Bay, cost about $200 million to make and centers on robot aliens clashing over a hidden spacecraft. (The 3-D effects alone contributed about $30 million to the budget.) It was easily No. 1 at the North American box office for the weekend.

“Cars 2,” from Pixar Animation Studios, was second in its second weekend with about $25 million in sales (excluding Monday estimates) for a new total of $116 million. “Bad Teacher,” the raunchy Sony comedy starring Cameron Diaz, was third with about $14 million for a two-week total of $59.5 million.

Ms. Roberts and Mr. Hanks limped along in fourth place in “Larry Crowne,” distributed by Universal Pictures and taking in about $13 million. Vendome Pictures spent about $30 million to make it. The two stars have opened to lower results: “Charlie Wilson’s War” sold about $10 million in tickets during its first three days in 2007. But that was a drama released in winter, and analysts had higher expectations for the two in a summer comedy.

The disappointing returns could have been the result of negative reviews and a warm-and-fuzzy marketing campaign that made the film look like something akin to a movie of the week.

Mr. Hanks directed the film, which he wrote with Nia Vardalos (“My Big Fat Greek Wedding”). To help get the movie made he agreed to play the male lead. The story centers on a middle-aged man who goes back to college after losing his job and develops a crush on his teacher, played by Ms. Roberts.

“Monte Carlo,” an inexpensive comedic romance from 20th Century Fox starring Selena Gomez, was fifth, taking in about $7.6 million.

The coming weeks will be crucial for Hollywood’s hopes of ending its domestic box office slump. Aside from continued sales for “Dark of the Moon,” the industry is counting on a potential multiplex monster: Warner Brothers will release “Harry Potter and the Deathly Hallows: Part 2” in 3-D on July 15.

Article source: http://feeds.nytimes.com/click.phdo?i=351aec446cc8611fcedb125ac0459fca

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Mission Accomplished, Nonprofits Go Out of Business

April 2, 2011 by Leave a Comment

Most notable, perhaps, is Malaria No More, a popular nonprofit that supplies bed nets in malaria zones. Its goal is to end deaths from malaria, a target it sees fast approaching.

The charity has announced plans to close in 2015, but it is keeping its options open in the unlikely event that advances against malaria are reversed.

“We never planned to be around forever,” said Scott Case, a co-founder of Priceline and vice chairman of Malaria No More. “We have thought of this more as a project than as an institution-building exercise, and the project is nearing its completion.”

So far, the number of organizations opting to go out of business for mission-related reasons is too small to call a trend. It is still far more common for a nonprofit to close its doors because of financial pressure, which is increasing as governments continue to pare their budgets and donors maintain tight grips on their giving.

Still, the novelty of organizations going out of business once their work is done has attracted attention.

“I don’t think it’s going to be a widespread phenomenon because there are a lot of groups taking on problems like alcoholism and domestic violence that aren’t problems that go away,” said Jan Masaoka, editor in chief of Blue Avocado, a blog for nonprofits. “But I do see that in some cases there is an opportunity for organizations to wind down gracefully and with their job done.”

Out2Play, an organization started by Andrea Wenner in 2005, plans to close its doors next year. The group has put up roughly 120 playgrounds used by about 80,000 children in public elementary schools around New York City and is fast running out of locations, in part because the Bloomberg administration liked the idea so much that it took on some schools itself.

“When I first wrote the business plan, I thought about expanding it to other cities or into other types of institutions, like housing projects or hospitals, and we talked about those ideas and others when the board began seeing the end in sight,” Ms. Wenner said.

Ultimately, though, the board decided that the model worked best for the purpose it had served and that anything else would require more than a simple tweak.

“For example, in a housing project, you would still need someone to take kids to the playground and supervise them,” Ms. Wenner said.

In the end, said Robert Daum, chairman of Out2Play’s board, “we just decided to declare victory and go home. Money is a scarce resource, and there are lots of other good causes out there, so there is no point in hitting up our friends and contacts for gifts simply to perpetuate the organization.”

Out2Play is working to complete roughly 40 more playgrounds before it closes. It plans to leave behind an endowment to cover some of the maintenance costs associated with the playgrounds, Ms. Wenner said.

“Right now, I think of it as very exciting because there’s a great sense of accomplishment that goes along with it, but I’m sure on the final day, I’ll have a strange feeling, probably bittersweet,” she said.

Executives who have closed nonprofits say a feeling of pride overcomes any potential regrets. “Knowing that we were going to close helped us work with extreme urgency and intensity and not slack off for a minute,” said David Douglas, a founder of Water Advocates, a charity that closed late last year.

Over its five years, Water Advocates raised more than $100 million. Its goal was to increase awareness of water issues, as well as to pull together the efforts of a wide range of organizations. The open knowledge that Water Advocates was destined to go out of business helped it encourage greater collaboration among those various groups.

“We weren’t trying to attract attention to ourselves, which allowed us to focus on the issue itself, and we were always looking at ways to hand off things to other nonprofit groups,” he said. “And we weren’t competing for money, which also helped us build relationships.”

British philanthropy circles recently have been talking about the decision to close the Otto Schiff Housing Association, a nonprofit set up in 1933 to provide assistance to displaced Jews. In its latest incarnation, the organization operated a number of homes for victims of Nazi persecution.

Article source: http://feeds.nytimes.com/click.phdo?i=792bf5055d9866da1b4e999e5b7baef5

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