AP
Berkshire 3Q Net Income Up 64 Percent
Friday November 2, 7:29 pm ET
By Josh Funk, AP Business Writer
Berkshire Hathaway's Net Income Jumps 64 Percent in 3rd Quarter


OMAHA, Neb. (AP) -- Berkshire Hathaway Inc. reported a 64 percent jump in third-quarter profit Friday on strong investment gains.

Berkshire said it earned $4.55 billion, or $2,942 per share, during the quarter that ended Sept. 30. That's up from last year's third-quarter net income of $2.77 billion, or $1,797 per share.

Officials at Berkshire, which is led by billionaire Warren Buffett, typically do not comment on quarterly earnings reports. A spokeswoman said no one was available Friday to comment on the report.

Investment gains of $1.99 billion accounted for nearly half of Berkshire's quarterly earnings.

Berkshire's sale of its investment in Chinese oil conglomerate PetroChina may account for a significant portion of the company's investment gains although not all of that happened during the quarter, said Andy Kilpatrick, the stockbroker-author of "Of Permanent Value, the Story of Warren Buffett."

Berkshire started selling off its 2.3 billion shares of PetroChina sometime this summer and finished selling the last of them in October. Buffett has said in interviews that Berkshire made about $3.5 billion on the sale of that $488 million investment.

Excluding the investment gains, Berkshire's operating income of $2.56 billion is actually down slightly from last year's $2.60 billion operating income.

But last year the company had a strong third quarter because few hurricanes struck in 2006, and Berkshire's insurance companies wrote a number of policies for catastrophic events.

"If it's about as good as last year, I'd say that's pretty good," Kilpatrick said.

Berkshire's insurance group, which includes GEICO, reinsurance giant General Re and several other firms, reported pretax profit of $1.97 billion in the third quarter, compared with pretax profit of $2.53 billion in the year ago period.

Berkshire said there was more competition for catastrophic insurance policies this year and that produced lower premiums. Berkshire said the amount of catastrophic premiums it earned this year fell $301 million in the quarter from last year's $671 million.

The three analysts polled by Thomson Financial expected earnings per share of $1,509.33 on average.

Berkshire's shares, which are the most-expensive U.S. stock, set a new 52-week high of $133,050 during trading Thursday.

Shares of Berkshire Hathaway's Class A stock gained $1,250, or about 1 percent, Friday to close at $132,500 before the earnings report was released.

Berkshire reported $29.94 billion in revenue during the quarter, up 18 percent from the $25.36 billion during the year-earlier period.

Berkshire said it had $47.08 billion cash on hand at the end of the third quarter, up slightly from the $46.95 billion it had at the end of the second quarter.

Through the first nine months of the year, Berkshire reported net income of $10.27 billion, or $6,644 per share. That is up 38 percent from 2006 when Berkshire made $7.43 billion, or $4,821 per share.

Berkshire owns more than 60 subsidiaries that range from insurance to clothing, furniture, and candy companies, restaurants, natural gas and corporate jet firms. Berkshire also has major investments in such companies as Coca-Cola Co., Anheuser-Busch Cos. and Wells Fargo & Co.

http://www.berkshirehathaway.com