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Despite a change in the wording of Berkshire Hathaway Inc.'s annual report, Howard Buffett still is in line to become the next chairman of the company.
His father, Berkshire Chairman and CEO Warren Buffett, repeated in the report that Berkshire's board of directors would maintain the company's business philosophy, then added these new words:
“I believe it would be wise when I am no longer CEO to have a member of the Buffett family serve as the nonpaid, nonexecutive chairman of the board. That decision, however, will be the responsibility of the then board of directors.”
Howard Buffett is spending more time working on matters related to his foundation, which has grown in recent years and is expanding its efforts to improve agriculture in developing countries and assist in other causes.
Berkshire's office said the new wording in the report doesn't change the plan to have Howard chair the corporation when necessary. The board would select a CEO to work with the executives of Berkshire's companies. Investment decisions would be handled by one or more other people, as yet unnamed, according to the current succession plan.
Job cuts
Berkshire's Fruit of the Loom clothing company cut 7,944 jobs last year, and Shaw Industries, a carpet manufacturer, cut nearly 3,500, according to the company's annual report. Overall employment of Berkshire operating companies was down about 11,000 people, or 4 percent, to 246,083 people at the end of 2009.
That total excludes the 35,000 Burlington Northern Santa Fe Corp. employees added to Berkshire's lineup last month.
The managers of each company make their own manpower decisions, and Buffett has said the economy has hurt retail and housing-related industries. Shaw's sales, for example, depend partly on the number of new housing starts nationwide, which has dropped for the past few years.
Clayton Homes, Berkshire's manufactured housing company, added 135 people. Clayton provides affordable housing.
Berkshire's auto insurance company, Geico, added 1,300 jobs and is gaining business as people try to cut expenses such as insurance. But Buffett said Geico's growth may slow in 2010 because some people are dropping insurance altogether due to financial problems, even though it's illegal to drive without auto insurance nearly everywhere in the country.
Check's in the mail
Berkshire Vice Chairman Charlie Munger sent a $20,000 check to Harvard surgeon Atul Gawande, and it wasn't payment for medical treatment.
Rather, according to National Public Radio, Munger was responding to Gawande's June 2009 article in New Yorker magazine about the high cost of medicine in McAllen, Texas, titled, “The Cost Conundrum.”
Buffett said recently that Munger, who had never met Gawande, sent the check because the article was “so useful socially,” NPR reported.
Gawande called the check “a flattering gesture.” He gave the money to Brigham and Women's Hospital's Center for Surgery and Public Health, which works to bring oxygen monitors to low-income countries.
Questions remain
To explain the 25 percent increase in Berkshire's stock price since the Jan. 20 split of its B shares:
Could the company be worth 25 percent more, justifying the nice, even $125,000-a-share closing price for A shares on Friday?
Could the addition of Burlington Northern railroad and the subtraction of the price paid result in a 25 percent increase in value?
Could the jump in the value of B stock from $66.64 on Jan. 19 to $83.36 on Friday be the result of purchases based on careful, reasonable analysis by investors?
Could joining the Standard & Poor's 500 Index raise Berkshire's earnings potential by one-fourth?
Did Buffett's annual letter to shareholders last weekend reveal brave new ideas that will create immediate wealth?
Do investors realize that in 30 trading days they “created” $41 billion, boosting the paper value of Berkshire shares to $205 billion?
Could it be that B shares were “cheap” at $66.64 each, after the 50-1 split, but “expensive” at the pre-split price of $3,332?
What, you were expecting answers?
Here's one: Probably not.
Contact the writer:
444-1080, steve.jordon@owh.com
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