Warren Buffett's company reported a nearly $50 billion loss on Saturday because of a huge drop in the paper value of its investments, although the company is still sitting on an enormous pile of cash. It is the latest sign the economic toll the novel coronavirus is having on corporate America.
Berkshire Hathaway Inc. said it lost $49.7 billion, or $30,653 per class A share, during the first three months of this year. (Berkshire Hathaway has two classes of shares, of which the Class A shares are the more expensive and main shares.) That's down from last year's first quarter profit of $21.66 billion, or $13,209 per share. Berkshire's shares closed at $273,262 on Friday.
The biggest factor in the loss was a $54.5 billion tumble on the value of Berkshire's investment portfolio as the stock market declined sharply after the coronavirus outbreak began. The year earlier, Berkshire's investments added $15.5 billion to the company's profits.
Buffett has long said Berkshire's operating earnings offer a better view of his conglomerate's quarterly performance because they exclude investments and derivatives, which can vary widely. By that measure, Berkshire's operating earnings improved to $5.87 billion, or $3,617.62 per share, from $5.56 billion, or $3,387.56 per share. for the quarter.
Still, analysts surveyed by FactSet had expected better — operating earnings per share of $3,796.90 on average.
Berkshire's revenue grew 1% to $61.27 billion. The company is also sitting on more than $137 billion in cash because Buffett, a famous Wall Street bargain hunter, has struggled to find major acquisitions for the company recently when the values of stocks were at all-time highs.
On Saturday afternoon, Buffett plans to lead an abbreviated "virtual" version of Berkshire's annual meeting online, without any of the 40,000 shareholders who typically attend the festive event. The company shifted to an online meeting and cancelled all the usual hoopla surrounding the event because of the coronavirus outbreak. He is expected to answer selected shareholder questions screened by several journalists.
Berkshire owns more than 90 companies, including the BNSF railroad and insurance, utility, furniture and jewelry businesses. The company also has major investments in such companies as Apple, American Express, Coca-Cola and Bank of America.