Buffett signals more cost cuts

Font Size

Print

Feedback

Email

Discuss

• Discount UK Shopping

Related Articles

Female bosses get thumbs down from shareholders

: Berkshire Hathaway Inc’s managers may deliver more cost cuts to chief executive officer Warren Buffett after the billionaire replaced Richard Santulli as the head of a money-losing plane-leasing unit.

Berkshire executives have eliminated jobs and closed plants as the sale of bricks, jewelry and luxury flights suffered in the recession. The company, which reports third-quarter results on Monday, may need further reductions, even as the US recovers, said Jeff Matthews, founder of the hedge fund Ram Partners LP.

“I don’t think Berkshire hit the reset button as hard as other companies” when it came to cutting costs, said Matthews, the author of “Pilgrimage to Warren Buffett’s Omaha.” Naming David Sokol, chairman of Berkshire’s energy business, to lead the aviation operation that Santulli founded may have been received as “a wake-up call to other managers.” Sokol said.

The CEOs of Berkshire’s operating companies oversee more than 2,00,000 workers selling Fruit of the Loom T-shirts, Geico car insurance and Dairy Queen ice cream, while Buffett vets investments with a staff of fewer than 20 at the firm’s Omaha, Nebraska headquarters. Berkshire said on November 3 it agreed to pay $26 billion to buy Burlington Northern Santa Fe Corp, adding a railroad with about 40,000 employees.

Berkshire has gained about 6.9% this year on the New York Stock Exchange, compared with the 18% gain in the Standard and Poor’s 500 Index. Third-quarter profit may more than double to $2.89 billion, according to Meyer Shields, an analyst with Stifel Nicolaus & Co The best back-to-back quarterly rally in the S&P in 34 years is helping Berkshire recover after its first loss since 2001 in the January-to-March period.