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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (82970)	8/15/2000 11:22:19 AM
From: JHP	Read Replies (1) \| Respond to of 132070

WAyne from tje fools re:berkie Breakfast With The Fool: Berkshire Hathaway's Operating Earnings Decline Warren Buffett's legendary holding company still waits for a turnaround in its insurance businesses. "Only those willing to risk going too far can possibly find out how far one can go." -- T.S. Eliot Latest Market NumbersBy Tom Jacobs (TMF Tom9)Monday, August 14, 2000Holding company Berkshire Hathaway Inc. (NYSE: BRK.A) reported a 19% drop in second-quarter operating earnings to $161 per share from $197 per share last year. This figure omits realized investment gains that led to net income for the quarter of $640 million, or $421 per share, a 12% increase over last year's $572 million, or $376 a share. The company assigns the bulk of the pain to "very unsatisfactory" underwriting results at its General Re reinsurance unit and continued losses at its GEICO auto insurance business. General Re sustained a $231 million operating loss against a $190 million loss a year ago, while GEICO posted a $65 million loss versus a $20 million profit. James M. Armstrong, whose Henry H. Armstrong Associates owns 1.6 million Berkshire Hathaway shares, cited positive factors ahead. Armstrong noted Buffett's determination to pump up GEICO's marketing budget from $30 million a year to $200 million to drive GEICO's market share from 3% to 40%. (Fans of The Motley Fool Radio Show are among those who have grinned at the new pitches for GEICO using "real people.") Years of take-no-prisoners competition in the property-casualty insurance industry have taken their toll on Berkshire's insurance units. Insurors are only now able to increase premiums and build the bottom line. For Berkshire, GEICO's increased premiums should lead to better results. Regulatory approval can slow the implementation of rising premium prices, and General Re has a backlog of policies with rates locked in for several years. Berkshire's Class A shares closed Friday at $62,400, a 50% increase from the 52-week low of $40,800 reached March 10. News to GoGeneral Electric (NYSE: GE) announced that it will produce the first, all-industries Web-based marketplace. Available in the fourth quarter, the marketplace will allow companies access through a Web browser, obviating the need for a firm to maintain its own electronic trading system. GE states that companies will be able to move existing systems to GE's Web-based offering. This adds a wild card to B2B commerce, profiled in the March 2000 issue of The Motley Fool Internet Report. Emeryville, Calif. biotechnology company Chiron Corp. (Nasdaq: CHIR) will acquire PathoGenesis for $700 million. Seattle-based PathoGenesis will contribute its cystic fibrosis drug and its $60 million a year in sales to Chiron, along with a tuberculosis drug in development. Chiron, whose $8 billion market cap makes it one of the leading biotechnology companies, needs new products after an experimental arthritis drug failed in trials, and its multiple sclerosis drug, Betaseron, hasn't shown it can stop an advanced form of MS. Rupert Murdoch's media conglomerate News Corp. (NYSE: NWS) beat out rival Viacom (NYSE: VIA) for Chris-Craft (NYSE: CCN) and its 10 U.S. television stations. News Corp. will pay $3.7 billion, The Wall Street Journal reported. This move may kill Viacom's UPN network, which competes with News Corp.'s Fox network and airs on Chris-Craft stations in major cities.Ford Motor Co. (NYSE: F) is giving its dealers the go-ahead to replace Firestone tires in Ford vehicles -- regardless of where they live. Firestone, a unit of Japan's Bridgestone Corp., had earlier scheduled a rolling regional recall of defective tires, concentrating on warm-weather states. Ford also released documents showing that Firestone was aware of the tire flaw in 1997. Retail sales rose 0.7% in July, after a mild 0.4% increase in June. The Commerce Department attributed the rise to sales of cars and furniture. The finance world will undoubtedly debate what effect this will or will not have on the Federal Reserve Bank's interest rate posture. Fools know that rates will rise and rates will fall, but that long-term investors need not concern themselves.Check out Friday's Foolish market wrap-up with just one click.Editor's Picks - Millennium Pharmaceuticals tries to be top dog in an emerging industry. - Learn when IRA earnings matter to your taxes. - Don't be charged twice for using your credit card.-News & Commentary -Fool Community-Post of the Day-Latest Fribble______________________________

To: Freedom Fighter who wrote (82970)	8/15/2000 11:48:04 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 132070

Wayne - [...When Warren Buffet bought General Re he substituted a cash compensation plan for the existing options plan. That action lowered GAAP earnings by 50 million (I think that was the number). Was General Re worth some multiple of 50 million less because he did that? I think not. The employees received cash instead of something that could theoretically be sold by the company for 50 million in the market place. That satisfied them....] The option plan was toast as soon as the company was taken private. I do think the cash-generating potential is significantly less without the option plan. All private companies suffer wrt public companies because they cannot take advantage of market mispricings. There is nothing to prevent the company from BOTH granting options and selling stock on the market. The fact that option granting companies are BUYERS of stock indicates that the selling of stock is NOT a real opportunity cost. Regards, Don