RTTNews - Billionaire Warren Buffett's Berkshire Hathaway Inc. (BRKA, BRKB) said Friday after the markets closed that its second quarter profit rose 14% from last year, helped mainly by huge derivative gains. However, the company's operating earnings per share came in below analysts' expectations.

The Omaha, Nebraska-based company reported net earnings for the second quarter of $3.295 billion or $2123 per Class A share, compared to $2.880 billion or $1859 per share Class A share for the year-ago quarter.

Berkshire had $1.52 billion of net gains from investments and derivatives in the second quarter, compared to gains of $610 billion in the prior year's second quarter. Deivative gains totaled $1.53 billion in the second quarter, up from $453 million in the second quarter of last year.

Excluding investment and derivative gains and losses, operating earnings for the second quarter were $1.78 billion or $1147 per Class A share, compared to $2.27 billion or $1465 per Class A share in the prior year quarter.

On average, 3 analysts polled by First Call / Thomson Financial expected the company to earn $1238.38 per share for the first quarter. Analysts' estimates typically exclude special items.

Total revenues for the second quarter fell 1.6% to $29.61 billion from $30.09 billion in the same quarter last year.

Insurance underwriting generated operating earnings of $83 million in the second quarter quarter, down 77% from $360 million in the same quarter last year.

Insurance investment income for the quarter rose 32% to $1.16 billion from $884 million a year ago.

Operating earnings from the company's non-insurance businesses fell 48% to $574 million in the second quarter from $1.09 billion last year.

During the second quarter, the company's book value increased 4.6% from last year to $73,806 per Class A share.

For the first six months of the year, the company reported net earnings of $1.76 billion or $1136 per Class A share, compared to $3.82 billion or $2467 per Class A share for the same period last year.

Excluding investment and derivative gains and losses, operating earnings for the first-half were $3.49 billion or $2248 per Class A share, compared to $4.20 billion or $2713 per Class A share in the prior year period.

Revenue for the first-half fell to $52.39 billion from $55.27 billion in the prior year's first-half.

Berkshire Hathaway is a holding company owning subsidiaries that engage in a number of diverse business activities including property and casualty insurance and reinsurance, utilities and energy, finance, manufacturing, services and retailing.

The company has over 70 units with businesses as varied as insurance, restaurants, furniture, clothing, candy companies, natural gas and corporate jet leasing.

Berkshire also holds significant stakes in many top-notch companies such as Coca-Cola Co. (KO), Wells Fargo & Co. (WFC), Kraft Foods Inc. (KFT), Washington Post Co. (WPO), American Express Co. (AEP) and Johnson & Johnson (JNJ) among others. Berkshire is the largest shareholder of Wells Fargo and Kraft Foods.

In May, Berkshire announced changes in its investments in US stocks, which totaled $40.87 billion at the end of march 31, down from from $51.87 billion at the end of December 31, 2009. In a filing with the US Securities and Exchange Commission, Berkshire said it has increased its stake in Wells Fargo, Johnson & Johnson and U.S.Bancorp (USB), while reducing its stake in UnitedHealth Group Inc. (UNH). Berkshire's investments in M&T Bank (MTB), SunTrust Banks Inc. (STI) and Bank of America Corp. (BAC) remained unchanged at the end of the March.

Concerns regarding who will take over Berkshire in case of Buffet's mortality have been ongoing for some time.

Berkshire's board has short listed four candidates, both internal and external, for the position of CIO and three internal candidates for the post of CEO. Buffet's son, Howard Buffet, will succeed him as the chairman, and the management of Berkshire, with more than $50 billion portfolio, will be divided between the Chairman, CEO and CIO.

According to media reports, persons speculated as likely candidates to succeed as the chief executive were David Sokol, chief of MidAmerican Energy Holdings Co., Tony Nicely, head of Berkshire's car insurance business Geico Corp., and Ajit Jain, the executive who runs Berkshire's reinsurance business.

Berkshire Class A shares closed Friday's regular trading session at $108,100 up $1,150 or 1.08% but lost $984 in after hours trading. Berkshire Class B shares closed the day's session at $3,540, up $22.69 but lost $13 in after hours trading.

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