Berkshire net income falls 64 percent because of derivatives

[jeffrey]

Berkshire Hathaway Inc. said Friday its first-quarter profit fell 64 percent because it recorded an unrealized $1.6 billion pretax loss on its derivative contracts, and its insurance businesses generated lower profits.

Berkshire reported net income of $940 million, or $607 per share, in the quarter ended March 31. That's down significantly from the net income of $2.6 billion Berkshire generated a year ago.

Berkshire's chairman and CEO Warren Buffett warned shareholders in his annual letter that the derivatives could make the company's earnings volatile. But he predicted the derivatives will ultimately be profitable...

washingtonpost.com

[Broken Arrow]

Whenever I hear the "D" word, it usually sends chills up my spine. To be fair, the company is still reporting a quarterly profit... just not as high as previous quarters.

On the bright side, for investors that wanted Berkshire shares, this presents an opportunity to buy in at a slightly discounted price.