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Berkshire Hathaway 2Q profit jumps 41 percent

By WTOP Staff

JOSH FUNK
AP Business Writer

OMAHA, Neb. (AP) — Warren Buffett’s company on Friday reported a 41 percent jump in its second-quarter profit that was boosted by a paper gain from a stock-swap deal completed earlier this year.

But even without the big investment gains, Berkshire Hathaway Inc. reported solid performances at most of its 80-odd subsidiaries, which include BNSF railroad and Geico insurance.

Berkshire said its overall net income grew to $6.4 billion, or $3,889 per Class A share. That’s up from $4.54 billion, or $2,763 per Class A share, in the same quarter a year ago.

Berkshire’s revenue improved 11 percent to $49.76 billion from last year’s $44.69 billion.

Berkshire agreed earlier this year to acquire a Miami-based TV station from Graham Holdings Co. in exchange for most of its shares in the company that once owned The Washington Post. As part of that deal, Berkshire and Graham Holdings exchanged assets worth roughly $1.1 billion.

Berkshire recorded a $1.1 billion gain in the second quarter because that’s when it took ownership of the WPLG television station and completed the exchange.

Buffett urges investors to pay more attention to the company’s operating earnings because they exclude the swings in the value of investments and derivatives, which can vary greatly from quarter to quarter. Berkshire’s operating earnings improved 11 percent to $4.3 billion, or $2,634 per Class A share.

Four analysts surveyed by FactSet expected Berkshire to report operating earnings per Class A share of $2,485.21.

Berkshire officials do not typically comment on their quarterly earnings reports, and they did not immediately respond to an interview request on Friday.

Berkshire finished the second quarter with more than $55 billion cash on hand, so Buffett has the resources for another big acquisition if he finds an attractive target.

“He’s piling up cash, so he must not see any real bargains out there,” said Andy Kilpatrick, author of “Of Permanent Value: The Story of Warren Buffett.”

Edward Jones analyst Jim Shanahan, whose firm has a “Buy” rating on Berkshire’s stock, said the company’s solid quarter is a sign that the overall economy continues growing.

“It sure does highlight the value of owning a diversified portfolio of businesses,” Shanahan said.

BNSF railroad has been an important contributor to Berkshire’s profits ever since it was acquired. Even though the railroad has been dealing with delays and service problems in the upper Great Plains, BNSF still contributed $916 million to Berkshire’s net income, up from $884 million a year ago.

Berkshire utility division was helped by the $5.6 billion acquisition of Nevada’s main electric utility, NV Energy. Berkshire’s utilities added $375 million to its net income, up from $279 million a year ago.

Berkshire’s insurance companies added $411 million from underwriting to its quarterly net income. That was down from last year’s $530 million net income from underwriting because Berkshire’s reinsurance companies recorded large gains in 2013.

Besides insurance, utility and railroad companies, Berkshire owns clothing, furniture, brick, carpet, jewelry and pilot training firms. It also has major investments in such companies as Coca-Cola Co., IBM and Wells Fargo & Co.

___

Online:

Berkshire Hathaway Inc.: www.berkshirehathaway.com

Follow Josh Funk on Twitter at www.twitter.com/funkwrite

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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