Berkshire Q3 profit up 29 percent; operating results miss

By Jonathan Stempel and Luciana Lopez

REUTERS - Warren Buffett's Berkshire Hathaway Inc posted a 29 percent jump in third-quarter profit as it recorded big gains on investments made during the financial crisis, but operating results missed forecasts amid weakness in insurance operations.

Quarterly results included $1.4 billion of gains from investments that Buffett made in October 2008, including in General Electric Co and Goldman Sachs Group Inc warrants, and bonds related to candy maker Mars Inc's purchase of rival Wrigley.

Such investments helped give Buffett a reputation as a lender of last resort.

But investment and derivative gains do not factor into operating results, and while profit rose at Berkshire's Burlington Northern Santa Fe railroad and MidAmerican energy and utility units, insurance underwriting results deteriorated.

Net income rose to $5.05 billion, or $3,074 per Class A share, from $3.92 billion, or $2,373 per share, a year earlier, Berkshire said on Friday.

Operating profit rose just 8 percent to $3.66 billion, or $2,228 per Class A share, from $3.4 billion, or $2,057 per share. Analysts on average expected $2,402 per share, according to Thomson Reuters I/B/E/S.

Michael Yoshikami, president of Destination Wealth Management in Walnut Creek, California, which invests $1.3 billion and owns Berkshire stock, said the company can boost investment results if bond yields rise once the U.S. Federal Reserve pulls back on efforts to prop up the nation's economy.

"The U.S. economy is rather stumbling, and that is positive actually for their infrastructure investments such as railroads," he said. "All things considered, we are fairly pleased with the results."

Book value, Buffett's preferred measure of the Omaha, Nebraska-based company's worth, rose 11 percent this year to $126,766 per Class A share as of September 30, 2013.

INSURANCE WEAKENS

Net insurance underwriting premiums fell 57 percent to $170 million. Results weakened at the Geico auto insurance unit, which paid out a higher percentage of premiums to cover claims than a year earlier, and the General Re reinsurance unit, which had a $400 million underwriting loss from a European hailstorm.

In addition, Berkshire's main reinsurance business sustained a $206 million pre-tax underwriting loss, hurt by lower premiums and currency fluctuations.

Profit rose about 6 percent at Burlington Northern to $989 million, as higher shipments of industrial products, consumer products and coal offset a drop for agricultural products amid lower grain exports and strong global competition.

Results also improved in businesses such as the Forest River recreational vehicle unit. Revenue from jewelry, home furnishings and other retail businesses rose 18 percent.

Bill Smead, chief executive of Smead Capital Management in Seattle, which invests 3 percent of its $700 million of assets in Berkshire, said the 83-year-old Buffett is setting up the company to perform over the long haul.

"He's making a big push into almost everything associated with the idea that we'll build a lot more homes in the next 10 years," Smead said.

Berkshire ended the quarter with $42.08 billion of cash and equivalents, giving Buffett the firepower to make one or more large acquisitions, which he calls "elephants."

The second-richest American wants to keep about $20 billion in cash, in part for possible insurance payouts on storms.

Berkshire bought $1.77 billion worth of stock during the quarter but sold $1.48 billion, and was actually a bigger net purchaser of bonds than stocks.

Buffett has run Berkshire since 1965, favoring businesses with consistent earnings power. Berkshire now has more than 80 businesses, though it remains best known for insurance.

He spent $12.3 billion in June to buy part of ketchup maker H.J. Heinz Co. Berkshire also owns $104.9 billion in equities, including such stocks as Coca-Cola Co , International Business Machines Corp and Wells Fargo & Co .

In Friday trading, Berkshire Class A shares closed up $127.70 at $173,122.50, while its Class B shares rose 19 cents to $115.27. Berkshire released results after U.S. markets closed. Its B shares fell 0.7 percent to $114.51 after hours. (Reporting by Jonathan Stempel, Jennifer Ablan and Luciana Lopez; Editing by James Dalgleish, Leslie Gevirtz, Andrew Hay and Bob Burgdorfer)

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Wall St rises, buoyed by results, manufacturing data

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks rose on Friday, rebounding following two days of losses as solar companies jumped on results and strong data on manufacturing.

Equities have been pressured since Wednesday, when a Federal Reserve statement raised concerns about when the central bank would begin to scale back its stimulus program, which has contributed to the S&P 500's advance of 23 percent this year. Some investors interpreted comments in the statement as suggesting the Fed would begin tapering stimulus earlier than expected.

The rally has taken the Dow and S&P repeatedly to record highs, leading some analysts to call for a pullback, especially in the wake of some signs of slowing growth, like weak economic data and an earnings season marked by tepid revenue.

"I'm not comfortable with the market at all-time highs, especially with earnings being mediocre, but the manufacturing report was better than expected, and where else can you go with the Fed putting so much liquidity into the system?" said Mark Grant, managing director at Southwest Securities in Fort Lauderdale.

The U.S. manufacturing sector expanded at its fastest pace in 2-1/2 years last month, a rate that was stronger than expected, according to the Institute for Supply Management's survey, which followed the similarly strong Chicago Purchasing Manager's Index on Thursday.

Chevron Corp was the latest company to disappoint on results as its third-quarter revenue came in below expectations. That sent shares of the Dow component down 2 percent to $117.55.

The Dow Jones industrial average was up 81.91 points, or 0.53 percent, at 15,627.66. The Standard & Poor's 500 Index was up 6.79 points, or 0.39 percent, at 1,763.33. The Nasdaq Composite Index was up 11.75 points, or 0.30 percent, at 3,931.46.

For the week thus far, the Dow is up 0.4 percent, the S&P is up 0.3 percent and the Nasdaq is down 0.2 percent. Both the Dow and S&P are on track for their fourth straight week of gains.

American International Group Inc fell 6.3 percent to $48.41 as the S&P's biggest decliner a day after reporting third-quarter earnings that slightly beat expectations, though analysts had expected better results in the insurer's consumer lines business.

First Solar Inc soared 13 percent to $56.76 after its results beat expectations and the company raised its full-year profit outlook. Among its peers, Yingli Green Energy climbed 5.3 percent to $6.32 and Canadian Solar was up 7.2 percent to $24.62.

With about 71 percent of S&P 500 companies having reported, 68.2 percent have topped Wall Street's expectations, above the long-term average of 63 percent, according to Thomson Reuters data. However, only 53.6 percent have topped revenue forecasts, below the 61 percent average since 2002.

In company news, Ford Motor Co shares rose 0.6 percent to $17.21 after the company reported October sales growth of 14 percent.

Container Store Group Inc shares jumped 93 percent to $34.63 in their trading debut after the company priced its initial public offering at the top end of an increased price range.

(Editing by Bernadette Baum)

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Wall St edges lower, but Exxon gains on results

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks fell modestly on Thursday, with investors cautious with indexes near record levels as they digested recent comments from the Federal Reserve, though some strong corporate earnings provided a reason to buy.

Optimism about earnings was boosted by Exxon Mobil Corp , one of the largest U.S. companies by market cap, which reported adjusted third-quarter earnings that beat expectations, sending shares 1.1 percent higher to $89.78.

Expedia also advanced following its results, topping the S&P 500 percentage gainers, while Facebook Inc fluctuated between steep gains and losses.

The Fed said Wednesday it had a weaker growth outlook for the U.S. economy, though it held steady with its stimulus program, which has fueled the S&P's 23 percent surge this year. That rally has come amid weaker-than-expected economic data and an earnings season marked by weak revenue.

"Nobody was surprised by the lack of action by the Fed, but there was a lack of clarity that was disappointing," said Rex Macey, who helps oversee $20 billion as chief investment officer at Wilmington Trust in Atlanta, Georgia.

"There is reason for caution at these levels, but nobody seems to be euphoric, so I don't think people need to get too defensive at this point."

The Dow Jones industrial average was down 48.61 points, or 0.31 percent, at 15,570.15. The Standard & Poor's 500 Index was down 4.95 points, or 0.28 percent, at 1,758.36. The Nasdaq Composite Index was down 15.18 points, or 0.39 percent, at 3,915.44.

The Dow has gained 2.9 percent in October, while the S&P has added 5 percent and the Nasdaq is up 3.7 percent.

Data on Thursday showed jobless claims fell slightly less than expected in the latest week, dropping 10,000 to 340,000. The Chicago Purchasing Manager's Index came in at 65.9, far ahead of expectations for a reading of 55.

While investors have been concerned by weak data pointing to slowing economic growth, strong data has also been viewed as a reason to sell, given that the Fed has said it would begin to slow its stimulus when economic growth meets its targets.

Facebook reported strong growth in its mobile advertising business late on Wednesday, though it said it didn't plan to boost the frequency of ads shown to users. Trading was volatile, with shares soaring during the premarket session but then turning sharply negative. They last traded at $48.38, down 1.3 percent.

Expedia jumped 18 percent to $59.98 a day after reporting third-quarter earnings that beat expectations, while Starbucks Corp fell 1.7 percent to $79.44 in the wake of a disappointing outlook.

Of 313 companies in the S&P 500 that reported earnings through Wednesday morning, 68.4 percent topped Wall Street expectations, above the 63 percent beat rate since 1994 and the 66 percent rate for the past four quarters, according to Thomson Reuters data. Only 53.7 percent of companies have topped revenue expectations, well below the 61 percent average since 2002.

(Editing by Bernadette Baum)

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Results of state-run banks fuel sector recovery hopes

By Swati Pandey

MUMBAI (Reuters) - India's second-biggest state lender Bank of Baroda Ltd posted a quarterly profit that topped analysts' expectations, sending its shares higher and stoking speculation that the bad loans weighing on big government banks may be easing.

Fourth-ranked Bank of India Ltd, while reporting earnings that missed estimates slightly, said its non-performing assets fell at the end of the September quarter from a year earlier. Its shares rose the most in six years.

State banks, with their high exposure to the power and infrastructure sectors, have been particularly hit by the country's economic slowdown. They are also typically more willing to ease repayment terms for struggling debtors.

Analysts say the better-than-expected earnings suggest that debt restructuring is bearing fruit and the banks' recovery efforts are gaining traction.

"The worst is behind us," Bank of Baroda Chairman S.S. Mundra told reporters after the results on Thursday. "The September quarter was the last of this bad cycle."

Bank of Baroda posted a 10.2 percent fall in July-September net profit to 11.68 billion rupees. Analysts, on average, had expected profit of 9.5 billion rupees, according to Starmine data.

The bank's non-performing assets rose to 1.86 percent of its total assets at the end of September from 0.82 percent a year earlier.

But Mundra said growth in non-performing loans will slow in the second half, helping to send the bank's shares up by more than 10 percent, their biggest gain in more than three years.

Over $20 billion of bad loans were weighing on the country's top 10 state banks as of March 31, according to Reuters calculations based on data from individual banks.

"Asset quality pressures will not increase. We will be able to maintain these levels or reduce," said Vijaylakshmi Iyer, chairwoman of Bank of India.

Bank of India said its September-quarter net profit more than doubled to 6.22 billion rupees. That compares with analyst expectations of 6.76 billion rupees.

Its non-performing assets fell to 1.85 percent of its total assets at the end of September from 2.04 percent a year earlier.

Shares in Bank of India rose more than 20 percent, their largest one-day gain since October 2007. At 0908 GMT, the benchmark index was down 0.1 percent.

The largest state lender, State Bank of India (SBI), which accounts for about a quarter of all loans and deposits, will report earnings on November 13. Punjab National Bank, the third-biggest, reports on November 8.

Punjab shares rose 8.9 percent and SBI was up 4.4 percent.

The fortunes of state banks have contrasted with those of private-sector peers ICICI Bank Ltd, HDFC Bank Ltd and Axis Bank Ltd. The banks each reported more than 20 percent profit growth after keeping their focus on consumer loans.

ICICI, India's biggest private-sector bank by assets, said a wider branch network and strong dealership connections will help the bank grow in the consumer segment.

GRAPHIC - India public vs private banks: http://link.reuters.com/tyw34v

NON-PERFORMING LOANS

Mid-sized state lenders are not faring as well as their bigger cousins.

Union Bank of India reported a 62 percent fall in quarterly profit as provisions nearly doubled and non-performing assets rose to 2.16 percent.

Indian Overseas Bank and Oriental Bank of Commerce Ltd each posted about a 16 percent decline in profit on a steep rise in non-performing loans.

Bank of Maharashtra Ltd reported a 72 percent decline in net profit while non-performing loans nearly doubled.

Non-performing loans as a percentage of total loans reached the highest in more than five years in June, at 4.3 percent. This has forced banks to set aside more money to cover them, reducing profits.

"The bigger banks are showing lower deterioration compared to mid-sized PSU banks," said Manish Ostwal, sector analyst at KR Choksey Shares & Securities. "They operate on stronger margins and can absorb the pressure in the short term. They also have a better ability to raise money in overseas markets."

(Additional reporting and writing by Prashant Mehra; Editing by Ryan Woo)

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Results of state-run banks fuel sector recovery hopes

By Swati Pandey

MUMBAI (Reuters) - India's second-biggest state lender Bank of Baroda Ltd posted a quarterly profit that topped analysts' expectations, sending its shares higher and stoking speculation that the bad loans weighing on big government banks may be easing.

Fourth-ranked Bank of India Ltd, while reporting earnings that missed estimates slightly, said its non-performing assets fell at the end of the September quarter from a year earlier. Its shares rose the most in six years.

State banks, with their high exposure to the power and infrastructure sectors, have been particularly hit by the country's economic slowdown. They are also typically more willing to ease repayment terms for struggling debtors.

Analysts say the better-than-expected earnings suggest that debt restructuring is bearing fruit and the banks' recovery efforts are gaining traction.

"The worst is behind us," Bank of Baroda Chairman S.S. Mundra told reporters after the results on Thursday. "The September quarter was the last of this bad cycle."

Bank of Baroda posted a 10.2 percent fall in July-September net profit to 11.68 billion rupees. Analysts, on average, had expected profit of 9.5 billion rupees, according to Starmine data.

The bank's non-performing assets rose to 1.86 percent of its total assets at the end of September from 0.82 percent a year earlier.

But Mundra said growth in non-performing loans will slow in the second half, helping to send the bank's shares up by more than 10 percent, their biggest gain in more than three years.

Over $20 billion of bad loans were weighing on the country's top 10 state banks as of March 31, according to Reuters calculations based on data from individual banks.

"Asset quality pressures will not increase. We will be able to maintain these levels or reduce," said Vijaylakshmi Iyer, chairwoman of Bank of India.

Bank of India said its September-quarter net profit more than doubled to 6.22 billion rupees. That compares with analyst expectations of 6.76 billion rupees.

Its non-performing assets fell to 1.85 percent of its total assets at the end of September from 2.04 percent a year earlier.

Shares in Bank of India rose more than 20 percent, their largest one-day gain since October 2007. At 0908 GMT, the benchmark index was down 0.1 percent.

The largest state lender, State Bank of India (SBI), which accounts for about a quarter of all loans and deposits, will report earnings on November 13. Punjab National Bank, the third-biggest, reports on November 8.

Punjab shares rose 8.9 percent and SBI was up 4.4 percent.

The fortunes of state banks have contrasted with those of private-sector peers ICICI Bank Ltd, HDFC Bank Ltd and Axis Bank Ltd. The banks each reported more than 20 percent profit growth after keeping their focus on consumer loans.

ICICI, India's biggest private-sector bank by assets, said a wider branch network and strong dealership connections will help the bank grow in the consumer segment.

GRAPHIC - India public vs private banks: http://link.reuters.com/tyw34v

NON-PERFORMING LOANS

Mid-sized state lenders are not faring as well as their bigger cousins.

Union Bank of India reported a 62 percent fall in quarterly profit as provisions nearly doubled and non-performing assets rose to 2.16 percent.

Indian Overseas Bank and Oriental Bank of Commerce Ltd each posted about a 16 percent decline in profit on a steep rise in non-performing loans.

Bank of Maharashtra Ltd reported a 72 percent decline in net profit while non-performing loans nearly doubled.

Non-performing loans as a percentage of total loans reached the highest in more than five years in June, at 4.3 percent. This has forced banks to set aside more money to cover them, reducing profits.

"The bigger banks are showing lower deterioration compared to mid-sized PSU banks," said Manish Ostwal, sector analyst at KR Choksey Shares & Securities. "They operate on stronger margins and can absorb the pressure in the short term. They also have a better ability to raise money in overseas markets."

(Additional reporting and writing by Prashant Mehra; Editing by Ryan Woo)

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Wall St up on tech results, on track for weekly rise

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks edged up on Friday, with technology shares leading the gains on strong results, though the market's rally appeared to be running out of steam with indexes near all-time highs.

The S&P 500 has gained 23 percent so far this year, just shy of the 23.5 percent jump it posted in 2009. Surpassing the 2009 record would give the index its biggest annual gain in a decade. The benchmark is also on track for its third-straight week of gains.

Microsoft Corp was the leading point gainer on the Dow, Nasdaq and S&P 500 as profit and revenue reported late Thursday exceeded expectations, sending shares up 5.9 percent to $35.72. Amazon.com posted its largest daily gain since April 2012 after the online retailer reported stronger-than-expected sales growth. Shares jumped 9.6 percent to $364.16 after hitting a record high of $368.40.

"We've been positive on Microsoft for a while, but I can't remember the last time I saw it move up this much after earnings. It is very positive, and helping to boost the overall tape today," said Douglas DePietro, managing director at Evercore Partners in New York.

"Still, the market has been getting tired lately. While I believe we'll see another leg up soon, it isn't out of the question that we would need to consolidate near all-time highs."

The Dow Jones industrial average was up 20.21 points, or 0.13 percent, at 15,529.42. The Standard & Poor's 500 Index was up 2.75 points, or 0.16 percent, at 1,754.82. The Nasdaq Composite Index was up 7.56 points, or 0.19 percent, at 3,936.52.

For the week thus far, the Dow is up 0.9 percent, the S&P is up 0.6 percent and the Nasdaq is up 0.7 percent. It is the third straight week of gains for both the Dow and S&P, while the Nasdaq has climbed in seven of the past eight weeks, up almost 10 percent over that period.

Much of those gains have come on expectations that the Federal Reserve will continue its $85 billion a month bond-purchase program for several months, likely providing a floor for stock prices into 2014.

Among other earnings, United Parcel Service's stock hit a record high at $96.94 after posting a bigger quarterly profit and said it expects online sales to boost holiday volume. Shares came off highs and were up 0.6 percent to $95.12.

Zynga said it expects a full-year profit after reporting better-than-expected third-quarter results due to cost-cutting and a renewed focus on mobile games and core franchises. Shares jumped 11 percent to $3.93.

With 49 percent of S&P 500 companies having reported, 68.7 percent have topped profit expectations, a beat rate that is above the historical average of 63 percent. However, only 54.2 percent have beaten revenue expectations, below the long-term average of 61 percent.

Dow component DuPont

jumped to the highest in more than 13 years a day after announcing it will spin off its titanium dioxide unit within 18 months, yielding to pressure from Wall Street to divest the volatile business. Shares hit $62.69 and were recently up 0.3 percent at $61.54.

New orders for long-lasting U.S. manufactured goods outside of transportation equipment fell in September, possibly due to uncertainty over government spending, while a surge in aircraft orders helped boost durable goods orders by 3.7 percent last month, more than expected.

U.S. consumer sentiment dropped in October to its lowest level since the end of last year as consumers worried congressional dysfunction and the resulting partial federal government shutdown would hurt growth.

In other data the Commerce Department said wholesale inventories rose 0.5 percent in August, the biggest increase since January. The government also said inventories rose more than initially estimated in July.

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S&P 500 ends at record high, boosted by tech results

By Caroline Valetkevitch

NEW YORK (Reuters) - The S&P 500 ended at another record high on Friday, boosted by gains in technology shares after strong results from Microsoft and Amazon.com.

They were the latest to offer some upbeat news on the earnings season, which has been mixed overall, especially on the revenue side where the percentage of companies beating analysts' expectations has been below the long-term average.

Microsoft gave the biggest boost to all three major indexes, while Amazon.com also helped the S&P 500 and Nasdaq. Microsoft shares jumped 6 percent at $35.73, a day after it reported profit and revenue above analysts' expectations.

Amazon.com shares rose as high as $368.40, a record, after the online retailer reported stronger-than-expected sales growth. Shares ended up 9.4 percent at $363.39.

The market has risen following last week's legislation to avoid a U.S. debt default and end a partial government shutdown, as well as increased speculation the Federal Reserve will delay scaling back its stimulus for several months. The S&P 500 had hit record finishes for four sessions until Wednesday.

"It seems like good news is being responded to very well and bad news is just seen as more evidence the Fed won't be able to tighten anytime soon," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

The S&P 500 is up 23.4 percent so far this year, just shy of the 23.5 percent gain it posted in 2009. Surpassing the 2009 record would give the index its biggest annual gain in a decade.

The Dow Jones industrial average was up 61.07 points, or 0.39 percent, at 15,570.28. The Standard & Poor's 500 Index ended up 7.7 points, or 0.44 percent, at 1,759.77, and hit an intraday record high of 1,759.82 late in the session.

The Nasdaq Composite Index was up 14.40 points, or 0.37 percent, at 3,943.36.

Indexes also posted gains for the week. The Dow rose 1.1 percent, the S&P 500 gained 0.9 percent and Nasdaq 0.7 percent. The Russell 2000 index of small cap stocks registered its eighth week of gains, its longest streak since 2003.

Based on results so far and estimates for companies still to report, S&P 500 earnings are expected to have risen just 3.4 percent in the third quarter, with 69 percent of companies reporting earnings above analysts' expectations. Revenue growth is seen at 2.2 percent for the quarter, with just 54.2 percent beating sales estimates, below the long-term average of 61 percent, Thomson Reuters data showed.

Among other earnings, United Parcel Service's stock hit a record at $96.94 after the company posted a bigger quarterly profit and said it expects online sales to boost holiday volume. Shares ended up 1.2 percent at $95.61.

Also, Zynga late Thursday said it expects a full-year profit after reporting better-than-expected third-quarter results. Shares jumped 5.5 percent to $3.729.

Dow component DuPont

jumped to the highest in more than 13 years, a day after announcing it will spin off its titanium dioxide unit within 18 months. Shares rose 0.8 percent to $61.90.

The day's economic data overall pointed to more signs that the recent budget battle in Washington has held back the economy.

New orders for long-lasting U.S. manufactured goods outside of transportation equipment fell in September, possibly due to uncertainty over government spending. U.S. consumer sentiment dropped in October to its lowest level since the end of last year as consumers worried congressional dysfunction.

(Editing by Nick Zieminski)

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Wall St opens up, Nasdaq gains on tech results

NEW YORK (Reuters) - U.S. stocks opened modestly higher on Friday, with the Nasdaq outperforming on the back of strong results from companies such as Amazon and Microsoft .

The Dow Jones industrial average was up 10.21 points, or 0.07 percent, at 15,519.42. The Standard & Poor's 500 Index was up 3.10 points, or 0.18 percent, at 1,755.17. The Nasdaq Composite Index was up 24.17 points, or 0.62 percent, at 3,953.13.

(Reporting by Ryan Vlastelica; Editing by Bernadette Baum)

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