On Monday, Berkshire reported that it had bought 9.8 million shares of Apple stock at a cost of $1.1 billion. That’s about one-tenth of 1 percent of Apple’s stock and less than 1 percent of Berkshire’s investment holdings.
The news pushed up Apple’s stock price as much as 4.27 percent.
In the Yahoo deal, unconfirmed reports last week said Berkshire may supply cash to help Quicken Loans founder Dan Gilbert acquire Yahoo, which has been struggling financially but is valued by the stock market at about $36 billion. Berkshire, Quicken and Yahoo have not confirmed that report, although Buffett told CNBC on Monday that he might be willing to help finance a purchase by Quicken.
First, the Apple investment, made by Buffett lieutenants Todd Combs and Ted Weschler:
“Apple makes technology products, yes,” said David Rolfe, chief investment officer of Wedgewood Partners of Ladue, Missouri. “But with the iPhone franchise and their customer base, we actually view Apple as a consumer company. They have an unusually loyal following, real sticky.”
Berkshire and Apple are Wedgewood Partners’ two biggest holdings out of $8.5 billion it manages.
Apple’s customer loyalty gives it pricing power, and it has a long history of making profits and a strong brand name — three basic Buffett investment criteria.
The timing of the purchase made it somewhat of a bargain. Apple’s stock price topped $130 last summer, and a slump in revenue and iPhone sales dropped the price below $100 this year.
Rolfe said he recalls that several years ago Buffett said in an interview that he wished he had bought Apple stock early on. Apple was founded in 1978, and at some point it gained the status of an established, predictable business, even if it is within the technology sector.
That’s already true of IBM, a major Berkshire holding since 2011, Rolfe said. Buffett has said he bought IBM stock mainly because it is a business service company, although dealing mostly in computers.
The Apple purchase “isn’t groundbreaking,” said Cathy Seifert, an analyst with S&P Global Markets Intelligence, but is “a function perhaps of a shifting of the guard that will probably continue to uphold the tenets established by Buffett/Berkshire Hathaway.”
Combs and Weschler each manages about $9 billion of Berkshire’s investments, an amount that has grown steadily since they joined Berkshire in 2010 and 2011, respectively. Buffett manages the other $100 billion-plus.
China's yuan joins elite club of IMF reserve currencies China's yuan joins the International Monetary Fund's basket of reserve currencies on Saturday in a milestone for the government's campaign for recognition as a global economic power.
The yuan joins the U.S. dollar, the euro, the yen and British pound in the IMF's special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.The IMF is adding the yuan, also known as the renminbi, or "people's money", on the same day that the Communist Party celebrates the founding of the People's Republic of China in 1949.
"The inclusion into the SDR is a milestone in the internationalization of the renminbi, and is an affirmation of the success of China's economic development and results of the reform and opening up of the financial sector," the People's Bank of China said in a statement.
China will use this opportunity to further deepen economic reforms and open up the sector to promote global growth, the central bank added.
The IMF announced last year that it would add the yuan to the basket, so actual inclusion is not expected to impact financial markets. But it puts Beijing's often opaque economic and foreign exchange policy in the international spotlight as some central banks add yuan assets to their official reserves.
Critics argue that the move is largely symbolic and the yuan does not fully meet IMF reserve currency criteria of being freely usable, or widely used to settle trade or widely traded in financial markets. U.S. Republican presidential nominee Donald Trump has said he will formally label China a currency manipulator if he wins November's election.
China stunned investors by devaluing the currency last year and the yuan has since weakened to near six-year lows, adding to worries about already feeble global growth.
Some China watchers also fear that Beijing's commitment to further market opening and financial sector reforms will fade after its diplomatic success, despite repeated reassurances from Beijing it will continue with the process.
U.S. Treasury Secretary Jack Lew said on Thursday the yuan was "quite a ways" from true global reserve currency status. The new IMF status recognizes the "enormous" change in China in the last 10 years that had made the yuan more open, but Beijing still had work to do to make its currency and its economy more market-driven, he said. "Being part of the SDR basket at the IMF is quite a ways away from being a global reserve currency," he said.
Capital Economics said inclusion of the currency in the IMF's SDR basket will have minimal impact on foreign demand for yuan assets, so "offers little support" for the currency.
China's yuan joins elite club of IMF reserve currencies China's yuan joins the International Monetary Fund's basket of reserve currencies on Saturday in a milestone for the government's campaign for recognition as a global economic power.
The yuan joins the U.S. dollar, the euro, the yen and British pound in the IMF's special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.The IMF is adding the yuan, also known as the renminbi, or "people's money", on the same day that the Communist Party celebrates the founding of the People's Republic of China in 1949.
"The inclusion into the SDR is a milestone in the internationalization of the renminbi, and is an affirmation of the success of China's economic development and results of the reform and opening up of the financial sector," the People's Bank of China said in a statement.
China will use this opportunity to further deepen economic reforms and open up the sector to promote global growth, the central bank added.
The IMF announced last year that it would add the yuan to the basket, so actual inclusion is not expected to impact financial markets. But it puts Beijing's often opaque economic and foreign exchange policy in the international spotlight as some central banks add yuan assets to their official reserves.
Critics argue that the move is largely symbolic and the yuan does not fully meet IMF reserve currency criteria of being freely usable, or widely used to settle trade or widely traded in financial markets. U.S. Republican presidential nominee Donald Trump has said he will formally label China a currency manipulator if he wins November's election.
China stunned investors by devaluing the currency last year and the yuan has since weakened to near six-year lows, adding to worries about already feeble global growth.
Some China watchers also fear that Beijing's commitment to further market opening and financial sector reforms will fade after its diplomatic success, despite repeated reassurances from Beijing it will continue with the process.
U.S. Treasury Secretary Jack Lew said on Thursday the yuan was "quite a ways" from true global reserve currency status. The new IMF status recognizes the "enormous" change in China in the last 10 years that had made the yuan more open, but Beijing still had work to do to make its currency and its economy more market-driven, he said. "Being part of the SDR basket at the IMF is quite a ways away from being a global reserve currency," he said.
Capital Economics said inclusion of the currency in the IMF's SDR basket will have minimal impact on foreign demand for yuan assets, so "offers little support" for the currency.
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Sweden's flagship tech company said its third-quarter earnings would almost completely evaporate, citing a 19% sales decline in its core mobile-network equipment business, while its gross margin fell to 28% from 34% in the same period last year.
The news sent the company's share price down 20% on Wednesday.
Ericsson has been caught in a perfect storm. Spending by mobile-service providers on latest-generation, or 4G, networks largely has dried up, with most mobile-broadband projects having been completed last year.
At the same time, competition has risen, with Huawei Technologies Co. of China expanding aggressively on the traditional European turf of Ericsson and Finland's Nokia Corp.
The Swedish company is betting big on the development of faster wireless networks, called 5G, and software-based systems such as the so-called Internet of Things, with connectivity built into everyday objects such as fridges. But the first revenue from 5G is several years away, analysts say, leaving Ericsson dangerously exposed to hefty research and lab costs in the interim.
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