Berkshire Hathaway’s Record Earnings
Berkshire Hathaway, led by CEO Warren Buffett, reported record operating earnings of $47.4 billion in 2024. Despite more than half of its 189 operating businesses experiencing a decline in earnings, the company’s overall performance exceeded expectations. The surge in earnings was largely driven by improved yields on Treasury Bills and an increased investment in these highly-liquid short-term securities. At the close of 2024, Berkshire’s cash reserves and cash-equivalent holdings, including Treasury Bills, stood at $334.2 billion, nearly double the $167.6 billion recorded at the end of 2023. The value of the company’s equity portfolio was $272 billion, a significant decrease from the $354 billion valuation at the end of 2023. This decline was primarily due to major sales of Berkshire’s stake in Apple during the first three quarters of 2024, reducing the value of its holdings in the tech giant by approximately $100 billion. Buffett reassured shareholders that despite the large cash position, the majority of their investments remain in equities, predominantly American, with many having significant international operations. He emphasized that this investment strategy would remain unchanged. Berkshire’s total revenues for 2024 amounted to $371.4 billion, up from $364.5 billion the previous year. However, its investment gains fell to $41.6 billion from $58.9 billion in 2023, reflecting the inherent volatility of these figures. In his annual letter to shareholders, Buffett addressed the mistakes made over the years, both in capital allocation and managerial assessments. He highlighted the importance of transparency and honesty in reporting to shareholders. Buffett also acknowledged the upcoming transition of leadership to Greg Abel, assuring that the company’s core values and investment philosophy would continue under Abel’s stewardship. Buffett took pride in Berkshire’s significant tax contributions, noting the $26.8 billion paid to the IRS in 2024, the highest amount ever paid by a single company to the U.S. government. He lauded the long-term benefits of reinvesting profits, which have allowed Berkshire to grow and impact all corners of the country. The letter also mentioned changes to the annual shareholders’ meeting schedule, with the Q&A session starting and ending earlier. Buffett, along with Vice Chairmen Greg Abel and Ajit Jain, will address shareholders in a slightly adjusted format. Berkshire Hathaway’s strong financial performance, strategic adjustments, and commitment to its core values underscore its resilience and continued growth under Buffett’s leadership.
Apple’s Strategic Shift Under Trump
In a recent announcement, former President Donald Trump has called on Big Tech companies to bring their operations back to the United States, with Apple being the latest company to heed this call. According to Trump, Apple is set to significantly shift its investment strategy, moving its production from Mexico to the United States. During a meeting with governors, Trump revealed that Apple CEO Tim Cook promised to relocate the company’s manufacturing plants from Mexico to the U.S. Cook also pledged hundreds of millions of dollars in investments within the United States, aiming to avoid tariffs. Trump highlighted that Cook has already halted two manufacturing facilities in Mexico and will now focus on building products domestically. However, it is unclear which specific production plants Trump referred to, as Foxconn Technology Group, which manufactures iPhones for Apple, has a considerable production presence in Mexico and plans to expand further. Big Tech and Government Relations Apple has not yet released an official statement regarding this strategic shift. However, it is evident that Cook has been actively fostering a close relationship with the former president. Cook attended Trump’s inauguration event and visited his Mar-a-Lago estate in Florida during the presidential transition. As Apple navigates this new phase of investment and production, it will be interesting to see how the company’s financial performance and market position are affected. The shift may also influence other tech companies to reconsider their manufacturing strategies and potentially follow suit. This strategic move by Apple underlines the ongoing interplay between Big Tech and government policies, shaping the future of technology manufacturing in the United States.
Reddit Stock Drops Nearly 20% Post-Earnings
In recent developments, Reddit (RDDT) stock has seen a significant decline of about 19% following its earnings report last week. This comes after a six-month period where the shares had quadrupled. Despite surpassing earnings per share estimates, Reddit’s daily active users fell from the previous quarter due to changes in Google’s Search algorithm, which impacted site traffic. Reddit’s stock price was $167.25, reflecting a 4.67% drop. The stock experienced a 5% decline on the trading day following the earnings report and has continued to fall over the past week, marking a 19% five-day loss, the largest since April 2024. Insider Trading and Regulatory Challenges CEO Steve Huffman and his trust sold approximately $70.5 million worth of Reddit shares recently, marking the largest stock sale by the chief executive to date. Comparatively, Huffman’s largest previous stock sale was 1,400 shares worth $2.8 million on January 31. Furthermore, Reddit shares declined by 7.5% as the US Federal Trade Commission launched an inquiry into tech platforms’ policies regarding user bans for certain content. Reddit’s policies can ban users for bullying, harassment, or posting explicit and abusive content. Despite the recent drop, Reddit’s stock remains up nearly 220% from six months ago. We have been drawn to the platform’s increasing advertising revenue and growing partnerships with major AI companies like OpenAI, which utilize Reddit’s data to train their artificial intelligence models.
Nikola Corporation Files for Chapter 11 Bankruptcy
Nikola Corporation, the renowned American truck manufacturer specializing in electric and hydrogen-powered vehicles, has initiated a Chapter 11 bankruptcy filing in Delaware, as per recent court filings. This strategic move aims to allow Nikola the opportunity to restructure its operations while continuing its business activities. The company’s financial woes have been escalating due to prolonged periods of cash outflows exceeding inflows, compounded by disappointing sales figures. Further exacerbating the situation, Nikola was compelled to recall several of its electric trucks following reports of battery-related fire hazards. The court documents reveal a stark imbalance between Nikola’s debts and its assets, suggesting significant financial instability. The filing wasn’t entirely unforeseen, as speculation about Nikola seeking bankruptcy protection surfaced two weeks prior. Nikola, named after the famed inventor Nikola Tesla, went public in 2020, initially achieving a market valuation of $30 billion (€28.8 billion). However, the company’s trajectory was marred by a scandal involving its founder, Trevor Milton. Milton misled investors about advancements in electric truck development prior to the company’s Initial Public Offering (IPO), leading to a substantial decline in stock value and culminating in his incarceration. This Chapter 11 filing could potentially pave the way for Nikola to recalibrate its business strategy and stabilize its finances, much like other corporations that have successfully emerged from similar crises.
Philips Records Orders Uptick After Three-Year Lull
Philips, the renowned Dutch technology conglomerate, has reported a significant milestone: an uptick in orders for the first time in three years. While the company saw profits increase in 2024, challenges persist in the crucial Chinese market, where a notable decline in orders has been observed. In 2024, Philips experienced a 1% growth in orders, capitalizing on a robust final quarter with a 2% increase, largely fueled by strong demand from North American markets. However, the dynamism in these regions was counterbalanced by a drastic decline in Chinese orders, which plummeted by several tens of percent over the year, tempering overall growth. According to Philips’ annual results report, the company anticipates continued volatility in China, with an expectation of further demand contraction in 2025. This downturn is attributed to stringent regulatory requirements on medical technology, aimed at curbing corruption, alongside waning consumer and business confidence due to economic sluggishness. Despite these challenges, Philips’ turnover in 2024 surpassed €18 billion, marking a 1% increase over the previous year, while earnings before interest, taxes, depreciation, and amortization (EBITDA) rose from €1.9 billion to €2.1 billion. Looking ahead, Philips remains optimistic, forecasting sales growth between 1% and 3% this year, with projections of enhanced profitability despite the hurdles in the Chinese market. The firm underscores its resilience, having navigated a challenging phase marked by costly settlements in the U.S. related to its sleep apnea devices, amounting to over €1 billion. Philips plans to commence shareholder payouts in the first half of this year, signaling confidence in its ongoing recovery and growth trajectory.
OPEC+ Considers Prolonged Oil Production Limits
In a strategic move that resonates across global economies, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, are deliberating on extending oil production restrictions. This decision aims to sustain elevated oil prices—a scenario already impacting fuel costs worldwide. Historically, OPEC+ has suggested production increases to stabilize market prices but has deferred these adjustments multiple times. A further delay in increasing output marks the fourth occasion where market pressures have dictated restraint. Key players like Saudi Arabia and Russia are at the forefront of these discussions, as they seek consensus among member nations. The correlation between market supply and pricing is evident; a surge in production often leads to price declines. Despite this, OPEC+ delegates disclosed to Bloomberg that negotiations are inclined towards postponing the anticipated production increment, reflecting the organization’s cautious stance in volatile market conditions. Previously, OPEC+ introduced a phased production boost plan in June of the preceding year but postponed its execution, citing fragile market dynamics. Current evaluations suggest the market remains susceptible to destabilizing factors, necessitating continued caution. This ongoing deliberation occurs against a backdrop of geopolitical and economic tensions. U.S. President Donald Trump has urged major oil producers such as Saudi Arabia to reduce prices. Nonetheless, many member states argue that current prices, hovering around $74 per barrel, fall short of their fiscal requirements. Adding to the complexity, concerns over U.S. import tariffs contribute to market instability, making definitive decisions increasingly challenging for OPEC+. The sustained high oil prices have a direct impact on consumer costs at the pump, influenced by global market fluctuations, taxation, and local pricing strategies. The ramifications of OPEC+’s decisions are manifold, affecting not only oil-dependent economies but also ordinary consumers worldwide who feel the pinch at fuel stations. As deliberations continue, the world watches closely, aware of how interconnected energy policies are with broader economic health and stability.
Boeing Surpasses Airbus in Aircraft Deliveries
In a significant development for the aviation industry, Boeing has outpaced its European competitor Airbus in monthly aircraft deliveries for the first time in nearly two years. The American aerospace giant delivered an impressive 45 aircraft in January, surpassing Airbus’s 25 deliveries during the same period. This uptick in production could signal a potential recovery for Boeing after a prolonged period of challenges, including large-scale strikes at its American production facilities. In fact, January marked Boeing’s first full month of production since over 30,000 workers ceased operations last September due to labor disputes. Boeing’s recovery has been complicated by a series of technical issues, notably when a door panel came loose during a flight early last year. Additional incidents have involved problems with landing gears and wheels, further exacerbating the company’s challenges. A notable highlight in Boeing’s recent achievements is the delivery of 40 Boeing 737 MAX aircraft in January, with seven of these going to Chinese airlines. This development comes amid ongoing trade tensions between the United States and other countries since the inauguration of President Donald Trump, which have included disputes over tariffs and trade agreements. Boeing’s recent success in surpassing Airbus could be a turning point for the company as it strives to overcome past hurdles and reestablish its footing in the competitive aviation market.
Kering Sees Profits Plummet Amid Weak Chinese Sales
Kering, the prestigious French luxury conglomerate and the parent company of renowned fashion powerhouse Gucci, has reported a significant downturn in its financial performance for the past fiscal year. This decline is predominantly attributed to the lackluster sales in the crucial Chinese market, which has historically been a substantial contributor to the luxury sector’s growth. The company’s net profit experienced a drastic reduction, plummeting by 62% and settling at 1.1 billion euros. This is a stark contrast to the substantial 3 billion euros recorded in 2023, marking a substantial setback for the company. The overall revenue of the group also witnessed a downturn, decreasing by 12% to reach 17.2 billion euros. Among the brands within its portfolio, Gucci, which serves as Kering’s flagship brand, experienced a significant sales slump, with a decrease of 23%. This decline is indicative of the broader challenges the luxury retailer is facing in the current economic climate. The luxury market, particularly in China, has been affected by various external factors, including economic slowdowns and shifts in consumer spending patterns, which have all contributed to this downturn. Kering boasts a rich portfolio that extends beyond Gucci, including other eminent names such as Saint Laurent, Balenciaga, Alexander McQueen, and Bottega Veneta. In light of these financial difficulties, Kering’s CEO, François-Henri Pinault, expressed in a statement the challenging nature of the past year, underscoring the impact of these external market conditions on the company’s performance. Compounding the difficulties faced by the company this year, Gucci recently saw a significant change in its leadership. The brand parted ways with its creative director, Sabato De Sarno. The Italian designer, who was appointed in 2023 with the intent to rejuvenate Gucci’s brand appeal, served in this capacity for approximately two years. His departure marks another pivotal moment for Gucci as it continues to navigate these challenging times while striving to maintain its position as a leader in the luxury fashion industry.
Impact of US Tariffs on Steel Imports
In a significant policy move, former President Donald Trump announced the imposition of a 25% import tariff on steel and aluminum, a decision that reverberates across international trade channels. This tariff mandates that American buyers pay more for these crucial foreign metals, affecting not only domestic industries but also foreign exporters. Among the countries impacted, the Netherlands ranks ninth in terms of steel exports to the United States, with Tata Steel standing out as a key player. According to Tata Steel’s IJmuiden plant, the new tariffs will affect over 10% of its sales, translating to an anticipated annual export of 800,000 to 900,000 tons of steel to the U.S. A spokesperson from the company highlighted that Tata Steel produces a unique type of steel not manufactured in the domestic U.S. market. This specialized metal finds its applications in manufacturing excavators and electric car batteries. During Trump’s first term, an exception was previously made for Tata Steel on such tariffs, leaving the possibility open for a similar exemption in the future. The spokesperson emphasized the broader implications, stating, “Import duties always have an impact on our sales abroad. If higher rates are introduced, it affects us significantly. Though outcomes remain uncertain, we are preparing for all possible scenarios.” Meanwhile, Thyssenkrupp, a prominent German steel and industrial company, anticipates minimal impact from these tariffs. The company’s focus remains primarily on the European market, which is its largest. Steel exports to the U.S. form a minor portion of its business, characterized by high-quality, niche products that hold a strong position in their market. Furthermore, Thyssenkrupp derives most of its U.S. revenue from trading activities and supplying automotive parts, which remain mostly unaffected by these tariffs. The imposition of these tariffs underscores the ongoing complexities in international trade relations and the strategic adjustments required by foreign exporters to maintain their market positions. As stakeholders brace for potential changes, the global steel market continues to navigate these challenging waters, balancing between tariffs and strategic exemptions.
McDonald’s Reports Notable U.S. Sales Decline
McDonald’s, the leading fast-food chain, experienced a notable decrease in sales in the United States during the last quarter, marking the largest drop since the onset of the COVID-19 pandemic in 2020. This decline is largely due to cautious consumer spending and an unfortunate E. coli outbreak affecting the chain. The E. coli bacteria was found at several McDonald’s locations, resulting in over a hundred illnesses and one death. In response, McDonald’s temporarily removed the popular Quarter Pounder from menus in certain states, negatively impacting overall sales. Even with increased customer visits, U.S. sales dropped by 1.4% in the fourth quarter compared to the same period the previous year, as consumers spent less per visit. In contrast, the company saw a sales increase in the Middle East. Historically, McDonald’s has faced boycotts in the region due to its perceived pro-Israel stance during the Gaza conflict. However, these political tensions seem to have eased recently, boosting sales figures. Similarly, McDonald’s outlets in China and Japan reported higher sales of hamburgers and other products, indicating positive growth in these markets.