Скачать или смотреть Warren on Problems at NetJets

CAROL LOOMIS: This question comes from Douglas Ott of Banyan Capital Management in Atlanta.

“In your recent letter to shareholders, you wrote that it was clear you failed us in letting NetJets descend into such a condition that it has recorded an aggregate pre-tax loss over the 11 years we have owned the company.

“What specifically were the errors committed by you and the previous CEO? What have you learned? And how will you prevent such a thing from happening with any of our other businesses in the future?”

WARREN BUFFETT: Well, I probably won’t. (Laughs)

We’ll make mistakes from time to time, and some of our managers may make mistakes. And sometimes you run into conditions that are really extraordinary.

But the mistake, the biggest mistake made with NetJets is essentially we kept — we were buying planes at prices that were fictitious, in terms of the price at which we would later be able to sell them. And there’s a certain time lapse involved in buying fractional shares.

There’s a lot of explanations for it. But in the end, we didn’t properly prepare for what was obviously happening. And we lost a lot of money, a good bit of which was attributable to the write-down of planes, which you could call is our inventory, where we bought them at X and we couldn’t sell them at X or 90 percent of X.

Some of those were new planes that we should not have taken on, and many of them were planes coming back from owners.

We also let our operating costs get out of line with recurring revenues.

But, you know, I’ve made plenty of mistakes. I stayed in the textile business for 20 years. I knew it was a lousy business. Charlie was telling me it was a lousy business in the first year, the second year.

And 20 years later, I woke up. I was like Rip Van Winkle. I mean, it’s kind of depressing when you think about it. (Laughter)

But the one thing we will guarantee, we’ll make some mistakes. It was a big mistake at NetJets, $711 million is the figure.

We are now operating at NetJets at a very decent profit. The figures you saw there on the screen reflect a pretax profit of well over $50 million in the first quarter, and that’s not with any big boom in plane sales or anything else. It’s just with a business plan that involves not an iota of diminution of safety or service, but just got things in line that needed to be in line.

And I give Dave Sokol enormous credit. I mean, he turned that place around like nobody could have, and all the shareholders here owe him a big vote of thanks for that.

Charlie? (Applause)

CHARLIE MUNGER: Yes, but I believe that the episode ought to be reviewed in context.

If we buy 30 big businesses and generally let the people who run them successfully and before run them with very little interference from headquarters, and it works out 95 percent of the time very well, and we have one episode when the basic franchise was protected but we lost profit opportunities for a while, it’s not a big failure record.

Nor does it indicate that we should stop being pretty easy with the remarkable people who join us with their companies.

WARREN BUFFETT: No, it does not change our management approach at all. I think that we have gotten performance, overall, from managers that are beyond the dreams I would have had when I was first putting this company together.

So, it’s been a — we let managers do their stuff. And I think —

CHARLIE MUNGER: It’s worked for us, net.

WARREN BUFFETT: Oh, it’s worked — it’s worked very well for us, net. And we’re going to keep doing it.