Buffett Won't Invest in Tech FirmsBARRY BEDLAN , Associated Press
May. 4, 1998 8:40 PM ET
OMAHA, Neb. (AP) _ Billionaire investor Warren Buffett says he won't invest in technology companies because, quite frankly, he doesn't understand them.
Buffett told 11,000 shareholders gathered Monday for the Berkshire Hathaway Inc. annual meeting he won't be putting money into Microsoft, IBM, Intel or any of the other high-tech giants because he doesn't know the industry well enough.
He plans to leave that market to Microsoft billionaire Bill Gates, the only American wealthier than Buffett.
``I've been an admirer of Bill Gates but I'm sorry I can't put my money behind him,'' Buffett said. ``I don't know what that world (technology) will look like in 10 years. Technology is just something we don't understand, so we don't invest in it.''
Buffett also said he stays clear of Internet-based businesses like Yahoo. He finds their futures uncertain compared with companies that Berkshire has holdings in, including Coca-Cola, Gillette, American Express and Walt Disney.
``If I taught a class, on my final exam I would take an Internet company and ask (my students) `How much is this company worth?''' he said. ``Anyone who would answer, I would flunk.''
Buffett and his partner, Berkshire vice chairman Charlie Munger, fielded more than 90 questions from shareholders for more than five hours after the business of the day _ routine election of directors _ was completed in a hurried 10 minutes.
Most of the inquiries were about the duo's successful investing philosophy that has reaped huge profits for Berkshire, which can trace its roots to New England textile companies. Buffett, who began buying Berkshire shares in 1962, took a controlling interest in 1965.
Its stock is the highest priced on the New York Stock Exchange. Its Class A stock closed Monday at $69,100 per share, up 51 percent from Dec. 1. It has doubled in value since January 1997 and finished Monday at more than 10 times its 1990 closing price.
Other shareholder questions were about Berkshire's future _ specifically, who will succeed Buffett, 67, and Munger, 74.
``We have a number of people in the company who are leagues ahead of Charlie and I ... who knows, one of them may know a thing about technology,'' Buffett said.
They refused to name their likely successors but said at least 25 people in the company could be considered worthy candidates.
As the two devoured See's peanut brittle, Dairy Queen ice-cream bars and Coca-Cola _ all products of Berkshire holdings _ one shareholder expressed concern about their diets.
``I'm very concerned about your health considering what you're eating,'' said Irene Fenster of Tusla, Okla. ``What does your doctor say?''
Buffett quipped: ``I'm eating our products! I'm helping the company.''
When asked about his recent decision to dispose of Berkshire's holdings in fast-food giant McDonald's and pick up International Dairy Queen, Buffett simply said the two transactions were not related. He refused to comment on the McDonald's decision. He said Dairy Queen has more of a niche market.
As for his surprise purchase of 129.7 million ounces of silver last year, Buffett said he has been monitoring the precious metals market since the 1950s for an opportunity to enter. He said he made the buy because the price of silver appears to be underpriced in relation to regular demand. He likened the purchase to more of a hobby than a major investment.
``I think this whole (silver) episode will have as big of an impact on Berkshire Hathaway as Warren's bridge playing,'' Munger said of his partner, who's known for his enthusiasm for the card game.