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CNBC Excerpts: CNBC's Becky Quick Speaks with Billionaire Investor Warren Buffett on CNBC's "Squawk Box" Today

BILL GATES, MICROSOFT FOUNDER & CO-CHAIR OF THE BILL & MELINDA GATES FOUNDATION & CHARLIE MUNGER, VICE-CHAIRMAN OF BERKSHIRE HATHAWAY JOIN SIT DOWN INTERVIEW

WHEN: Today, Monday, May 5th

WHERE: CNBC's "Squawk Box"

Following are excerpts from the unofficial transcript of a CNBC interview with billionaire investor Warren Buffett as well as Bill Gates, Microsoft Founder & Co-Chair of the Bill & Melinda Gates Foundation and Charlie Munger, Vice-Chairman of Berkshire Hathaway live from the Berkshire Hathaway Annual Shareholders Meeting. Video from the interview is available at CNBC.com.

All references must be sourced to CNBC.

BUFFETT ON COCA-COLA

WE HAD NO DESIRE, NEVER WILL HAVE A DESIRE, TO GO TO WAR WITH COCA-COLA. IT'S A WONDERFUL COMPANY, IT HAS TREATED US WONDERFULLY, THE MANAGEMENT HAS ALWAYS BEEN TOTALLY CANDID WITH US. I THINK WE'VE GOT THE RIGHT LEADER – I'M SURE WE'VE GOT THE RIGHT LEADER IN MUHTAR KENT. SO WE HAD NO DESIRE TO GO TO WAR, BUT WE DID THINK THE PROGRAM WAS EXCESSIVE. AND WITH THOSE TWO BELIEFS, WE FELT THE BEST THING TO DO WAS TO EXPRESS OUR OPINIONS PRIVATELY TO THE MANAGEMENT WHO WILL LISTEN CAREFULLY AND TO ABSTAIN FROM VOTING AT THIS MEETING AND WE THINK – I KNOW WE WILL HAVE SOME VERY CONSTRUCTIVE DISCUSSIONS WITH COCA-COLA BETWEEN NOW AND WHEN THEY IMPLENT ANY PLAN.

BUFFETT ON BOARDS

BOARDS ARE IN PART BUSINESS ORGANIZATIONS AND IN PART SOCIAL ORGANIZATIONS. AND PEOPLE WALK INTO THOSE WITH THEIR BEHAVIOR FORMED BY DOZENS OF YEARS. USUALLY YOUR PEOPLE HAVE ACHIEVED SOME STANDING PERHAPS TOO IN THE COMMUNITY. SO THEY HAVE LEARNED HOW TO GET ALONG WITH OTHER PEOPLE. AND THEY DON'T SUDDENLY CHANGE THEIR STRIPES WHEN THEY COME INTO A BOARD MEETING. SO THERE'S A GREAT TENDENCY TO BEHAVE IN A SOCIALLY ACCEPTABLE WAY AND NOT NECESSARILY IN A BUSINESS MAXIMIZATION WAY. THE MOTIVES ARE GOOD. BEHAVIOR IS FORMED BY DECADES EARLIER AND PEOPLE LIKE TO GET ALONG WITH OTHER PEOPLE. MOST PEOPLE. A FEW PEOPLE – CARL DOESNT HAVE THAT GENE QUITE AS STRONGLY AS OTHERS. AND I LOVE CARL, BUT HE MAY ENJOY BATTLE AND SOME PEOPLE DO THAT. BUT GENERALLY YOU DON'T GET INVITED ON BOARDS IF YOU THINK YOU'VE GOT A PERSON WHO ACTUALLY LOVES A FIGHT.

BUFFETT ON MARY BARRA

SHE INHERITED A MESS. AND IT'S NOT A SMALL ONE, AND IT'S A PARTICULAR CONCERN TO THE AMERICAN PUBLIC BECAUSE THE GOVERNMENT DID SAVE GENERAL MOTORS IN 2009 AND THESE EVENTS WHICH HAPPENED PRIOR TO THAT. BUT GENERAL MOTORS IS IN THE FOREFRONT OF MOST AMERICANS. BUYING CARS ARE IMPORTANT TO THEM. SO MARY – SHE IS BASICALLY ON A HOT SEAT BUT IT'S NOT A HOT SEAT OF HER OWN MAKING. AND I DON'T THINK THERE IS ANYBODY BETTER – THAT IS GOING TO BE BETTER AT HANDLING IT. IT WON'T BE HANDLED IN A WEEK OR MONTH. I MEAN, IT IS JUST THE NATURE OF PROBLEMS LIKE THAT TO GO ON FOR QUITE AWHILE.

BUFFETT ON TAX RATES

WE DO NOT FEEL THAT WE ARE UNDULY BURDENED BY FEDERAL INCOME TAXES. BUT IT DOES GET A LITTLE ANNOYING TO US WHEN WE SEE OTHER PEOPLE PAYING FAR LOWER TAX RATES WHILE ENGAGING IN THE SAME SORT OF BUSINESS THAT WE ENGAGE IN. BUT BERKSHIRE OPERATED UNDER 52% TAX RATES AND 48% TAX RATES AND WE MAKE A LOT OF MONEY UNDER U.S. TAX RATES.

BUFFETT ON CORPORATE TAXES

IF YOU LOOK AT CORPORATE TAXES AS A PERCENTAGE OF GDP, SINCE WORLD WAR II THEY'VE COME DOWN FROM 4% TO ABOUT 2%. IN FACT, UNDER 2%, THAT'S WHILE CORPORATE PROFITS HAVE BEEN HITTING RECORD LEVELS. SO IF YOU LOOK AT THE BUDGET OF THE UNITED STATES, INDIVIDUALS HAVE PAID MORE TAXES. CORPORATIONS HAVE COME DOWN FROM 4% OF GDP TO 2% OF GDP. NO OTHER GROUP HAS COME DOWN AS MUCH PERCENTAGE-WISE AS CORPORATIONS. CORPORATIONS ARE DOING FINE IN THE UNITED STATES.

BUFFETT ON LOBBYING

WE HAVE NEVER LOBBIED FOR A TAX ADVANTAGE. BUT IN TERMS OF THE TAX CODE, WE DO NOT FIGURE UP OUR TAX RETURN FOR THE YEAR AND THEN ADD A TIP OF 15% AT THE END OF THE YEAR, LIKE ON A RESTAURANT CHECK. WE PAY WHAT WE OWE. AND BY PAYING WHAT WE OWE, WE HAVE EARNED SUBSTANTIAL RETURNS ON CAPITAL. WE HAVE NEVER FOREGONE A CAPITAL INVESTMENT BECAUSE WE WERE HERE IN THE UNITED STATES INSTEAD OF SOME FOREIGN COUNTRY. AND WE HAVE BOUGHT FOREIGN BUSINESSES.

BUFFETT ON BERKSHIRE HATHAWAY NOT BREAKING UP

THERE ARE REAL ADVANTAGES TO HAVING THE COMPANY TOGETHER. I MEAN, ONE BIG ADVANTAGE IS THE ABILITY TO ALLOCATE CAPITAL FROM BUSINESSES WHERE IT CAN'T BE USED EFFECTIVELY, MAYBE – THE PRESENT CAPITAL CAN BE USED EFFECTIVELY, BUT INCREMENTAL CAPITAL HAS VERY LITTLE VALUE AND WE CAN MOVE THAT OVER TO OTHER AREAS, WHICH HAVE CAPITAL NEEDS BEYOND THE AMOUNT THEY ARE GENERATING THEMSELVES. SO CAPITALISM IS ABOUT CAPITAL ALLOCATION. THE WHOLE IDEA IS PUTTING RESOURCES IN THE RIGHT PLACES.

BUFFETT ON HIS SUCCESSOR

THE BOARD WILL NOT PUT A PERSON INTO THE JOB OF CEO OF BERKSHIRE THAT THEY DON'T THINK IS TERRIFIC AT ALLOCATING CAPITAL. AND THE CANDIDATES WE HAVE, I HAVE NO WORRIES ABOUT. THERE ARE PLENTY OF PEOPLE THAT ARE VERY GOOD AT SOMETHING ELSE AND MIGHT MEET A LOT OF THE TESTS, BUT WOULD NOT MEET THE CAPITAL ALLOCATION TEST AND THEY SHOULD NOT BE IN THE JOB.

BUFFETT ON ACTIVISM

SO AN IMMEDIATE BUMP IN THE STOCK PRICE SHOULD NOT BE THE MEASURE OF WHETHER SOMEBODY HAS ACCOMPLISHED SOMETHING SUCCESSFULLY IN A CORPORATION. BUT THERE ARE TIMES WHEN CHANGE IS NEEDED IN CORPORATIONS AND THEY'RE NOT GOING TO DO IT THEMSELVES.

MUNGER ON AMAZON MODEL

I THINK ITS VERY DISRUPTIVE TO PRACTICALLY EVERYBODY ELSE. I THINK IT'S A FORMIDABLE MODEL THAT'S GOING TO CHANGE AMERICA.

MUNGER ON CORPORATE TAX

I THINK THE ECONOMY MIGHT WORK A LITTLE BETTER IF THE CORPORATE TAX RATE WAS LOWER. BUT I THINK IT WOULD BE A MISTAKE FOR AMERICAN CORPORATIONS TO GET REALLY LOW TAXES.

MUNGER ON DATA BREACH

I THINK THESE DATA BREACHES ARE SO LIKELY THAT WE'LL SEE MORE OF THEM AND I DON'T THINK THE CEO IS NECESSARILY AT SOME TERRIBLE FAULT.

MUNGER ON HIGH FREQUENCY TRADING

WELL OF COURSE THEY HAVE AN ADVANTAGE CLEVERLY OBTAINED AND OF COURSE IT DOES THE REST OF THE CIVILIZATION NO GOOD AT ALL. IT'S THE FUNCTIONAL EQUIVALENT OF LETTING A LOT OF RATS INTO A GRANARY. NO I DON'T LIKE IT.

MUNGER ON PATENTS

WHEN I WAS YOUNG THERE WASN'T MUCH MONEY THAT CHANGED HANDS BASED ON PATENTS AND NOW THEY'RE HUGELY IMPORTANT. I THINK PATENTS ARE TOO EASILY GRANTED NOW. I DON'T THINK WE NEED AS MUCH PATENT PROTECTION AS WE HAVE.

GATES ON FRIENDSHIP WITH BUFFETT

I ACTUALLY MADE THIS MISTAKE THINKING THAT WARREN'S VIEW OF THE WORLD WAS JUST ABOUT CHARTS AND STOCK VOLUMES AND NOT ABOUT THE FUNDAMENTALS OF BUSINESS. AND SO WHEN WE MET AND HE WAS ASKING ME HOW DO YOU COMPETE WITH IBM, HOW DO YOU PRICE YOUR STUFF, WHERE IS IT GOING. IT WAS FANTASTIC, IT WAS THE MOST FUN CONVERSATION I'D EVER HAD AND SO THAT STARTED AN AMAZING FRIENDSHIP.

GATES ON MEDICAL COSTS

ZEKE EMANUEL WROTE A BOOK ABOUT MEDICAL COSTS IN AMERICA AND HOW WE GOT TO THE COMPLEX SITUATION WE HAVE. AND HE MAKES SOME PREDICTIONS ABOUT THE FUTURE. AND PEOPLE CAN DISAGREE WITH HIM. ACTUALLY I DISAGREE WITH SOME OF IT. BUT ITS VERY WELL-WRITTEN AND WE SHOULD HAVE A MORE INFORMED DIALOGUE ABOUT THAT CRITICAL TOPIC.

GATES ON SHAREHOLDERS HAVING POWER

WELL THERE'S A LEVEL OF DISCIPLINE THAT SHAREHOLDERS IN THE HIERARCHY, THEY SHOULD BE VIEWING THE ACTIONS OF THE BOARD AND MANAGEMENT. SOMETIMES IT SEEMS TO GET FOCUSED ON VERY SHORT TERM THINGS LIKE THE DIVIDEND POLICIES AS OPPOSED TO THE STRENGTH OF THE MANAGEMENT TEAM AND THE LONG TERM STRATEGY. BUT SHAREHOLDERS HAVING POWER IS A VERY IMPORTANT PART OF THE SYSTEM.

GATES ON PATENTS

THE IDEA THAT INNOVATION IN AND OF ITSELF SHOULD BE PROTECTED, YOU SHOULD GET PAID. THAT'S BEEN A VERY SUCCESSFUL IDEA GOING ALL THE WAY BACK TO THE STEAM ENGINE.

GATES ON SATYA NADELLA

YEAH, SATYA IS OFF TO AN AMAZING START AND HE'S DRAWING ON A BROAD SET OF PEOPLE IN THE COMPANY TO GET THEM TO RETHINK HOW CAN MICROSOFT MOVE A BIT FASTER AND REALLY DISTINGUISH OURSELVES WITH THINGS LIKE OFFICE 365.

GATES ON SHAREHOLDERS BEING HIJACKED

QUICK: CAN SHAREHOLDERS GET HIJACKED, THOUGH, BY A SHAREHOLDER WHO IS VERY LOUD BUT WHO HAPPENS TO HAVE A SMALL POSITION IN STOCK?

GATES: ONLY IF THE PRESS ALLOWS IT TO HAPPEN.

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