As the annual Berkshire Hathaway shareholders meeting gets underway in Omaha, Warren Buffett's company has just reported a 64 percent decline in net income for its first quarter.
Berkshire's net income of $940 million, or $607 per share, is down sharply from the $2.6 billion of last year's first quarter.
But a big chunk of that is due to "unrealized" losses of $1.6 billion on some long-term derivatives contracts Berkshire holds. Under accounting rules, those contracts have to be valued at the level they would go for if sold right now.
Buffett, of course, has no intention of selling them now, and says he believes those contracts, some of them going out years into the future, will turn out to be highly profitable.
In the meantime, Berkshire's earnings take a short-term hit, on paper.
The company goes into greater detail, and includes an excerpt from the most recent Letter to Shareholders, on all this in its news release.
Operating earnings also fell, but not by as much as the net: $1247/share vs $1434/share, a decline of 13 percent. Berkshire's insurance business brought in less income, and that's real money.
A reminder that Warren Buffett Watch is in Omaha (sitting in a Staples parking lot at the moment, thanks for the wi-fi), and will have extensive coverage from Buffettstock '08, including a live real-time blog of Buffett's big question-and-answer session with shareholders. That starts around 10:30a ET tomorrow (Saturday).
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See Warren Buffett Watch on CNBC's The Call, most weekday mornings at 11:50a ET
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