Following are excerpts from the unofficial transcript of a CNBC interview with Billionaire Investor Warren Buffett ahead of the Berkshire Hathaway Annual Meeting. Following are links to video of the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000616140, http://video.cnbc.com/gallery/?video=3000616135, http://video.cnbc.com/gallery/?video=3000616139, http://video.cnbc.com/gallery/?video=3000616134 and http://video.cnbc.com/gallery/?video=3000616127.
All references must be sourced to CNBC.
BUFFETT ON IBM:
BUFFETT: well no I wouldn't say the specific earnings disappointed me but I would say that I don't value IBM the same way that I did six years ago when I started buying it. I mean overall I think the 6 years that I've revalued it somewhat downward and a matter of fact when it got up over $180 we actually sold a reasonable amount of stock.
QUICK: you sold a reasonable amount of IBM?
BUFFETT: Right
QUICK: last that I had seen you owned something like 13 or 14 billion dollars' worth of IBM...
BUFFETT: well depends on the price
QUICK: how much I'm trying to think back the number of shares...
BUFFETT: we owned about 81 million shares
QUICK: ok and
BUFFETT: when it got over 180 compared
QUICK: 180 dollars a share?
BUFFETT: yea 180 and compared to the valuation then that I thought was appropriate and other things we started selling some stock and some of that we sold in the first quarter. most of it was sold in the first quarter. some was sold in the second quarter.
QUICK: how much did you sell?
BUFFETT: we sold about 30%
QUICK: 30% of the shares? you owned about 9% of the shares outstanding of IBM.
BUFFETT: well if you look at it this way we had 81 million shares yea, so we probably sold in the area of 24, 25 million shares... but that was at higher price
QUICK: you were selling at 180 dollars that stock has come down pretty significantly since the earnings I think it's closer to $160 per share. would you still sell?
BUFFETT: I don't think we will be selling. in fact we could buy. I mean I continuously look at what they do, I look at the price of the stock when it was over 180 and I looked at what was happening and everything, they've run into some very tough competition.
QUICK: Warren, why are you telling us this?
BUFFETT: Well because the 13F is coming out in a week and were going to have the annual meeting and if questions came up about IBM I would feel like I shouldn't get cute in terms of having it a week later. people would look back and say well what was he saying at the meeting?
QUICK: So have you talked to IBM about this at all?
BUFFETT: Ginni Rometty was out a few weeks ago and actually they had had some stock watch. I don't know your viewers are probably familiar with it but there are some stock watch firms. I don't even know their names, I don't know how many there are but they a lot of big companies use them...Berkshire does not use them, and they report to management who they think is buying and selling. in fact I don't think I've ever even read a story on them or anything. I think it would be very interesting just to know who they are, how much they charge, how they get their information because we've had that happen 4 or 5 times that a management will say that they kind of wonder or they are sort of hearing or something of the sort that we might be buying or selling and like I say I don't know quite how they get the information...
QUICK; but Ginni Rometty asked you about that?
BUFFETT: well she yeashe wondered if it were true because she had gotten reports and I said it was true. I didn't tell her how many shares or any of the rationale or the prices or anything like that but she said that shed whatever firm does that had informed them that they thought we were selling and I said we were or had been maybe
QUICK: Can you tell us again why you sold the shares though because $180 doesn't seem like it's a ridiculously expensive price considering where you started buying the stock and where you've held it.
BUFFETT: well where you buy doesn't make any difference. A stock doesn't know what you paid for it.
BUFFETT ON APPLE'S BALANCE SHEET
QUICK: They also have a cash hoard of over a quarter of a trillion dollars. are you jealous?
BUFFETT: I'm very jealous yea, I thought I was doing ok until I looked at their balance sheet. on the other hand, we've got ours here in the united states.
BUFFETT ON A MISTAKE
QUICK: would you call your purchase of IBM a mistake?
BUFFETT: well it was a mistake in the sense that I could have done a lot better if I'd just bought the S&P. We made quite a bit more money than if we'd just sat with treasury bills but there were a lot of things to make money in that that we missed. I missed Apple, you know, earlier.
BUFFETT ON THE ECONOMY
BUFFETT: I'm a broken record on this subject but since the fall of 2009, literally, it's been about 2% a year, you know, and I don't think the figures are necessarily that accurate when you get to tenths and all of that. I'm sure its sped up a little bit sometimes it will fallen back a little. it's been 2% a year now for 7 and a half years. I don't think we've ever seen anything like that I mean it was a great recession but the recovery has been very steady ah you know autos are falling off a little now but housing is good and most of our businesses are doing a little better but I don't see it doing a lot more than that, I don't see it being a lot less. I wouldn't be surprised if when its revised it comes in a little higher than that and it's not perfect reporting. now what I see isn't perfect either obviously. I I just don't see anything but kind of a steady rise
BUFFETT ON DC
BUFFETT: well I would say this, if they hadn't passed the budget that would be news but that whole thing is ..its archaic. they ought to figure out a better system both in terms of the debt limit and the going through these theatrics. it's kind of unbecoming almost I mean the country has been around a long time. we should have gotten so that we don't have to go through this all the time.
QUICK: is it something that you pay much attention to as a business leader? Watching these things and we have gotten kind of accustomed to the theatrics as you put it.
BUFFETT: yea not at all I mean anytime a debt limit comes up, I'm not sitting there thinking you know is the united states going to default on debt or anything of the sort. I think I think 99% of people in business feel that way.
BUFFETT ON APPLE'S EARNINGS
BUFFETT: well its about what I expect but I don't really. I don't own it because of what I think the earnings are going to be in the next 3 months or 6 months. it's very hard to figure out how much people delay their buying of iPhones because of the launch of a new one in 6 months. I've talked to our guys at the furniture mart and they say there is a lot of that but.
QUICK; a lot of people waiting?
BUFFETT: a lot of people waiting yea. its if you knew a new car was coming out tomorrow a new model of something or other and you had to pay the same roughly the same, I don't know what they are going to sell the new one at but close to the same for the last year model you are probably going to wait so I think it's an incredible consumer product.
BUFFETT ON APPLE'S CASH
BUFFETT: I love the fact that they've repurchased shares. now what they are doing now is borrowing money in the United States figuring they will get that money back at some point or another so they are really buying in their stock using borrowed money but with the knowledge that if they had to they could take it back now and pay every bit of repatriation tax but they probably hope that tax comes down and my guess is that at some point or another that money will end up back in the United States or most of it. I like buying. If I like buying the stock myself, I like the company buying it. I obviously think that it's a good buy and if you can buy your own stock...there is no company you should understand better than your own company. and I think buying in stock makes a lot of sense at one price and I think it does not make sense at another price. I think it should be price sensitive. most companies don't look at it that way but that's the way I look at it.
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