BUFFETT SOUNDS WAKE-UP CALL TO LOWER COSTS

       Berkshire Hathaway managers may deliver more cost cuts to chief executive Warren Buffett after the billionaire replaced Richard Santulli as the head of a money-losing plane-leasing unit.
       Berkshire executives have eliminated jobs and closed plants as the sale of bricks, jewellery and luxury flights suffered in the recession.
       The company, which reports third-quarter results yesterday, may need further reductions, even as the US recovers, said Jeff Matthews, founder of the hedge fund Ram Partners.
       "I don't think Berkshire hit the reset button as hard as other companies" when it came to cutting costs, said Matthews, the author of "Pilgrimage to Warren Buffett's Omaha".
       Naming David Sokol, chairman of Berkshire's energy business, to lead the aviation operation that Santulli founded may have been received as "a wake-up call to other managers".
       Sokol said that Netjets was laying off as many as 495 pilots.
       The CEOs of Berkshire's operating companies oversee more than 200,000 workers selling Fruit of the Loom T-shirts, Geico car insurance and Dairy Queen ice cream, while Buffett vets investments with a staff of fewer than 20 at the firm's Omaha, Nebraska headquarters.
       Berkshire said on Wednesday that it agreed to pay US$26 billion (Bt867 billion) to buy Burlington Northern Santa Fe, adding a railroad with about 40,000 employees.
       Berkshire has gained 5.5 per cent this year through Thursday on the New York Stock Exchange, compared with the 18 per cent gain in the Standard Poor's 500 Index.
       Third-quarter profit may more than double to $2.89 billion, according to Meyer Shields, an analyst with Stifel Nicolaus.
       The best back-to-back quarterly rally in the S&P in 34 year is helping Berkshire recover after its first loss since 2001 in the January-to-March period.
       Berkshire's agreement to purchase the 77.4-oer-cent of Burlington it did not already own may mean Buffett is more confident in the company's finances after he scaled back on insuring catastrophes earlier this year to guard capital. The deal is Buffett's biggest.
       "He's making such a large acquisition at a time when he was so concerned about having enough liquidity," said Gerald martin, a finance professor at American University's Kogod School of Business in Washington. "It might signal that Berkshire is kind of turning the corner."
       Buffett built Berkshire into a $150-billion company over four decades by buying out-of-favour stocks and family businesses. After credit markets froze last year, Buffett added to holdings of bank stocks and agreed to finance Goldman Sachs Group, investments that surged in this year's recovery.
       Buffett purchases operating companies for Berkshire with the promise to their owners never to sell them and says his ideal time horizon to hold a stock is "forever".
       He reversed course on credit-rating company Moody's Corp, reducing Berkshire's stock holding three times since July. In February, he said he made a mistake by buying ConocoPhillips stock, which cost Berkshire $1.9 billion in the first quarter.
       Buffett was a NetJets client before acquiring the firm in 1998 from Santulli, the inventor of fractional jet ownership.
       Santulli added about 648 jobs at Columbus, Ohio-based Netjets in 2008 before presiding over about $350 million in losses in the first half. Sokol announced 300 job cuts in September and the additionaly layoffs on Friday.
       Santulli said in August that he was resigning to spend more time with his family, and Buffett said he accepted the departure "with reluctance".
       "Nothing is forever, even at Berkshire", Matthews said.
       Buffett replaced Marvin Beasley in April as CEO of Helzberg Diamond Shops after saying in an interview that consumers "won't go in our jewellery stores" because of the recession.
       A year earlier, Beasley told the kansas City Business journal that Helzberg was not planning more job cuts after eliminating 21 positions, saying, "we think it's going to be OK".
       Helzberg has 234 US stores, according to its website, compared with the" nearly 270" tally given by the company in April when the transition was announced.
       Marti Greathouse, a spokes-woman for Helzberg, did not return a call seeking comment.
       Berkshire last year cut jobs at businesses including Clayton Homes, which builds manufactured housing, and brick-maker Acme Building Brands.
       Buffett told shareholders at the firm's annual meeting in May that he expected more reductions. Shaw Industries, the world's largest carpet manufacturer, said last October it was closing a spun-yarn plant in Trenton, Georgia, to cut production. About 440 workers were affected.

       Buffett built Berkshire into a $150-billion firm over four decades by buying out-of-favour stocks and family business.