A day after Berkshire Hathaway’s shareholder meeting, billionaire buddies Warren Buffett, Berkshire’s chairman, and Bill Gates, a Berkshire director, were interviewed today on Fox Business Channel. Here’s a short story summarizing the conversation, and here are some interesting excerpts from a transcript provided by the Fox Business Network.
Near the beginning, Buffett got a question from interviewer Liz Claman that’s apropos to Microsoft’s decision to walk away from its proposed acquisition of Yahoo, rather than attempting a hostile takeover, as it had signaled. Asked why he never launches hostile takeovers, Buffett said:
“Well, it’s just not my way of — I want people that want to join us, and I want managers that are enthused once they get here. We’re going to keep the management in place that comes with the deal, and we’re not equipped to take over something and raid a castle and then bring in our own troops afterwards or anything like that.”
Asked what he would tell Gates if he was advising Gates on the Yahoo deal, Buffett demurred.
BUFFETT: “I would not presume to advise Bill in that game. That’s his game.”
CLAMAN: “But you have often said that sometimes two behemoths envision that combining themselves would be a great thing, but that often one plus one doesn’t equal two, it kind of ends up being one and a half.”
BUFFETT: “Yes, but with Steve and with Bill, they’re going to analyze it properly. And there’s a point in which you walk in deals. I’ve walked in deals, and sometimes they come back later on, sometimes they don’t. But, you know, you can’t want something at any price. You will do a lot of silly things if you come in with that approach.”
Then Claman turned to Gates. “If the opportunity arose again, would you welcome Yahoo!?”
He replied, “Well, that’s not the focus. We spent time with them, and we’re going to start to make some investments that are based on the great work our people are doing in gaining share organically.”
Claman asked whether Gates had much interaction with Yahoo President Sue Decker, also a Berkshire board member. “Was there any tension over the weekend? You guys talked together, or were you both very busy on the phone dealing with the situation?”
GATES: “I like Sue. You know, she’s — we have a great board. All the board members are super. Sue and I didn’t talk about the deal because Steve Ballmer and Jerry Yang were handling that, and so I was able to focus on my Berkshire activities.”
BUFFETT: “I watched them at dinner last night. Believe me, when Bill said, ‘Pass the salt,’ Sue just got it over there right away.”
Later she asked Gates about CEO Ballmer’s job performance, particularly with regard to Microsoft’s stock price.
GATES: “Well, Steve has done a fantastic job. If you take what’s happened to the earnings and sales since he’s been CEO, it’s well more than doubled. It’s phenomenal.
“If you do a comparison back to that period, where all the tech stocks, even Microsoft, even though we said, hey, this seems very wild to us and crazy, you know, that’s a comparison. But in fact, the strength of the company has never been greater.
“And what a management does is they just build that strength. They don’t let the volatility of the market determine how they’re making good business decisions. And so, you know, we’re being rewarded relative to, say, three years ago for the good work we’ve done.”
She also asked Gates for a reading on the impact to Microsoft of a slowing economy.
GATES: “Well, so far, the Microsoft numbers have been very healthy, but in no way can the technology sector be immune if the economy is slowing down. In fact, technology spending is often the thing that goes up the most as the economy grows and goes down, as people are seeing the economy contract. So, we were seeing good numbers so far, but, you know, all the discussion may put people in a more conservative mode. So we’re trying to make sure that, you know, we’ve got our bases covered.”
And she elicited this interesting story about Gates’ early entrepreneurship.
GATES: “Well, my parents exposed me to a lot of their business activity.
“My biggest success was when I was a page in the United States Congress, that the McGovern/Eagleton ticket was dissolved. And so I bought up all the campaign buttons and I totally owned the market on these campaign buttons.
“So I paid literally a few cents. And we decided they were worth about $5. And so, I had a great summer because I — for me at the time, I made a lot of money.”