Berkshire Annual Letter 1995 (Part 7)
In 1995, there were three businesses in the Berkshire staple that underperformed.
The shoe business had depressed earnings but the problem was likely to be a cyclical one.
On the other hand, the industry trends for Berkshire’s newspaper business, The Buffalo News, are not good (This was also previously mentioned in the 1991 Annual Report). Newspapers are less economical attractive now compared to the days when they have a bullet-proof franchise.
Over time, Warren expects their competitive strength to gradually erode, but with many remaining years of being a fine business.
The most difficult problem was in World Book, which had increasingly difficult competition from CD-ROM and other online offerings.
As a result, it had to make major changes in the way it operates, with more electronic products and reduced overheads. Whether these efforts are sufficient remains to be seen.