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Buffett says diagnosis no cause for alarm

Read the Berkshire Hathaway press release.

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Warren Buffett's prostate cancer should not interfere with his duties as CEO of Berkshire Hathaway Inc., but it is a reminder that the day will come when someone else will take his job.

Buffett said Tuesday that his case "is not remotely life-threatening or even debilitating in any meaningful way." He said daily radiation treatments at the Nebraska Medical Center starting in mid-July will hinder only his travels for about two months.

But the medical news heightened concerns among some Buffett-watchers that Berkshire should be more transparent about its CEO succession plan.

The thought was evident in a press release in which Buffett addressed his shareholders, saying he would let them know immediately "should my health situation change. Eventually, of course, it will; but I believe that day is a long way off."

Buffett, 81, said he received the diagnosis of prostate cancer last Wednesday and had a CAT scan and a bone scan on Thursday, followed by an MRI on Tuesday.

"These tests showed no incidence of cancer elsewhere in my body," he said, adding: "I feel great — as if I were in my normal excellent health — and my energy level is 100 percent."

He said the cancer was discovered because his PSA (prostate-specific antigen) level recently jumped beyond its normal level and a biopsy seemed warranted. Buffett said it was diagnosed as Stage 1 prostate cancer.

Stage 1 prostate cancer does not cause symptoms, according to the American Joint Committee on Cancer. It is estimated that half of 90-year-old men have it. One study showed that men diagnosed with early prostate cancer have a survival rate of 87 percent after 10 years and their overall survival rate is about the same as men without prostate cancer.

Buffett biographer Alice Schroeder said the diagnosis is unfortunate but not a "huge event" that would prompt Berkshire to do anything immediate about its succession plan.

She noted that his older sister Doris has survived three bouts with cancer and is "still going strong." She said: "I'm not particularly concerned that it would change his expected longevity or anything like that."

But Schroeder has maintained for some time that Buffett should name the person designated as his successor and begin passing responsibilities to that person.

"I believe they should be making some transition steps, anyway. They should just be doing it because it's part of the natural order of things."

Buffett, however, told CNBC on Tuesday that Berkshire's succession plan would not change. He and Berkshire's board have designated a person as the next CEO but have not disclosed the name or notified the designee.

Investment manager Julius Ridgeway of Jackson, Miss., said the stock market's reaction today will be a test of how investors view the news.

Ridgeway, whose clients own Berkshire stock, said he doesn't think Berkshire needs to alter its succession plan, noting that Buffett has hired two younger men who could handle investments and that the board is ready if someone is needed as CEO. "I don't think we necessarily need to know who that candidate is," he said.

Buffett's diagnosis comes just weeks before the May 5 annual meeting of Berkshire Hathaway shareholders in Omaha, where attendance usually tops 35,000. His treatments apparently will start after an annual gathering hosted by Allen & Co. in Sun Valley, Idaho, where he's a regular guest.

The pending diagnosis did not stop Buffett from entertaining business students on Friday or from appearing onstage with musician Jimmy Buffett at an Omaha concert Saturday.

Omahan Richard Holland, an early Berkshire investor and a friend of Buffett's since the 1950s, said the diagnosis may cause concern.

"It's going to be a problem because of that word, 'cancer.' Everybody thinks it's a sentence," he said. "I'm sorry to hear this but, at the same time, knowing what I know about prostate cancer, I'm not terribly worried."

Holland, 90, said he was diagnosed with prostate cancer about 15 years ago and has been fine since. He and Buffett have the same doctor, Dr. Michael Sorrell.

"He's as good as they come," Holland said.

Buffett hasn't had serious health problems, except for surgery in 2000 to remove a section of his colon that had benign polyps. He occasionally mentions his imperfect hearing.

Berkshire's chief financial officer, Marc Hamburg, posted the press release shortly after 4 p.m., after the New York Stock Exchange closed for the day.

Berkshire's A share price had closed at $121,310 per share, up $1,785, or 1.49 percent, for the day. In after-market trading, the price fell.

Jeff Auxier, who heads an investment fund in Oswego, Ore., that holds more than $2 million worth of Berkshire stock, said it's encouraging that the cancer does not appear to be life-threatening. Auxier said he expects Buffett's choice for CEO to be "really outstanding. He's made so many right moves his entire life, you can't imagine anything else."

If the stock market reacts Wednesday by sending Berkshire's stock price down further, Auxier said, "that would be great. We want to buy some more."

The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.

Contact the writer:

402-444-1080, steve.jordon@owh.com


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