Berkshire Hathaway Inc. Chairman Warren Buffett has been diagnosed with stage 1 prostate cancer that is “not remotely life threatening,” the billionaire investor said in a letter to investors.
Buffett, 81, will begin a two-month treatment of daily radiation in July, he said. The regimen will restrict his travel during the period and not otherwise change his daily routine, said Buffett, who is also chief executive officer of the Omaha, Nebraska-based company.
“I feel great -- as if I were in my normal excellent health -- and my energy level is 100 percent,” Buffett said in the letter yesterday. “I will let shareholders know immediately should my health situation change. Eventually, of course, it will; but I believe that day is a long way off.”
The diagnosis is the least severe of four stages of the cancer, which affects 1 in 8 men over the age of 70. The five-year survival rate for local prostate cancer, such as Buffett’s, is close to 100 percent, according to the American Cancer Society.
“It’s a slowly progressive disease,” said Sean Collins, a radiation oncologist at Georgetown Lombardi Comprehensive Cancer Center in Washington, who has no personal knowledge of Buffett’s condition. “If someone had a short life expectancy you wouldn’t treat them at all. With a 10-year life expectancy, radiation treatment is a rational decision.”
Buffett has been preparing for an eventual transition for more than a decade, and told shareholders in his most recent annual letter that the board has a candidate for CEO, without naming the executive. Vice Chairman Charles Munger is 88.
Class B shares slipped 0.9 percent to $80.06 at 9:51 a.m. in New York. Uncertainty over management transition weighs on Berkshire’s credit grade, Standard & Poor’s and Moody’s Investors Service said in March.
“We expect modest weakness in the shares,” said Meyer Shields, an analyst at Stifel Nicolaus & Co., in a note to investors yesterday. “Succession-related uncertainty remains one of the primary concerns underlying our hold rating, but we don’t think today’s news makes these concerns significantly more imminent.”
The diagnosis should pressure Buffett to publicly identify his successor, said Beth Saunders, Americas chairman for FTI Consulting strategic communications in Chicago, who has advised companies including Coca-Cola Co. and Dow Chemical Co.
“He has a higher threshold because of his importance to the company,” Saunders said in an interview. “I think he’s failed to meet it so far.”
The CEO received the diagnosis April 11 and had a magnetic resonance imaging test yesterday that showed no incidence of cancer elsewhere in his body, he said. The annual shareholders’ meeting, scheduled for May 5, will proceed according to plan, CNBC reported, citing an interview with Buffett.
Buffett “is out in the open, and I like that,” said Thomas Russo, a partner at Berkshire investor Gardner Russo & Gardner. He said the disclosure was better than was given by Apple Inc. co-founder Steve Jobs, who was diagnosed with pancreatic cancer in 2003 and died in October at 56.
Jobs, who helped rebuild Apple from industry also-ran to the world’s most valuable company, was forced to take three leaves of absence because of health issues. Steve Dowling, an Apple spokesman, declined to comment.
American International Group Inc. Chief Executive Officer Robert Benmosche, 67, has led the bailed-out insurer while battling cancer since 2010. The New York-based company said in October of that year that he began an “aggressive round of chemotherapy,” without specifying the type of cancer. Benmosche has said that he intends to stay on the job past this year.
Buffett said in 2000, after having colon surgery, that his roles would be divided upon his retirement. He has said his son Howard Buffett, a farmer and Berkshire director, would help maintain the company’s identity as non-executive chairman. Berkshire has hired former hedge fund managers Todd Combs and Ted Weschler in the past two years to help oversee investments and eventually run a portfolio that included more than $75 billion of stock holdings as of the end of 2011.
Keeping the name of the next CEO private puts Berkshire on par with JPMorgan Chase & Co., the largest U.S. bank, and General Electric Co., Buffett has said.
They “probably don’t like the effect of having a crown prince,” Buffett said in a Feb. 27 interview on CNBC, according to a transcript on the station’s website.
Buffett oversees managers running more than 70 businesses including the Geico car insurer and Burlington Northern Santa Fe railroad. He also makes the firm’s biggest investments, including the purchase of more than $10 billion in International Business Machines Corp. stock in a bet disclosed by Berkshire in November. Buffett didn’t immediately respond to a message seeking comment.
About 241,740 new cases of prostate cancer will be diagnosed in the U.S. this year and the disease will kill about 28,170 patients, the American Cancer Society estimated. The disease is the second-deadliest cancer for men after lung cancer.
Among prostate-cancer survivors are Rudy Giuliani, the former New York City mayor, and Andy Grove, former CEO of the world’s largest computer chipmaker, Intel Corp.
Giuliani, now 67, announced in 2000 that he had prostate cancer. The disease has since been successfully treated. Giuliani’s diagnosis led him to end a U.S. Senate campaign against Hillary Clinton, the current secretary of state.
Grove was Intel’s CEO when he underwent radiation treatment in 1995. Now 75, Grove remains active in public-policy matters including immigration and job creation.