(Adds earnings details, cash position, merger activity)
By Jonathan Stempel and Luciana Lopez
OMAHA, Neb. May 2 (Reuters) - Warren Buffett's Berkshire Hathaway Inc on Friday said quarterly profit declined 4 percent, falling short of analyst forecasts, as earnings from insurance underwriting declined and bad weather disrupted shipping at its BNSF Railway unit.
Results nonetheless benefited from strength in many businesses, including a one-third increase from underwriting at its Geico car insurance unit, and improvement at economically-sensitive businesses such as its Clayton Homes mobile home unit.
First-quarter net income fell to $4.71 billion, or $2,862 per Class A share, from $4.89 billion, or $2,977, a year earlier.
Quarterly operating profit fell 7 percent to $3.53 billion, or $2,149 per share, from $3.78 billion, or $2,302 per share.
Book value per share, Buffett's preferred measure of growth, rose 2.6 percent from year-end to $138,426 from $134,973.
Analysts on average expected operating profit of $2,172 per share, according to Thomson Reuters I/B/E/S.
Results were also hurt by an 80 percent drop in gains from derivatives, mainly related to contracts whose value grows faster when the stock market rises. Berkshire said such gains are "often meaningless" in trying to understand the company.
"It's the medium- to long-term results that count," said Mark O'Hare, a private investor from Brisbane, Australia. He said the profit shortfall is "consistent with what Mr. Buffett has always said: underwriting results will vary from year to year. The key is that it's a profitable underwriting result."
O'Hare was speaking in Omaha, Nebraska, where Buffett and Vice Chairman Charlie Munger are welcoming tens of thousands to Berkshire's annual shareholder weekend, which Buffett calls "Woodstock for Capitalists." They will field five hours of questions on Saturday at Berkshire's annual meeting.
Some may focus on Berkshire's slowing growth, after Buffett in 2013 missed his five-year target for the first time since taking over the company in 1965.
Berkshire's per share net worth grew 91 percent after taxes from 2009 to 2013, while the Standard & Poor's 500 including dividends rose 128 percent before taxes.
The company's market value tops $316 billion. It will need big deals, such as last year's purchase of a 50 percent stake in ketchup maker H.J. Heinz Co, to keep growing. Heinz contributed $177 million to first-quarter profit.
"In a quarter where the economy didn't grow, you wouldn't expect a company that's considered by the chief executive to be an all in bet on the U.S. economy to have stellar growth," said Bill Smead, who runs Smead Capital Management in Seattle, which owns $34 million of Berkshire shares.
A lack of big mergers has also driven up Berkshire's cash stake, which rose to $48.95 billion from $48.19 billion at the end of 2013. Buffett has said he wants a $20 billion cash cushion.
BAD WEATHER HURTS BNSF
Operating profit from insurance fell 31 percent to $1.18 billion. Much of the drop was attributable to a reinsurance business, whose lower results reflected currency fluctuations and the absence of a year-earlier gain.
Meanwhile, operating profit from noninsurance businesses rose 5 percent to $2.35 billion.
This was despite a 9 percent drop at BNSF to $724 million, which Berkshire said resulted from "severe weather conditions and service-related challenges," especially in northern U.S. states. Berkshire nonetheless projected that BNSF's profit for the rest of the year will top levels in 2013.
Profit generated by Berkshire Hathaway Energy, a utility unit that Berkshire owns most of and on Wednesday changed its name from MidAmerican Energy, rose 15 percent to $453 million.
That unit on Thursday agreed to pay $2.9 billion for AltaLink LP, a Calgary-based unit of SNC-Lavalin Group Inc that provides energy transmission services in Alberta.
Overall, Berkshire revenue rose 4 percent to $45.45 billion.
Berkshire also owns tens of billions of dollars of stocks such as American Express Co, Coca-Cola Co, International Business Machines Corp and Wells Fargo & Co.
Its smaller businesses sell, among other things, Benjamin Moore paint, Borsheim's jewelry, Dairy Queen ice cream, Fruit of the Loom underwear, Johns Manville insulation and See's candies.
In Friday trading, Berkshire Class A shares closed down $1,173 at $192,255 after earlier hitting a record high, and the Class B shares fell 97 cents to $128.09. (Reporting by Luciana Lopez and Jonathan Stempel in Omaha, Nebraska; Editing by Bernard Orr)