Monday, 22 October, 2018

Elliott's Singer agrees with Buffett, Dimon on profit guidance

Bitcoin Surprise Surprise! Jamie Dimon and Warren Buffet Still Don’t like Bitcoin Rick D Bitcoin Surprise Surprise! Jamie Dimon and Warren Buffet Still Don’t like Bitcoin Rick D
Celia Hoffman | 09 June, 2018, 17:31

Companies often hold back spending on technology, hiring, and research and development to meet quarterly earnings guidance that may be affected by factors outside the company's control, the business leaders wrote. That's not too surprising given the Dimon is now the chair of the Business Roundtable.

"In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability", they wrote.

Buffett defended his argument in an interview with CNBC on Thursday morning.

FILE PHOTO: Jamie Dimon, CEO of JPMorgan Chase, takes part in a panel discussion about investing in Detroit during a panel discussion at the Kennedy School of Government at Harvard University in Cambridge, Massachusetts, U.S., April 11, 2018.

Dimon has blasted excessive reporting requirements and the short-term focus of quarterly earnings.

In the op-ed, Dimon and Buffett said the pressure to meet short-term earnings estimates has contributed to a drop in the number of public companies in the USA in the past two decades.

More news: Andy Murray ditches plastic bottles on court | Scotland

On Thursday morning, the Business Roundtable which includes CEOs of US companies with more than 16 million employees and more than $7 trillion in annual revenues, weighed in supporting the proposal. In contrast, results that fall shy of market forecasts often cause the stock price to fall.

The Business Roundtable has thrown its support behind companies abandoning the practice of quarterly forecasting, Dimon says.

"When companies get where they're sort of living by so-called 'making the numbers, ' they do a lot of things that really are counter to the long-term interests of the business", Buffett said.

Buffett and Dimon also blamed the practice for contributing to the decline in the number of public companies in the US over the past 20 years. The two business gurus said quarterly financial guidance encourages short-term thinking that stifles growth and limits innovation in the economy.

The top executives, however, admitted that reducing or eliminating guidance won't alone eliminate all short-term performance pressures.

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