Quarterly profit forecasts hurt economy, say Warren Buffett, Jamie Dimon

Quarterly profit forecasts hurt economy, say Warren Buffett, Jamie Dimon

Business Roundtable said it supports companies moving away from offering quarterly guidance and focusing on long-term goals.

Warren Buffett and Jamie Dimon are doubling down on their plea for corporations to stop providing quarterly earnings guidance.

Dimon, the chairman and CEO of J. P. Morgan Chase, and Buffett, chairman and CEO of Berkshire Hathaway, wrote about the group's endorsement in an opinion column in The Wall Street Journal.

They argue that short-term guidance has encouraged companies to hold off on technology spending and hiring and research, and has even discouraged many private companies from going public at all. JPMorgan Chase reported lower fourth-quarter earnings January 12, 2018 on weak trading revenues and one-time costs from USA tax reform, partly offset by gains from higher interest rates.Net income for the quarter ending December 31 was $4.2 billion, down 37 percent from the year-ago period.

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 U.S. in the past two decades. Around that time, big companies like Coca Cola, UPS and AT&T said they would no longer give quarterly guidance.

FTSE fails to open, LSE says opening auction delayed
A spokesperson for the London Stock Exchange said the opening auction had been held up because of an issue with pricing data. The shares were sold at an average price of GBX 4,182 ($55.68), for a total value of £1,700,359.38 ($2,263,825.56).

However, companies that are in favor of issuing guidance say that it improves communications with Wall Street, lowers share price volatility and results in higher valuations.

"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.

Dimon, Buffett and BlackRock Inc.'s Laurence D. Fink urged companies in 2016 to refrain from short-term earnings forecasts in a letter and report with other financial industry executives.

Dimon said Thursday that about 20 percent of Business Roundtable members still do quarterly guidance and about 60 percent provide annual targets. "Such short-termism is unhealthy for America's public companies and financial markets - which are critical to economic growth and financial prosperity", Business Roundtable said in a statement.

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