Buffett And Dimon: No More Quarterly Profit Forecasts

Buffett Dimon make plea to halt quarterly guidance so management can think long-term

Berkshire Hathaway Chairman and CEO Warren Buffett speaks during an interview in Omaha last month

Dimon, in a joint interview with Buffett to CNBC, claimed that executives are often under pressure to make quarterly predictions, but the practice "can often put a company in a position where management from the CEO down feels obligated to deliver earnings and therefore may do things that they wouldn't otherwise have done", report said.

Buffett, who is Berkshire Hathaway's chairman, and JPMorgan Chief Executive Jamie Dimon said in the interview that they had selected a person for the healthcare venture's top job.

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

Dimon said CEOs can influence their quarterly results by not opening branch offices, cutting research and development spending, reducing their marketing and other decisions that could hurt future earnings. That's not too surprising given the Dimon is now the chair of the Business Roundtable.

Dimon has blasted excessive reporting requirements and the short-term focus of quarterly earnings. The analysts take the company guidance into consideration when making investment recommendations and setting price targets for stocks.

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Short-term-oriented capital markets have discouraged companies with a longer-term view from going public at all, depriving the economy of innovation and opportunity, the two said.

According to Buffett and Dimon, the focus of companies on short-term profits run counter to the long-term interests of the business.

Despite the short-term hit to results from the tax bill, chief executive Jamie Dimon hailed the measure as a boon for the U.S. economy."US companies will be more competitive globally, which will ultimately benefit all Americans", Dimon said in a news release. About 31 percent gave annual earnings-per-share guidance.

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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.

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