Jamie Dimon, Warren Buffett urge CEOs to end quarterly earnings forecasts
Jun 09 2018 by Johnny Bowman
JPMorgan CEO Jamie Dimon, who has made negative comments about the cryptocurrency in the past, said during an interview Thursday with CNBC that while he doesn't want to be a "bitcoin spokesperson", buyers should "beware".
As a result, corporations "frequently hold back on technology spending, hiring, and research and development" that would improve businesses' future growth, Buffett and Dimon say.
J.P. Morgan chief executive Jamie Dimon on Thursday denied that he plans on running for president.
Buffett and Dimon helped produce a set of voluntary governance guidelines two years ago, which was signed by more than one dozen executives.
Several big companies like AT&T, Coca Cola, Facebook and UPS have stopped issuing quarterly earnings guidance.
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Dimon and Buffett noted that the pressure to meet short-term profit forecasts has contributed to a fall in the number of public companies in the U.S.in the past two decades, "depriving the economy of innovation and opportunity". "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.
Neither Buffett and Dimon nor the Business Roundtable is arguing against quarterly or annual reports from public companies. Without company guidance, analysts' estimates are likely to vary more, making share prices more volatile at the same time that estimates become less valuable to investors and, horror, not worth paying for. Bloomberg LP, the parent of Bloomberg News, is a member of the Boston-based non-profit group.
In a CNBC "Squawk Box" program interview and an opinion piece published in the Wall Street Journal, Buffett and Dimon said quarterly forecasts, known on Wall Street as "guidance", take up management's time and lead to decisions that don't benefit companies or their shareholders.
"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", he said.