Buffett, Dimon say stop profit guesses

Buffett, Dimon say stop profit guesses

"We are encouraging all public companies to consider moving away from providing quarterly earnings-per-share guidance".

Warren Buffett and Jamie Dimon have teamed up to once again call for the end to quarterly earnings guidance by companies.

They said the pressure for companies to meet short-term estimates was hurting the USA economy.

The two executives said on CNBC Thursday that companies that focus on hitting their quarterly numbers may do things that hurt them in the future, such as delaying investments or changing when certain gains are recorded.

The pressure to meet short-term estimates has contributed to a fall in the number of USA public companies, wrote Buffett, chairman of Berkshire Hathaway Inc (BRKa.N), and Dimon, who is also the chairman of top executives' lobbying group Business Roundtable, in an article on Wednesday. Public companies owe it to all of them to get this right, they said.

Buffett has never provided profit forecasts and doesn't even have an investor relations department at his Berkshire Hathaway conglomerate.

The guidance "often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability", the two powerful CEOs wrote in a commentary piece in the The Wall Street Journal.

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"I've never seen a company whose performance has improved by having some forecast out there by the CEO that we're going to earn X", Buffett said.

Many CEOs who take part in the common practice of providing Wall Street estimates of how much money their companies will make often feel "pressure" to meet those quarterly forecasts.

Buffett and Dimon said they are not opposed to the current practice of quarterly and annual reporting that ensures transparency.

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

The three corporate leaders said in January that their companies - Berkshire Hathaway, Amazon and JPMorgan Chase - would work together to give their combined 840,000 employees better health care choices.

There has been great interest in these companies' health initiative since it was announced early this year, but few details have been released so far.

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