Buffett, Dimon urge end to quarterly profit forecasts | AP business

Warren Buffett

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. They plan to name the venture's first CEO publicly within two weeks.

J.P. Morgan chief executive Jamie Dimon appeared on CNBC on Thursday to discuss why he doesn't think tariffs are the way to go.

But Buffett says the practice of CEOs providing a heads-up on how earnings-per-share results are shaping up often causes them to make poor decisions to ensure that the company beats or meets the results they've communicated to Wall Street.

Besides their positions as business executives, Dimon is chairman of the Business Roundtable, an organization of about 200 top executives.

Instead, McKinsey found, the practice of giving quarterly guidance took up valuable time from management and made them focus too much on the short term. "You're not going to be ordained to be the president of the United States. Business just doesn't work that way".

In the latest appeal, they said companies often hesitate to spend on technology, hiring, and research and development to meet quarterly earnings forecasts that can be affected by seasonal factors beyond their control. Last month, he said the goal is to challenge the entire healthcare industry, not individual segments.

"Sometimes you're a cork in the ocean", he said.

Such managers argue that the forecasts are important disclosures by companies and inform investors about what the business leaders expect to accomplish.

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

Amazon's size and reputation as a disruptor prompted investors to sell shares of companies that might be hurt by the venture when it was announced in January.

"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.



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