Jamie Dimon, Warren Buffett urge CEOs to end quarterly earnings forecasts
- Author: Darren Santiago Jun 09, 2018,
Jun 09, 2018, 20:43
Dimon, who appeared in a joint CNBC interview with Berkshire Hathaway chief executive and billionaire business magnate Warren Buffett, has in the past been very sceptical of the crypto, labelling it a "fraud" in September previous year.
Warren Buffett and business friend Jamie Dimon argued Thursday that publicly traded businesses can damage their long-term growth and hurt their shareholders by forecasting their earnings every three months and then making short-term decisions to "make the number".
Dimon, who also leads the Business Roundtable group, and Buffett co-wrote an article about why they think quarterly profit forecasts are hurting the economy.
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.
"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. CEO Jamie Dimon appealed for radical changes to the way public companies disclose financial information.
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Dimon said that Schultz "would be a great chief executive or governor or senator or mayor or whatever he wants to do", but added that he's not sure that managing a business makes a person suitable for politics.
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.
"Short-term-oriented capital markets have discouraged companies with a longer view from going public at all, depriving the economy of innovation and opportunity", Buffett and Dimon wrote.
Quarterly results are influenced by the weather, commodity prices and other factors beyond the control of CEOs, Dimon said. "Public guidance was the fix for many companies". "We're hoping a bunch of companies drop it right away".
Buffett told CNBC on Thursday that the CEO will probably be announced within two weeks. About 31 percent gave annual earnings-per-share guidance.