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

Bad Advice       Quarterly guidance has resulted in bigger earnings surprises since 2016              Source Bloomberg

Bad Advice Quarterly guidance has resulted in bigger earnings surprises since 2016 Source Bloomberg

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.

Buffett told CNBC on Thursday that the CEO will probably be announced within two weeks.

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.

Warren Buffett, Jeff Bezos and Jamie Dimon have picked a leader for their health care venture.

"In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability", Buffett and Dimon wrote.

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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. JPMorgan Chase reported lower fourth-quarter earnings January 12, 2018 on weak trading revenues and one-time costs from U.S. tax reform, partly offset by gains from higher interest rates.Net income for the quarter ending December 31 was $4.2 billion, down 37 percent from the year-ago period.

Several big companies like AT&T, Coca Cola, Facebook and UPS have stopped issuing quarterly earnings guidance.

Neither Buffett and Dimon nor the Business Roundtable is arguing against quarterly or annual reports from public companies. Buffett has echoed the idea that guidance can lead to corporate misbehaviour. They offered "common-sense" recommendations for public companies to improve governance and relations with shareholders. Bloomberg LP, the parent of Bloomberg News, is a member of the Boston-based non-profit group.

The practice of forecasting has come under severe criticism in recent times with investors pressurising firms to deliver to their promises, said CNBC. "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".

Quarterly earnings guidance works like this.

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