The two men noted that companies often hesitate to spend on technology, hiring, and research and development in order to meet quarterly earnings guidance that can be impacted by seasonal factors beyond their control, such as political events and even weather.More news: The message is lost: Yahoo kills off its Messenger service
Buffett and Dimon announced they are partnering with Business Roundtable, a group of roughly 200 CEOs of major USA companies, to call on companies to consider eliminating quarterly guidance.
Although we've seen no immediate opposition to the proposed elimination of quarterly EPS guidance, it's not hard to imagine what at least one argument might be: just because companies don't publish the number does not mean they won't calculate such a number.
Meanwhile, billionaire investor Warren Buffett and Berkshire Hathaway Vice Chairman Charlie Munger told FOX Business' Liz Claman last month that bitcoin was "more expensive rat poison", after previously comparing it to the deadly chemical five years ago. "We are encouraging all public companies to consider moving away from providing quarterly earnings-per-share guidance".More news: Veterans react to signing of VA Mission Act
Despite the short-term hit to results from the tax bill, chief executive Jamie Dimon hailed the measure as a boon for the United States economy."US companies will be more competitive globally, which will ultimately benefit all Americans", Dimon said in a news release. "Public guidance was the fix for many companies". Public companies owe it to all of them to get this right, they said.
The Business Roundtable has thrown its support behind companies abandoning the practice of quarterly forecasting, Dimon says. 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.More news: Manchester United's Fred suffers injury scare ahead of World Cup