Elliott's Singer agrees with Buffett, Dimon on profit guidance

Warren Buffett

The group said public companies should be managed for long-term prosperity, not to meet the latest forecast.

Several big companies like AT&T, Coca Cola, Facebook and UPS have stopped issuing quarterly earnings guidance. That's not too surprising given the Dimon is now the chair of the Business Roundtable.

"The three of us and the new CEO, we've basically reached agreement", Berkshire Chief Executive Officer Warren Buffett said Thursday in an interview with CNBC, without naming the individual.

FILE PHOTO: Jamie Dimon, CEO of JPMorgan Chase, takes part in a panel discussion about investing in Detroit during a panel discussion at the Kennedy School of Government at Harvard University in Cambridge, Massachusetts, U.S., April 11, 2018.

Executives often feel pressure to make quarterly forecasts, but "it can often put a company in a position where management from the CEO down feels obligated to deliver earnings and therefore may do things that they wouldn't otherwise have done", Dimon said in a rare joint interview with Buffett airing Thursday on CNBC's Squawk Box . Heading into the profit reporting season, a CEO gives forecasts of sales and profits to the Wall Street analyst community. "Public guidance was the fix for many companies".

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"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", he said.

Proponents of the practice say it improves communications with investors and ultimately results in fewer, not more, wild swings in stock prices.

Both men said they still want companies to release detailed quarterly and annual financial data, so investors can evaluate them.

Buffett and Dimon also blamed the practice for contributing to the decline in the number of public companies in the USA over the past 20 years. "Such short-termism is unhealthy for America's public companies and financial markets - which are critical to economic growth and financial prosperity", Business Roundtable said in a statement. "But it would be a step in the right direction", they wrote.

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