Buffett Says Health Venture CEO Pick to Be Disclosed in Weeks

Warren Buffett

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.

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.

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.

"Reducing or even eliminating quarterly earnings guidance won't, by itself, eliminate all short-term performance pressures that US public companies now face, but it would be a step in the right direction", Dimon and Buffett wrote.

They told companies to move away from providing quarterly guidance.

Putin Says Russian Military Not Building Long-term in Syria
Russian President Vladimir Putin has characterized new us steel tariffs against its long-term allies as unjustified sanctions. The Russian government responded by mocking May and accusing the British government of fabricating the incident.

When the actual earnings results are officially reported, so-called beats - or profit results that top expectations - are often rewarded with a rise in the stock price.

Berkshire Hathaway is one of those firms that does not follow the practice as its leader Warren Buffett believes it sends a "wrong message" and tempt executives to manipulate numbers, according to report. The two business gurus said quarterly financial guidance encourages short-term thinking that stifles growth and limits innovation in the economy.

JPMorgan CEO Jamie Dimon, who has made negative comments about the cryptocurrency in the past, said during an interview Thursday with CNBC that while he doesn't want to be a "bitcoin spokesperson", buyers should "beware". Public companies owe it to all of them to get this right, they said. Around that time, big companies like Coca Cola, UPS and AT&T said they would no longer give quarterly guidance.

But McKinsey & Co. found in a 2006 study that quarterly guidance didn't affect valuation multiples and didn't reduce share price volatility. Last month, he said the goal is to challenge the entire healthcare industry, not individual segments.

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