Business

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

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

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 .

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".

They also said they have found a person to head up the venture that their two companies, plus Amazon, are forming to attack the health care system's high costs and quality problems.

Dimon, the chairman and CEO of J. P. Morgan Chase, and Buffett, chairman and CEO of Berkshire Hathaway, wrote about the group's endorsement in an opinion column in The Wall Street Journal.

"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. CEO Jamie Dimon appealed for radical changes to the way public companies disclose financial information.

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"We think the president has raised some very critical issues about trade, especially with China, around state owned enterprises, fair competition, market access, the ability to own 100% of a company, and these things should be negotiated out and the Business Roundtable supports those issues", Dimon said. Last month, he said the goal is to challenge the entire healthcare industry, not individual segments.

In the op-ed, Dimon and Buffett said the pressure to meet short-term earnings estimates has contributed to a drop in the number of public companies in the United States in the past two decades.

However, those favouring the practice vouch that it improves communications with Wall Street, reduces share price volatility and boosts a stock's value, the report said.

Quarterly earnings guidance works like this.


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