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

Warren Buffett

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Berkshire Hathaway Inc, Amazon.com Inc and JPMorgan Chase & Co within the next two weeks will likely name a chief executive for their joint venture aimed at lowering the cost of health care, billionaire investor Warren Buffett said in an interview aired on Thursday on CNBC.

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.

They told companies to move away from providing quarterly guidance.

Buffett, who is chairman of Berkshire Hathaway Inc (BRKa.N), and Dimon wrote in a Wall Street Journal column on Thursday that the pressure to meet short-term estimates has contributed to a fall in the number of US public companies.

Many CEOs who take part in the common practice of providing Wall Street estimates of how much money their companies will make often feel "pressure" to meet those quarterly forecasts.

Dimon has blasted excessive reporting requirements and the short-term focus of quarterly earnings. "Public guidance was the fix for many companies".

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 USA in the past two decades. "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. At JPMorgan's investor day in February, he called on companies to stop providing the guidance, saying earnings are hard to predict and companies have an incentive to fudge numbers. About 31 percent gave annual earnings-per-share guidance.

However, companies that are in favor of issuing guidance say that it improves communications with Wall Street, lowers share price volatility and results in higher valuations.

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.

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