Buffett says health venture CEO pick to be disclosed in weeks

Warren Buffett

Warren Buffett

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 USA public companies.

This combo of file photos shows Warren Buffett attending the Forbes 100th Anniversary Gala in New York on September 19, 2017, left, and JP Morgan Chase Chairman and CEO Jamie Dimon on the floor of the New York Stock Exchange on July 12, 2013.

"Reducing or even eliminating quarterly earnings guidance won't, by itself, eliminate all short-term performance pressures that USA public companies now face, but it would be a step in the right direction", Dimon and Buffett wrote. The group said public companies should be managed for long-term prosperity, not to meet the latest forecast.

Warren Buffett and Jamie Dimon have teamed up to once again call for the end to quarterly earnings guidance by companies.

Besides their positions as business executives, Dimon is chairman of the Business Roundtable, an organization of about 200 top executives.

It's "sending the wrong message", Buffett told CNBC's Becky Quick in the interview.

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.

Securities laws require quarterly reports on profits, revenue and other information but do not require quarterly forecasts. "Public guidance was the fix for many companies".

Dimon and Buffett noted that the pressure to meet short-term profit forecasts has contributed to a fall in the number of public companies in the U.S.in the past two decades, "depriving the economy of innovation and opportunity".

Dimon said Thursday that about 20 percent of Business Roundtable members still do quarterly guidance and about 60 percent provide annual targets.

Those in favor of guidance say it improves communications with Wall Street, reduces share price volatility and boosts a stock's value. An outsized emphasis on quarterly earnings per share projections undermines the importance of investments in infrastructure, workforce development and other crucial capital expenditures that drive sustained USA economic growth.

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