Enough with earnings projections!
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MARK AUSTIN THOMAS: The nation’s Chamber of Commerce has turned its attention to business competitiveness. In a new report out this morning it explores how to make American markets more competitive on the global stage. Marketplace’s Lisa Napoli looks at one of them.
LISA NAPOLI: Publicly-traded companies are required to issue earnings reports each quarter.
And two-thirds of them do something they aren’t obligated to do: They put out earnings projections, too. Meaning how much they expect to make per share in the next quarter.
BOB POZEN: The inevitable result is, if the company does not meet that projection, its stock takes a tremendous hit.
That’s Bob Pozen of the Chamber’s Capital Markets Commission. The group is telling public companies: Stop the madness.
Pozen says American companies put too much time and energy into figuring out how to make their target earnings and not enough into research and development and other projects.
POZEN: One of the keys to global competitiveness is to take a longer-term approach to economic growth.
Pozen says a few companies have already said no to earnings projections, Coca-Cola, Exxon and Motorola among them.
No companies in Europe or Asia issue such forecasts.
In Los Angeles, I’m Lisa Napoli for Marketplace.
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