Barry Diller, chairman of Expedia and digital media group IAC, told CNBC on Friday his companies will no longer provide long-term earnings forecasts.
“Guidance is a bad business. We’re out. We’re not doing it anymore,” the billionaire businessman told “Squawk Box.”
Diller said the amount of time companies spend to develop guidance is “wasteful” and that employees’ time would be better spent “actually doing some work.”
“The whole thing is nuts,″ he added.
Many companies suspended earnings guidance due to the uncertainty caused by the coronavirus pandemic. Diller said it gave Expedia and IAC the opportunity to say it would no longer be issuing it and he wants other corporations to do the same.
“I would hope that this period would allow all these companies to say, ‘Be gone with your guidance.’ It’s not a good game. Spend your time actually figuring out where you should invest your money, how you should run your company,” he said. “I’d love it as a practice to end for everybody.”
“Companies spend too much time massaging the process, getting the model right, so that they can always beat, not miss expectations, and the markets are always reactionary on that wildly short-term, dumbness of what happened in the next quarter,” Diller said, adding the models are “based on a phony premise.”
“You cannot predict the future. Full stop.” he said.
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