Newspaper: Others Should Follow Coke’s Lead

Dec 26, 2002

By George Anderson

An editorial in the Christian Science Monitor praises Coca-Cola’s recently announced decision to stop releasing forecasts of its earnings every three months.

According to the paper, “If other big companies follow the soft drink king’s lead, American business could be radically restructured. More investors would pick a stock for its long-term value rather than speculate on whether a company may beat its own guesses on earnings.”

“Managers with stock options would be less tempted to manipulate numbers in order to meet expectations and boost a stock price every few months. Stocks wouldn’t be treated like an instant lottery for quick gains. And most of all, CEOs could concentrate more on building up staff, nurturing ideas, building up market share, and constructing large capital projects.”

Company forecasts have made the very people that cover the companies lazy. Analysts determine the progress and value of a stock based on a company meeting its own projections rather than fully analyzing the potential and actual performance of an organization.

Moderator’s Comment: What are your thoughts on Coke’s
decision to end its quarterly forecasts?

We’re not much for government regulation, but we’d support
the SEC if it strongly encouraged others to do exactly what Coca-Cola is doing.
Anderson – Moderator

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

Be the First to Comment!