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Coca-Cola closes door on earnings forecasts

Atlanta, Dec. 14 (Reuters): Coca-Cola, the world’s number one soft drink maker, on Friday said it would stop providing earnings guidance, scrapping one of the basic tools used by investors to keep tabs on the financial health of companies.

But Coca-Cola said the move to abandon quarterly and annual earnings guidance did not reflect any deterioration in its business and noted that it was positioned for strong growth in 2003.

In one final forecast, the Atlanta-based soft drink powerhouse left its earnings outlook for this year unchanged and added that it was comfortable with the current range of profit forecasts for 2003.

Analysts expect Coca-Cola to earn between $ 1.74 and $ 1.78 a share this year and $ 1.90 to $ 1.99 a share next year, according to market research firm Thomson First Call.

Coca-Cola’s policy shift came just months after it announced it would end its practice of providing quarterly unit case sales updates, a key financial yardstick in the beverage industry.

“We are quite comfortable measuring our progress as we achieve it, instead of focusing on the establishment and attainment of public forecasts,” Coca-Cola chairman and chief executive Douglas Daft said in a press release on Friday.

“We are managing this business for the long term,” added Daft, who noted that the focus on short-term forecasts prevented investors from taking a more meaningful look at the long-term strategies of the company.

The policy of withholding earnings forecasts is also one held by consumer products company Gillette Co., which, like Coca-Cola, counts billionaire investor Warren Buffett as a board member. Berkshire Hathaway Inc., Buffett’s own company, typically does not provide earnings forecasts.

Analysts said they did not think Coca-Cola's decision to draw the curtain on earnings forecasts would dramatically reshape investors' perceptions of the beverage firm's future prospects.

“While (it) could negatively impact Coca-Cola’s valuation, given the company’s track record of misjudging growth, it may not be a significant negative,” said UBS Warburg analyst Caroline Levy, who has a “buy” rating on Coke’s stock.

Shares of Coca-Cola, which have slumped about 12 per cent since Daft formally took over as head of the company in early 2000, lost 2 cents to close at $ 45.85 on the New York Stock Exchange.

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