Unable to predict the unpredictable
I wonder sometimes whether top management read their annual reports. If they did they would realise that some of their statements reach the level of ludicrous.
Here, for instance are some ‘unable to predict’ statements taken from annual reports:
“We are also unable to predict if and when any changes to laws or regulatory policies will occur and how they will affect our business …” [1]
This statement relates to the risk of delays in the development and commercialisation of new products.
Now what reasonable shareholder or simple reader of annual reports would expect management to predict future changes to any country’s laws or regulatory policies? None at all.
How about these two:
“The Company cannot predict the effect of the planned separation on the trading price of shares of its common stock …” [2]
“Abbott cannot predict with any certainty changes in foreign currency exchange rates …”
Can anyone predict the trading price of any share in any company in the future, or predict changes in foreign currency exchange rates? Of course not.
But what if top management have read these statements and decided to keep them in their annual report. This tells us another story. I can only conclude these companies consider their shareholders as illiterate in business matters or complete idiots, or both.
[1] Bristol Myers Squibb, Forms 10-K, for the fiscal years ended 31st December 2021, page 25 and 31st December 2022, page 24. The statement appears in both years with no change, pure ‘copy paste’ from prior year annual reports!
[2] Johnson & Johnson, Annual report 2021, for the fiscal years ended 31st December 2021, page 14 and 31st December 2022, page 14. The statement appears in both years with no change, pure ‘copy paste’ from prior year annual reports!