McDonald's Has Forecast Its Last Loss

After forecasting its first quarterly loss in 47 years, fast-food giant McDonald's MCD said it's getting out of the business of short-term financial forecasts.

Instead, the restaurant operator will provide investors an outlook for the key components of earnings. "This approach will give a clear assessment of our business," said McDonald's CEO Jim Cantalupo in his first public address to the financial community since he took over this month.

The decision follows a similar move by soft-drink manufacturer Coca-Cola KO in December. Previously, Gillette G said in January 2001 that it would no longer offer short-term earnings estimates. Both said such estimates crimped their ability to plan for the long term.

The announcement by McDonald's might seem slightly less pious in light of the direction in which its business has been headed.

Back in December, McDonald's said it would lose 5 cents to 6 cents a share in the fourth quarter, including charges to restructure certain markets. Excluding charges, the company said it would earn 25 cents to 26 cents a share, below estimates at the time. The stock fell 8% on the day of the warning.

Grimace

Shares of McDonald's were lately down 5.2% to $15.82, as investors also reacted to news that it will not make any changes to its controversial dollar menu, which has set off a price war in the industry.

"Everyday value has always been important to the industry," said Cantalupo on a conference call, adding that he will continue to evaluate whether premium offerings like the Big 'N Tasty burger belong on it. "We are happy with the dollar menu, but not married to any item on it."

Back in October, McDonald's introduced the dollar menu as a way to goose slumping sales. The decision pressured other rivals in the fast-food industry to lower prices on some of their most popular items. Most recently, Burger King put its flagship Whopper on sale for 99 cents in January.