The offering of financial guidance by publicly traded companies has become a hotly debated topic.

Some companies offer quarterly financial guidance on revenue, earnings, and other meaningful financial metrics. Other companies offer no financial guidance at all. Most fall somewhere in between.

So who has it right?

That’s an easy question with no easy answer.

For many companies that do provide financial guidance, be it quarterly figures or annual figures, the pros and cons are evident. The most notable advantage is that guidance gives a group of covering financial analysts and investors some sense of where their respective financial models should be for a given quarter or year. The most notable disadvantage is that the company has publicly stated a goal that it is now obligated to meet (despite what is said in a forward-looking statement or safe harbor disclaimer).

So what is a company to do?  Should they guide or not guide?

The reason why so many companies differ on their opinion is because each company and industry is so different. Some have very steady revenue streams with high quality visibility into the future. Others have lumpy revenue streams and virtually no future visibility. Some have stable expense lines while others need to remain flexible with expenses to capitalize on certain opportunities. Some businesses are quite seasonal, others are not. The list of differences goes on and on.

When Google went public they stated that they would not provide financial guidance because they felt it focused too much on the near-term and, as a company, they were more focused on the long-term. I believe this was code for “given how young this company is and how insane the potential growth opportunities are, we have no idea on the extent to which we will grow, nor do we have a good idea of how much we will need to invest in the near or long term, so we won’t be providing guidance”.

In the end, it really comes down to how comfortable management is with their visibility into future business and how comfortable they are with predicting their company’s success rate going forward.  After all, if offering guidance is too much of a guessing game for management, then are they really doing themselves or shareholders any favors by offering it?