Earnings Preview: Johnson & Johnson (NYSE: JNJ) Third Quarter 2010
Friday, October 08, 2010 6:32 PM

Johnson & Johnson (NYSE: JNJ), the world's largest health-products company, is scheduled to release third-quarter earnings before the opening bell on Tuesday, October 19, 2010. Analysts, on average, expect the company to report earnings of $1.15 per share on revenue of $15.17 billion. In the year-ago period, the company reported earnings of $1.20 per share on revenue of $15.08 billion.

Johnson & Johnson engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three business segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics.

In the preceding second-quarter, the New Brunswick, New Jersey-based company's net income was $3.45 billion, or $1.23 a share, compared to $3.21 billion, or $1.15, in the year-ago period. On an adjusted basis, the company earned $1.21 a share in the second quarter. Revenue rose 0.6% to $15.33 billion from $15.24 billion in the same quarter. Analysts, on average, expected the company to report earnings of $1.21 per share on revenue of $15.66 billion. The second quarter results reflected an approximately $200 million negative impact of sales and an approximately $0.05 per share negative impact to earnings per share from the McNeil Consumer Healthcare recalls and the suspension of manufacturing at McNeil's Fort Washington in Pennsylvania plant.

Late in July, the company lowered its fiscal 2010 guidance to reflect the impact of the voluntary recalls announced earlier this year of certain over-the-counter medicines and the suspension of manufacturing at the McNeil Consumer Healthcare facility in Fort Washington, Pennsylvania, as well as unfavorable changes in foreign currency exchange rates. The company expects earnings for full-year 2010 to be in the range of $4.65 to $4.75 per share, which excludes the impact of special items. Previously, the company had expected earnings to be in the range of $4.80 to $4.90 per share.

The healthcare-giant's reputation has been severely tarnished in recent months by a string of product recalls. In August, the company issued a voluntary recall of its 1-Day Acuvue TruEye contact lenses that were distributed in Japan and two dozen other countries in Europe and Asia. Similarly, Johnson & Johnson's orthopedic devices unit in August announced a voluntary recall of two of its hip replacement systems after reviewing data that indicated more people than expected who received the ASR Hip System experienced pain and other symptoms that led to a second hip replacement surgery, called a revision surgery. The company has been forced to issue over eight separate recalls including dozens of products and hundreds of millions of individual packages.

Among other developments, Johnson & Johnson recently agreed to purchase all outstanding equity of Crucell N.V. (NASDAQ: CRXL), not already held by it, for about EUR 1.75 billion or EUR 24.75 per share.

In terms of stock performance, shares of the company have lost nearly 3% since the beginning of the year.

Disclosure: Author doesn't own any of the stocks discussed here.



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