Johnson & Johnson (NYSE: JNJ), the world's largest health-products company, is scheduled to release fiscal second-quarter earnings before the opening bell on Tuesday, July 20, 2010. Analysts, on average, expect the company to report earnings of $1.21 per share on revenue of $15.70 billion. In the year-ago period, the company reported earnings of $1.15 per share on revenue of $15.24 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 first quarter, the New Brunswick, New Jersey-based company reported that its net income climbed to $4.53 billion or $1.62 a share, from $3.51 billion or $1.26 a share in the corresponding quarter last year. First-quarter 2010 net earnings included an after-tax gain of $910 million representing the net impact of litigation matters. Excluding this special item, the healthcare-giant earned $1.29 a share. Revenue increased 4% to $15.63 billion. Analysts, on average, expected the company to report earnings of $1.27 per share on revenue of $15.62 billion. Domestic sales declined 5.0%, while international sales increased 14.4%.
In April, the company updated its earnings guidance for full-year 2010 to $4.80 to $4.90 per share to reflect changes in foreign currency exchange rates. Earnings guidance excludes the impact of special items and now incorporates the impact of recently enacted health care reform legislation. Previously, the company had forecast full-year earnings in the range of $4.85 to $4.95 a share. The company expects health-care reform legislation to reduce its 2010 topline by $400 million to $500 million, or less than 1% of what it reported for total sales in 2009. The company expects to report full-year 2010 sales in the range of $63.5 billion to $64.5 billion.
Recently, Johnson & Johnson's unit McNeil Consumer Healthcare announced that it will be recalling 21 lots of products including Tylenol Day & Night and Tylenol Extra Strength due to reports of a musty or moldy odor. The move expands a recall started in January. The healthcare giant has announced four product recalls so far this year. There is little doubt that the company's reputation has been damaged by the recent string of recalls. The fallout is also likely to hurt the sales and earnings of the company's consumer healthcare segment. Late in June, McNeil Consumer Healthcare said that most of the products that were produced at its Fort Washington, Pennsylvania manufacturing facility will not have sources of supply before the end of 2010.
Among other developments, Johnson & Johnson agreed to acquire medical devices maker Micrus Endovascular Corp. (NASDAQ: MEND) in a cash for stock exchange deal of $23.40 per share or about $480 million. The deal, which is scheduled to close in the second half of 2010, is expected to be breakeven to slightly dilutive to Johnson & Johnson's 2010 earnings per share.
Late in April, Johnson & Johnson announced that its board of directors increased the quarterly dividend by 10.2% to 54 cents per share from 49 cents per share. In terms of stock performance, shares of the company have lost nearly 5.4% since the beginning of the year.
Disclosure: Author doesn't own any of the stocks discussed here.
