S&P 500: -17.23 (-2.01%)
Johnson & Johnson (JNJ) +0.43%
A stronger dollar and patent expirations dragged down J&J’s first-quarter profit, but earnings were still above expectations and the company reiterated its 2009 projections.
Revenue dropped 7.2 percent to $15.03 billion, with six percentage points of the decline coming from the stronger dollar. When you consider the stronger dollar and the fact that prior-year revenue was boosted by Zyrtec’s over-the-counter debut, the revenue results are quite impressive.
Consumer products posted particularly strong sales performance and continue to offset the headwinds faced in the pharmaceutical segment. Medical devices yielded mixed results, with particularly weak performance from the vascular group as the company’s drug-eluting stent is losing market share to Abbott’s superior stent.
J&J’s pharmaceutical segment, on the other hand, has taken a substantial hit in recent quarters after losing patent protection for epilepsy-treatment Topamax (the company’s second-largest drug by sales) in March and antipsychotic Risperdal last year.
J&J has multiple new drugs that could offset patent losses awaiting FDA decisions in the next six months including potential blockbusters ustekinumab (biologic drug for sever psoriasis) and rivaroxaban (a pill to prevent blood clots), as well as paliperidone palmitate (schizophrenia) and golumumab (rheumatoid arthritis). The company’s full-year guidance does not reflect the approval of these drugs, which could significantly add to revenues in the second half of 2009.
J&J repurchased $500 million shares as part of the $10 billion program started in 2007. To date, the company has purchased $8.6 billion and expects to finish the buybacks in 2009. I got a bit ahead of myself regarding the company’s dividend, and an increase to the payment will likely be announced sometime in the next two weeks.
Intel (INTC) +0.19%
After the market closed, Intel reported earnings that absolutely crushed estimates. As expected, margins were pressured by lower utilization rates and revenue was lower as PC makers cut back on chip orders to reduce inventory. Still, revenues came in above expectations.
More importantly, CEO Paul Otellini said in the company’s press release: “We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns.”
The initial numbers look pretty good, but we will have more details following the conference call.
Principle Financial Group (PFG) -12.89%
MetLife (MET) said they won’t participate in TARP, seeking to separate itself from rivals in the insurance industry. Judging by the trading activity on other insurers, including Principal Financial Group, it appears they have succeeded in doing so. On the bright side, we can be certain that the insurers in need will be offered assistance from the Treasury.
Quick Hits
- Bernanke’s Response to Four Questions at Morehouse College
- How to Puff Up Earnings, Goldman Sachs Style
- Analysts See Weak Spots in Goldman’s Results
Peter Lazaroff, Junior Analyst
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