Johnson & Johnson will remain in one piece.
The company dismissed a proposal floated by an analyst at Goldman Sachs to break up into smaller companies, as some of its competitors have done.
"I could tell you we're not considering that now, and we feel very good about having a broad-based business in health care," Dominic Caruso, J&J's chief financial officer, said during a conference call with Wall Street analysts Tuesday.
Caruso made his comments after New Brunswick-based J&J released its quarterly earnings report, which one analyst said was its best in five years.
Johnson & Johnson, one of New Jersey's biggest employers with about 14,000 employees statewide, has been trying to regain its prestige after falling on hard times. Most notably, it is remodeling a plant that makes some of its best-known medicines after a series of recalls forced it to suspend production. The plant is expected to come back on line next year.
Its recent travails prompted Jami Rubin of Goldman Sachs to write a report that spelled out how J&J's three divisions -- consumer products, pharmaceuticals and medical devices -- could operate more effectively on their own.
She suggested J&J follow the lead of Abbott Laboratories and Pfizer, which recently spun off divisions and saw their stock prices climb faster than J&J's.
Alex Gorsky, Johnson & Johnson's chief executive officer, said in July that the company was better equipped to serve its customers as a large, diversified company.
Rubin raised the idea again on the conference call Tuesday. The company hadn't changed its mind.
"We think that's the way to be best positioned for where health care is going globally, and we believe having a broad portfolio is in fact the strongest set of cards we can have," Caruso said.
Caruso said he thought J&J was on sound financial footing. The company Tuesday said it made nearly $3 billion, or $1.05 a share, compared with $3.2 billion, or $1.15 a share, the same quarter a year ago. The decline was because of extra costs it faced to finalize an acquisition, pay for new hip replacement surgeries for patients and discontinue research of a drug.
Its revenue, however, was up 6.5 percent from the same quarter last year thanks to strong sales in its pharmaceutical division and the acquisition of medical device maker Synthes. The rate of its revenue growth was the strongest in five years, Michael Weinstein, an analyst with J.P. Morgan in New York, noted.
"It's been a long time coming," Weinstein said during the conference call.
Johnson & Johnson's stock closed at $69.55 Tuesday, up 95 cents, or 1.4 percent. It has risen 9 percent since the beginning of the year.
The company said it is focusing at least part of its energy on the pharmaceutical division, which is opening what it calls innovation centers in California, Boston, London and China. All but the center in China are expected to open by early next year, spokeswoman Diane Pressman said.
The goal: To place 15 to 25 scientific, financial, legal and business development experts from J&J in the middle of major life sciences communities, where they can spot breakthroughs being developed by universities and entrepreneurs; acquire or partner with them; and bring the product to market quickly.
"The idea is by being there closer to where the innovation is happening. we can move innovation forward faster," Pressman said.
Michael L. Diamond; 732-643-4038; mdiamond@njpressmedia.com ___
(c)2012 the Asbury Park Press (Neptune, N.J.)
Visit the Asbury Park Press (Neptune, N.J.) at www.app.com
Distributed by MCT Information Services
- Get Livefyre
- FAQ
