Wednesday, January 25, 2012
Johnson Takes $3 Billion Hit on Hip Recall
Johnson & Johnson took quarterly charges of more than $3 billion, largely related to the recall of artificial hips, and gave a 2012 earnings forecast below analysts’ estimates on Tuesday.
The company’s DePuy Orthopaedics unit issued an extensive recall of its “metal-on-metal” hip replacement devices in 2010 after they shed metal fragments, causing disabling injuries.
The fourth-quarter charges will allow money to be set aside for patients and lawyers involved in product liability litigation.
“The hip recalls worry me because their eventual costs are unknown,” said Jeff Jonas, an analyst at Gabelli & Company, who noted that the fourth-quarter charges included $800 million for medical costs of the recall.
The company forecast 2012 earnings of $5.05 to $5.15 a share, compared with the consensus Wall Street view of $5.21.
William Price, a company spokesman, said most analysts had not factored in damage from the stronger dollar.
Johnson & Johnson reported better-than-expected fourth-quarter earnings, helped by favorable taxes and sales of new prescription drugs. The company earned $218 million, or 8 cents a share, in the quarter. That compares with $1.9 billion, or 70 cents a share, a year earlier, when it also took charges for recalls of hip replacement devices.
Excluding special charges, Johnson & Johnson earned $1.13 a share. Analysts had expected $1.09, Thomson Reuters said.
Johnson & Johnson, which is based in New Brunswick, N.J., said global sales rose 3.9 percent in the quarter, to $16.26 billion, slightly below analysts’ target.
Posted by Connie at 2:40 PM