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J&J posts solid gains
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January 25, 2000: 11:21 a.m. ET
Drug sales push earnings above forecast; AHP matches expectations
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NEW YORK (CNNfn) - Johnson & Johnson posted fourth-quarter profits Tuesday that slightly beat forecasts, while American Home Products met quarterly expectations but posted a huge net loss for the year because of legal settlements and restructuring charges.
Johnson & Johnson, maker of Band-Aid bandages and Tylenol as well as drugs and diagnostic products, posted net earnings of $796 million, or 56 cents per share, before special charges. The company credited its gains to the performance of its pharmaceutical division.
The results easily surpassed year-earlier earnings of $712 million, or 50 cents per share, and narrowly topped the 55 cents per share consensus estimate reported by the First Call Corp.
Net income for the quarter totaled $754 million, or 53 cents per share, compared with $102 million, or 7 cents per share, a year ago. The figure included the costs associated with the company's October acquisition of biotech firm Centocor, and the reconfiguration of its worldwide manufacturing network.
Revenue for the quarter jumped 6.3 percent to $6.9 billion. That included a sharp increase in worldwide pharmaceutical sales, which grew 10.3 percent for the quarter to $1.5 billion, and a 14.9 percent increase in domestic pharmaceutical sales.
For the year, the New Brunswick, N.J.-based company earned a record $4.21 billion, or $2.97 per share, excluding special charges, compared with $3.7 billion, or $2.61 per share, in 1998.
Net income totaled $4.17 billion, or $2.94 per share, compared with $3 billion, or $2.12 per share, a year earlier.
Revenue for the year rose 14.5 percent to a record $27.5 billion.
The results were released before Tuesday's market opening. Shares of J&J (JNJ), a component of the Dow industrial average, rose ½ to 84-3/16 Tuesday morning, after dropping 6-3/16 to 83-11/16 Monday in advance of the report.
AHP matches expectations
American Home Products (AHP), maker of the estrogen replacement treatment Premarin, Centrum vitamins and Chapstick, met Wall Street's estimates, posting a modest increase in profits for the fourth quarter.
The results come as the future of the company, which has agreed to merge with rival drug maker Warner-Lambert Co. (WLA), is in question amid a complex takeover battle in the pharmaceutical industry.
AHP also is trying to settle litigation associated with the "fen-phen" diet cocktail, which was withdrawn in 1997 after being linked to health problems. A multibillion-dollar settlement with fen-phen users is awaiting federal court approval.
The company earned $593.2 million, or 45 cents per diluted share, from $590.1 million, or 44 cents per share, in the year-earlier period. The 1998 quarterly figure excludes a $240.5 million one-time restructuring charge.
Sales rose 7 percent to $3.4 billion. Pharmaceutical sales increased 8 percent to $2.4 billion, while consumer health care sales also rose 8 percent to $702.8 million.
For the year, Madison, N.J.-based American Home posted a net loss of $1.2 billion, or 94 cents per diluted share, including a $3.3 billion, or $2.51 per share, after-tax charge associated with the diet drug settlement and a $126.7 million, or 10 cents per share, one-time charge associated with the restructuring of the company's Cyanamid agricultural products unit.
Sales rose 2 percent to $13.5 billion in 1999.
American Home agreed in November to merge with Warner-Lambert, a fast-growing drug and consumer products maker. But Pfizer Inc. (PFE), which has a lucrative co-marketing agreement with Warner for the blockbuster cholesterol drug Lipitor, has launched a rival, higher bid for Warner, and analysts say that Pfizer is likely to prevail in the fight.
American Home has seen two previous merger agreements break down.
Meanwhile, consumer products maker Procter & Gamble (PG) dropped talks Monday to step in and buy both Warner and American Home in a white knight bid that would foil Pfizer's unfriendly offer. AHP stock slipped 11/16 to 41-7/8 in morning trading. 
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Johnson & Johnson
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