NEW YORK (Reuters) - Johnson & Johnson (JNJ - News) on Tuesday said its quarterly earnings fell, hurt by generic competition for its Risperdal schizophrenia drug and the strong dollar, but lower costs enabled the company to beat Wall Street expectations.The diversified health-care company, whose shares rose more than 3 percent in premarket trading, said it earned $3.51 billion, or $1.26 per share, in the first quarter. That compared with $3.6 billion, or $1.26 per share, in the year-earlier period.
Analysts on average expected $1.22 per share, according to Reuters Estimates.J&J reaffirmed its 2009 profit profit forecast of $4.45 to $4.55 per share.All eyes are likely to focus on J&J's results on Tuesday because it is a component of the Dow Jones industrial average and the first major U.S. health-care company to report first-quarter results.Global company revenue fell 7.2 percent to $15 billion in the period, well below the $15.43 billion Reuters Estimates forecast. Sales would have fallen only about 1 percent if not for the stronger dollar, which depresses the value of overseas sales when converted back into U.S. currency.
But J&J bolstered results by cutting spending more than 10 percent on research, and on sales, general and administrative expenses.
"They've managed things well, reducing expenses the way they had telegraphed they would, and it's going straight to the bottom line," said Steve Brozak, an analyst with WBB Securities.
"This is a game of expectations, and even though sales were weak across all three of J&J's business units, people were expecting far worse numbers," Brozak said.Sales of consumer products fell 8.7 percent to $3.7 billion despite strong demand for J&J's Listerine mouthwash and Neutrogena skin-care line, as the strong dollar battered overseas sales.
Global sales of prescription drugs fell 10.1 percent to $5.8 billion, as cheaper generics wrested away two-thirds of Risperdal sales and demand for anemia drugs Procrit and Eprex continued to wither due to safety concerns.Sales of medical devices and diagnostics slipped 2.9 percent to $5.5 billion, as J&J's Cypher stent faced brutal competition from Abbott Laboratories Inc's (ABT - News) newer Xience stent.
Stents are tiny scaffold-like devices used to prop open heart arteries that have been cleared of plaque.
I own shares of JNJ and Abt and will be adding to my stake in both in the future.
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