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BUSINESSWednesday 14 October
Stocks dip as investors assess earnings, deals Johnson & Johnson posts mixed
3Q results, authorizes a buyback
STEVE ROTHWELL Looking at the consumer stock dropped $7.02, or 9.3
MARLEY JAY numbers here in the U.S., percent, to $68.63. LINDA A. JOHNSON
AP Markets Writer they are still very strong.” Chemicals company FMC AP Business Writer
NEW YORK (AP) — U.S. The Standard & Poor’s 500 Corp. fell $1.18, or 3.1 per- Johnson & Johnson, continuing a tough year of declin-
stocks dropped on Tuesday index fell 13.77 points, or 0.7 cent, to $36.35. The com- ing revenue, posted a 29 percent drop in third-quarter
for the first day in five as in- percent, to 2,003.69. The pany lowered its earnings earnings as it was hammered by plunging sales of its
vestors assessed company Dow Jones industrial aver- outlook late Monday and hepatitis C medicine and unfavorable currency ex-
earnings and the latest age declined 49.97 points, will lay off up to 850 work- change rates.
corporate deal news. More or 0.3 percent, to 17,081.89. ers, citing the rapid devalu- The healthcare bellwether’s results were also hurt by
evidence of weakness in The Nasdaq composite ation of the Brazilian real. comparison to a year-ago when it had a $2 billion gain
China’s economy also un- dropped 42.03 points, or The falling real is hurting its from selling a large diagnostics business.
settled the market. 0.9 percent, to 4,796.61. agricultural solutions busi- Company executives on Tuesday tried to put a positive
Ryder System led indus- Stocks started the day low- ness and FMC said it can’t spin on the results, saying that underlying performance
trial stocks lower after the er after a report showed raise prices fast enough to remained strong after excluding multiple negative fac-
tors. J&J raised its profit forecast and announced a $10
Trader Kevin Lodewick works on the floor of the New York Stock Exchange, Tuesday, Oct. 13, billion stock buyback plan that will be financed by issu-
2015. Stocks are opening slightly lower, breaking a winning streak, as traders worried about weak ing new debt.
Chinese trade figures. J&J, based in New Brunswick, New Jersey, beat ana-
lysts’ muted profit expectations for the quarter, but Wall
(AP Photo/Richard Drew) Street was unimpressed. J&J shares slipped 33 cents to
$95.66 in midday trading Tuesday.
transportation and logistics that China’s imports fell in compensate. The compa- “International growth — the hoped-for growth driver —
company cut its profit fore- September by an unex- ny makes almost a quarter was anemic even after adjusting for currency swings,
cast for the third quarter. pectedly wide margin. of its sales in Brazil. and the domestic market is dead in the water,” wrote
Molson Coors surged on Imports dropped 20.4 per- Overall, earnings for com- analyst Erik Gordon, a professor at the University of
speculation that a tie-up cent after a 5.5 percent panies in the S&P 500 are Michigan’s Ross School of Business.
between the world’s two decline in August. It was forecast to contract by 5.4 The U.S. consumer health business, nearly recovered af-
largest brewers would give the latest sign of weakness percent for the third quar- ter a long and embarrassing spate of recalls dating to
it an opportunity to expand in the country’s economy ter, according to S&P Capi- 2009, was the lone bright spot, with a 9 percent sales
its own business. The stock and indicates anemic de- tal IQ. Much of the slump increase, but it accounts for just 7.5 percent of sales.
market started October mand in the world’s sec- is attributable to a col- “Domestic consumer sales of Tylenol and other brands
with strong gains, rebound- ond biggest economy. lapse in earnings at energy that had suffered being off shelves for so long after the
ing from a big slump in the “We don’t think that this is and material companies, manufacturing problems are rebounding. The brand
previous two months as a hard landing (for China’s where profits are shrinking names still are strong,” Gordon noted.
investors worried about a economy) in the making,” as oil and commodity pric- The maker of Tylenol, medical devices and Xarelto, for
slowing Chinese economy. said Stephen Freedman, es have plunged. preventing heart attacks and stroke, reported third-
This week investors are fo- Senior Investment Strate- Molson Coors was the big- quarter net income of $3.36 billion, or $1.20 per share,
cusing on corporate earn- gist, UBS Wealth Manage- gest gainer in the S&P 500. compared with $4.75 billion, or $1.66 per share, a year
ings as they try and mea- ment Americas. “But we do The brewing company ago.
sure the impact that slow- acknowledge that there surged after AB InBev Adjusted net income, excluding the impact of its sale
ing global growth is having has been some spillover announced that it had of its Ortho-Clinical Diagnostics business and higher
on profits. Companies that into the U.S.” reached an agreement to charges for litigation and write-downs in the value of
are focused on the U.S. are Among individual stocks, buy SABMiller. If the deal assets, was $4.17 billion, or $1.49 per share. That topped
likely to do well as consum- Ryder System was the big- goes ahead, Molson Coors analysts’ average expectation for $1.44 per share.
er confidence improves, gest decliner in the S&P may get the opportunity J&J’s revenue of $17.1 billion missed analysts’ forecasts
said Jerry Braakman, chief 500. The transportation and to buy full ownership of its for $17.41 billion. The strong dollar, which reduces the
investment officer of First logistics company cut its MillerCoors joint venture, value of products bought with local currency in other
American Trust. earnings forecast for the which sells beers including countries, cut total revenue by 8.2 percent, the com-
“It’s been a rally here and third quarter, blaming low- Miller Lite, Coors Light and pany said.
the question is: ‘Is this just er-than-forecast growth at Blue Moon in the U.S. Mol- The company increased its 2015 profit forecast to $6.15
a bounce?’ “ Braakman a unit that provides servic- son Coors’ stock jumped to $6.20 per share, excluding one-time items, up from
said. “The earnings season es to companies that own $7.83, or 9.9 percent, to the company’s July forecast of $6.10 to $6.20 per share.
will help us a little with that. and operate truck fleets. Its $86.58.q Analysts surveyed by FactSet expected $6.16 per share.
Pharmaceutical sales declined 7.4 percent to $7.7 bil-
lion, mainly because sales of hepatitis C drug Olysio
plunged 90 percent to just $79 million. The drug was
once seen as a likely blockbuster, but newer hepati-
tis C pills Sovaldi, Harvoni and Viekira Pak have since
cornered the market and together are raking in billions
every quarter.
Asked whether the recent furor over sky-high prescrip-
tion drug prices would affect J&J’s pricing, Chief Finan-
cial Officer Dominic Caruso told analysts on a confer-
ence call, “We think the real answer is to monitor and
provide outcome-based measures (on drugs’ benefits
and risks) and not focus solely on price.”
“We’re very responsible in the pricing of our drugs,” Ca-
ruso added.
Sales of consumer health products such as pain reliever
Motrin and allergy pill Zyrtec fell 7.7 percent worldwide,
to a total of $3.3 billion.q
