J&J may cut more than 8,000 jobs

Amidst its year-long acquisition spree and poor third-quarter revenues, Johnson & Johnson announced today that it may cut more than 8,000 jobs and set other restructuring moves in order to save up to $900 million next year.

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NEW BRUNSWICK, N.J.—Amidst its year-long acquisition spreeand poor third-quarter revenues, Johnson & Johnson announced Nov. 3 that itmay cut more than 8,000 jobs and set other restructuring moves in order to saveup to $900 million next year.
J&J said plans to simplify its business structure andprojects will save between $1.4 billion and $1.7 billion annually after therestructuring is complete in 2011. Cost savings will be achieved primarily byreducing layers of management, increasing individual spans of control andsimplifying business structures and processes across the company's globaloperations. The company said the cuts will affect 6 to 7 percent of its globalwork force of roughly 118,700 workers, or potentially more than 8,000 jobs.
The layoffs will prompt a restructuring charge of up to $1.3billion pretax in the fourth quarter. Still, the company confirmed adjustedprofit guidance between $4.54 and $4.59 per share for 2009.
J&J's revenue fell 5 percent in the third quarter asintensifying generic competition slashed sales of about a half-dozen of itsprescription drugs, including the schizophrenia drug Risperdal and the epilepsytreatment Topamax.
The new restructuring program comes on heels of management'sdecision to cut its comprehensive care business in August. That unit wascreated under a 2008 restructuring program with the goal of boosting sales,though sales were down during the first half of 2009. The unit made medicaldevices and tests. Its operations were spread throughout other parts of thecompany.
Chairman and CEO William C. Weldon said the move is based ona broad, global view of the changing health care industry, taking into accountnational and international markets.
"These types of changes are difficult under anycircumstances, and will have a very personal impact on people who have beendedicated to the mission of Johnson & Johnson," he said. "We recognizetheir contributions to the achievements of our business, and are committed totreating them fairly and with respect throughout this process."
Nevertheless, J&J has been on a buying spree for most of2009. In May, J&J made a $1 billion cash tender offer for CougarBiotechnology, a Los Angeles-based biopharmaceutical company that focuses ononcology drugs. In July, the company will invested $1 billion in Dublin,Ireland-based neuroscience biotechnology firm Elan Corp. in exchange for an18.4 percent stake. And in late September, J&J spent $444 million for newshares of Crucell in a deal aimed at developing monoclonal antibodies andvaccines for the treatment and prevention of influenza and other infectious andnon-infectious diseases.
Following the announcement, shares of Johnson & Johnsonfell 25 cents to $59.24 in morning trading.

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