Johnson & Johnson's $4 Billion "Oops, Never Mind!"
Late yesterday one of the midnight-oil-burning "Squawk Box" producers runs over to my desk asking, "Hey, is this J and J thing a big deal?" I said, "What J and J thing?" "Check the wires," he said. Here's what I saw:
"J&J to take $4.4 billion charge
LOS ANGELES, Nov 29 (Reuters)
NEW YORK (AP) - Johnson & Johnson expects to record a $4.4 billion one-time charge in the fourth quarter….
Yikes! You bet a $4.4 billion write-down is a big deal. I immediately instant messaged Dylan Ratigan who was anchoring "Fast Money" live from the Nasdaq and he quickly got the story on the air and it moved the stock. Check out this bullet from Reuters:
JOHNSON & JOHNSON
SHARES DROP 1.7 PCT TO $67.25
AFTERHOURS ON NEWS OF $4.4 BLN CHARGE
I then called JNJ's media relations department to try to get some details. An assistant took a message and within minutes spokesman Bill Price called me back. And I never get calls returned that quickly from JNJ. Price told me the company made a mistake in an 8-K filing it had just made with the Securities and Exchange Commission. He called it a "conversion error" (whatever that means), but it looks to me like someone somehow put in an extra digit.
The filing, which you can see for yourself here, said JNJ will take a fourth-quarter charge of $4,403 million. That would be $4.4 billion. The write-down is due to declining sales of the company's congestive heart failure drug, Natrecor, which has been plagued by side-effect issues and allegations about its sales and marketing. The real number, Price said, is $440 million. Indeed, the company soon filed an amended 8-K with the right figure . Price also told me it will not affect the company's earnings guidance for this year.
Once again, I instant-messaged Ratigan who was in the closing seconds of his show and he deftly managed to get the company's lower number on the air before it ended.
People make mistakes. But I am still amazed that at a company as huge as Johnson & Johnson, where SEC documents and press releases are presumably looked at by several sets of eyeballs and lawyered to the hilt before they go out, made this boo-boo.
Other Note: Here's hoping the USC Trojans make no mistakes on the field tomorrow and exact their revenge on the UCLA Bruins to win a sixth straight Pac-10 Championship and a trip back to the Rose Bowl. And here's hoping the Rose Bowl doesn't become USC's regular-season football home and that the university and the Coliseum Commission can come to terms quickly to keep the Trojans where they belong. Fight On! (The video clip is my standing in for colleague Darren Rovell today, who is on vacation, but as you know, still blogging this week!)
Questions? Comments? Pharma@cnbc.com