Looking over some of the sales information on Johnson & Johnson (JNJ), it's pretty clear that the company is relying more and more on international sales to drive overall revenues.
First, let me point out that most of this information comes from the company's Historical Financial Review [pdf], which the company warns "is not a substitute for the more detailed financial statements (including footnotes) found in the Annual Report and other SEC filings."
So I took the overall quarterly data and put it into chart form to show trailing 12-month sales through the first quarter of 2012.
Overall, worldwide sales have been relatively flat.
But that flatness disguises the significant difference between US and international sales.
Is this good news or bad news? It's good news that the company's expanding international sales is keeping overall sales steady. But it could be bad news if non-US economies falter or if for some reason the company has problems hedging currency risks.
International sales by market segment
According to the Wall Street Journal's Peter Loftus, Goldman Sachs suggested that JNJ consider splitting its three divisions into three separate companies. It's a move Goldman says could take the share price to $76 - and even that is a "conservative" estimate.
Goldman says the $76 target would be "conservative" as the standalone units could generate more growth alone.
Any such split would follow a recent trend of Pfizer and Abbott pursuing split-ups, which has helped those stocks, and a general trend outside of the pharmaceutical world of conglomerates breaking up.
There is a lack of synergy between the three business lines and each calls for different investment and management needs, Goldman says.
These business lines, or "segments" as JNJ refers to them, include
- Consumer
- Pharmaceutical
- Medical devices and diagnostics
I thought I'd take a look at each division's performance in terms of international vs. US sales, so here are a few more charts by business segment using trailing 12-month data.
Consumer segment
Pharmaceutical segment
Medical devices and diagnostics
Of the segments, medical devices seems to be the one with the revenues growing the most. And the pharmaceutical segment reached a milestone this quarter. It's the last of the three divisions to finally reach the point where international sales exceeded US sales.
Not everyone agrees that the company should be split up. Johnson & Johnson after all is a major global brand. And it remains to be seen where the value really lies in each of these potential spin-offs.
$35 into $66,000
Finally, after spending some time at JNJ's investor relations site, I learned something interesting about the company's sales and share price.
In 1946, the company generated more than $100 million in sales for the first time ever. A split-adjusted 1000 shares of stock would have cost $35 back then. Today it's worth more than $66,000. I'm pretty sure that beat inflation.
Survivorship bias? You bet. There are plenty of companies where that $35 was lost forever.
But JNJ is certainly a survivor. It might survive better as three separate companies, but I'd have to wait and see if the company would even seriously consider such as move and how it would structure the deal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
