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Is JNJ Becoming a Two-Legged Stool?

|Includes: Johnson & Johnson (JNJ)


JNJ has been a core holding in my portfolio for a number of years. Financially strong, a share-holder friendly management that’s committed to a growing dividend, and well diversified across the medical field, as well as geographically…..what’s not to like?


I was, and still am, of the opinion that JNJ’s spread across drugs, medical devices, and OTC consumer products provided the stability of a 3 legged stool, as its sales were pretty evenly divided across all three of the segments, providing something of shield from weakness in a given sector. I must admit that I’m starting to get more than a bit concerned about JNJ’s recent string of missteps in their consumer, OTC segment. The latest recall by JNJ’s McNeil Consumer Healthcare unit of Rolaids products comes in the wake of earlier recalls of Tylenol, Benadryl, and Motrin, attracting the attention of various government agencies, and bodies.


Reputations take years, and years to build, but can be destroyed in short order. JNJ’s response to the old Tylenol tampering affair, years ago, was arguably a classic example of how a company should deal with an adverse event, even though JNJ had not done anything wrong. I’m not suggesting that JNJ is ignoring the situation at their McNeil division, but I think that its time that JNJ make some sweeping and well publicized changes there, as a way of getting in front of the situation and reassuring their customers, as well as their shareholders.

Disclosure: Long JNJ

Disclosure: I am long JNJ.