Johnson & Johnson (NYSE: JNJ) said Tuesday it will trim layers of management, cut thousands of jobs, and set other restructuring moves in order to save up to $900 million next year, according to Associated Press.
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The New Brunswick, N.J., company said the cuts will affect 6 to 7 percent of its global work force of roughly 118,700 workers, or potentially more than 8,000 jobs.
The layoffs will prompt a restructuring charge of up to $1.3 billion pretax in the fourth quarter. Still, the company confirmed adjusted profit guidance between $4.54 and $4.59 per share for 2009.
Johnson & Johnson plans to simplify its business structure and projects that it will save between $1.4 billion and $1.7 billion annually after the restructuring is complete in 2011.
The company, the world's most diversified health-products maker, saw its revenue fall 5 percent in the third quarter as intensifying generic competition slashed sales of about a half-dozen of its prescription drugs, including the schizophrenia drug Risperdal and the epilepsy treatment Topamax.
Chairman and CEO William C. Weldon said the moves are meant to position the company for long-term growth in an evolving, and sometimes turbulent, market.
The new restructuring program comes on heels of management's decision to cut its program with the goal of boosting sales, though sales were down during the first half of 2009. The unit made medical devices and tests. Its operations were spread throughout other parts of the company.
He said the move is based on a broad, global view of the changing health care industry, taking into account national and international markets. As for health care reform, management has said it needs more clarity on what any future plan could look like before assessing a more concrete impact on the business. The restructuring program is also not a move to centralize J&J's operations, he added.
In morning trading, shares of Johnson & Johnson fell 25 cents to $59.24.
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