J&J: Another recall, another earnings rise

Tuesday's Johnson & Johnson/McNeil recall of Tylenol 8-hour caplets is an unremarkable data point in the company's continuing quality-meltdown saga. It's on the small end of Tylenol recalls at just 128,000 bottles. And it's lacking in drama, following the congressional inquisition in which CEO Bill Weldon suffered a few body blows but nothing that knocked him down.

CNN Money was able to spice things up a bit by chronicling from 2003 the FDA inspection reports of the Fort Washington, PA plant involved in most of the recalls. Labeling issues were the problem in 2003, but a cornucopia of GMP violations mark inspection reports from 2006, 2008 and 2009. One source speculates that there was a change in QA management during that time.

Yet again, the company was able to please investors with a 2.2 percent earnings rise for the third quarter, which J&J announced virtually in tandem with the latest recall. Sales were down by less than 1 percent, notes the New York Times, barely a ding given the recall totality: infants' and children's liquid Tylenol, Motrin, Zyrtec, Benadryl and some adult Tylenol and related products. But the drop in sales garnered essentially a ho-hum from analysts.

The latest recall is not good news, of course, especially given its appearance during Weldon's campaign as fix-it man. That campaign encompasses the manufacturing quality issues that have plagued McNeil and that likely extend further into the J&J mega-structure, as well as the corresponding damage to its company and brand names.

- see the Times article
- here's the CNN report