J&J CEO to Step Down - Analyst Blog

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Johnson & Johnson ( JNJ ) recently announced that Bill Weldon, its Chief Executive Officer ( CEO ), will be stepping down from his post. Mr. Weldon, however, will continue to serve as Chairman of the Board of Directors.

Mr. Weldon, CEO at Johnson & Johnson since 2002, will be replaced by Mr. Alex Gorsky, who currently holds the post of the Vice Chairman of the Company's Executive Committee. Mr. Gorsky is also responsible for the Medical Devices & Diagnostics Group, Global Supply Chain, Health Care Compliance & Privacy and Government Affairs & Policy.

The new CEO will take charge on April 26, 2012, the date of the company's annual shareholder meeting.


Besides Mr. Gorsky, another contender for the post of the CEO was Sheri S. McCoy. Sheri S. McCoy will continue in her role as Vice Chairman of the Executive Committee. She will continue to lead the Pharmaceuticals and Consumer Groups, and maintain responsibility for Information Technology.

Change Expected

The announcement did not come as a huge surprise. During a part of Mr. Weldon's tenure, Johnson & Johnson has been beleaguered by frequent product recalls, which affected the performance of its consumer segment. The company has been facing these issues since 2009. While US Consumer segment sales declined 6.7% in 2011 to $5.2 billion with US OTC/nutritional sales declining 22.9%, 2010 revenues were impacted by about $900 million due to the product-recall related issues. In addition to losing revenues, consumer trust in the company was also affected.

The company has been working on resolving the situation. However, just when it looked like the product recall situation was somewhat under control, Johnson & Johnson announced yet another recall (seven lots of Infants' Tylenol Oral Suspension, 1 oz. Grape distributed in the US) a few days back.

Neutral on Johnson & Johnson

We currently have a Neutral recommendation on Johnson & Johnson, which carries a Zacks #3 Rank (short-term "Hold" rating). In our view, the new CEO will have his hands full dealing with the product recall issues and regaining consumer confidence.

Other companies that announced a change at the helm in the recent past include Pfizer ( PFE ) and Merck ( MRK ).


 
JOHNSON & JOHNS ( JNJ ): Free Stock Analysis Report
 
MERCK & CO INC ( MRK ): Free Stock Analysis Report
 
PFIZER INC ( PFE ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CEO , JNJ , MRK , PFE

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