J&J Layoffs: The Jobs That Are Safest and Those That Aren't
Johnson & Johnson (JNJ) anounced it would lay off up to 8,100 of its workers today. But whose jobs are safest and whose are in most jeopardy? A look at the recent performance of some of J&J's divisions and products will potentially tell you where J&J might spare the ax and where, conversely, the pink slips are more likely to fall like snow (see below).
J&J gave this explanation for the job cuts. It wants to achieve:
... cost savings of $1.4-$1.7 billion when fully implemented in 2011, with $800-$900 million expected to be achieved in 2010.
The company estimates that position eliminations will be in a range of 6-7 percent of its global workforceAs J&J has about 117,000 workers, up to 8,190 may be laid off. The overall reason why the company is doing this can be found in this graph. It shows the amount J&J earns back in revenue and gross profit for every dollar it spends on sales, admin and marketing -- the bulk of the company's daily expenses.
(Source: SEC filings.)
As you can see, J&J gets $3.16 in revenue for every dollar it spends to make it, and of that about $2.23 is gross profit. It was trending up until recently, when it seems to have reached a plateau. In Q3 2009, J&J saw revenues fall 5.3 percent to $15 billion and net income rise 1.1 percent to $3.3 billion.
But a look at the individual products and divisions that are faring best and worst gives a potential guide to whose jobs may be in danger and whose aren't. The chart gives the division or product, followed by the percentage sales growth. Obviously, it is more likely that J&J will ax jobs in the poorer-performing business units than in the growing ones.
- Safest Jobs?
- U.S. Skin Care +3.4%
- International Wound Care +11.6%
- Remicade/Simponi +5.0%
- Velcade +21.6%
- Prezista +91%
- U.S. Concerta + 7.9%
- Jobs in most jeopardy?
- U.S. Baby Care -10.5%
- U.S. Women's health - 13.4%
- Duragesic -20.5%
- Procrit -12.4%
- Topamax - 76%
- Risperdal -40%