Johnson & Johnson made the statement during a conference call on its third-quarter results. It said quarterly sales rose almost 7 percent to $12.3 billion from $11.6 billion, thanks largely to its medical-device business.
Guidant, if acquired, would fall under the company's medical devices and diagnostics business, which posted third-quarter global sales of $4.6 billion, or 14 percent over the same period last year, it said.
Johnson & Johnson net earnings were up 12 percent to $2.6 billion, or 87 cents a share, over the year-earlier quarter, when Johnson & Johnson had taken a $12 million charge for the acquisition of Scott Labs Inc. In the third quarter of 2004, the company reported net earnings of $2.3 billion, or 78 cents a share.
Last December, Johnson & Johnson agreed to acquire Guidant, a leading maker of coronary stents, defibrillators and pacemakers.
Then this year, Guidant recalled several models of implantable defibrillators because of potential electrical failures. Food and Drug Administration investigators also have questioned employees about the timing of its product alerts, according to the New York Times.
In the conference call, Johnson & Johnson chief financial officer Robert Darretta called the issues "serious" and stated: "In light of these matters and their impact, we are continuing to consider the alternatives under our merger agreement."
Darretta said Johnson & Johnson "continues to believe" that the Federal Trade Commission will clear the merger this month but refused to elaborate on the company's plans or take any questions.
"Our take is that J&J will likely first try to renegotiate the terms. But if they cannot, they may walk away," said John Chen, an analyst at Cathay Financial L.L.C., which follows Guidant.
Under the current merger agreement, Johnson & Johnson may face a $750 million termination fee depending on how the troubles have changed Guidant's value, Chen said.
Johnson & Johnson shares closed down 3 cents at $62.97. Guidant's shares were down more than 11 percent at $64.10, still above its one-year low of $59.94.
Contact staff writer Thomas Ginsberg at 215-854-4177 or email@example.com.