New Pfizer Takes Shape

By early afternoon, J&J's stock was down $1.46, or 2.4%, to $59.86. Pfizer's stock was up 35 cents, or 1.6%, to $29.99.

Investing and Value

Pfizer says it won't let the J&J money burn a hole in its pocket.

"We will focus on our key priorities: leveraging our internal research and development and strong pipeline of new medicines; continuing to acquire products and technology that will drive long-term growth of the business; and improving shareholder returns," said Hank McKinnell, Pfizer's chairman and CEO, in a prepared statement.

One shareholder-return strategy is a stock buyback. Pfizer plans to buy as much as $7 billion in stock this year and $10 billion next year. The company's market capitalization is now $168.8 billion.

Thanks to the stock repurchases, McKinnell says the sale of the consumer-products unit will have a neutral impact on earning per share next year and will improve EPS in 2008. Excluding the sale proceeds and the costs of capital expenditures and dividends, McKinnell says Pfizer expects cash flow from operations of $34 billion for the next 30 months.

"The expansion of our share-purchase program reflects our conviction that Pfizer stock at current levels is a compelling investment opportunity," said David Shedlarz, a vice chairman. "We will also continue to support strong dividend growth." Pfizer paid quarterly dividends of 24 cents a share in early June and in March, up from the 19 cents a share paid Dec. 6, 2005.

Shedlarz said the high interest in Pfizer's consumer products, including Nicorette for smoking cessation and Neosporin for minor wound care, enabled the company to act faster than the third-quarter deadline that it set in February.

"We will use the proceeds to both invest in our future and build value today," he said. "To drive long-term growth, for example, we have acquired products, product candidates and technologies in priority areas such as Alzheimer's disease, diabetes, obesity and infectious diseases in just the last 12 months."

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