Updated from 8:30 a.m. EDT

WASHINGTON -- Johnson & Johnson ( JNJ) raised its full-year guidance and reported strong third-quarter sales thanks to swelling revenue at its medical devices and consumer segments.

The New Brunswick, N.J., drugs and health-products maker had sales of $12.3 billion, up from $11.6 billion in the year-ago third quarter. The company earned $2.6 billion, or 87 cents a share, compared with $2.3 billion, or 78 cents a share, last year.

Earnings in the 2004 third-quarter included charges of $12 million associated with the acquisition of Scott Lab, the company said Tuesday.

J&J's quarterly profit was a penny ahead of estimates, but sales fell short of Wall Street's consensus forecast. Analysts surveyed by Thomson First Call were looking for earnings of 86 cents on sales of $12.5 billion.

What everyone hoped to hear was something about the Guidant ( GDT) acquisition. As in the past, J&J offered little new information on its thinking, but what executives did say had Guidant shareholders on the run.

During its earnings conference call, J&J said it will "consider alternatives under our merger agreement" with Guidant. That sent shares of the Indianapolis-based medical-devices maker down $7.04, or 9.7%, to $65.34. Guidant had a series of product recalls this year that had some observers wondering if J&J would try to renegotiate the agreement. Thus far, the terms are intact.

The company has a pact in place to buy Guidant for $25.4 billion, or $76 a share.

"We believe these are serious matters, and we are continuing to closely monitor Guidant ," said J&J's Chief Financial Officer Robert Darretta. J&J said it still expects clearance for the deal from the Federal Trade Commission in October, but refused to take any questions about the acquisition during the call.

Flagging Pharma

J&J raised its full-year profit guidance to $3.48 to $3.50 a share from its previous forecast of $3.44 to $3.47. For sales, the company projected full-year operating growth at 6.5%, with a fourth-quarter year-over-year change of 3%. J&J's estimates are based on a 52-week sales year, compared with the 53 weeks counted in the last fiscal year.

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