Johnson & Johnson (NYSE: JNJ) beat analysts' earnings expectations yesterday and raised the lower end of its 2011 earnings guidance, but traded down for most of yesterday until the late-day rally. And it's down a few points today while the Dow Jones (INDEX: ^DJI) has been relatively flat.

What's going on? As best I can tell, investors seem a little anxious about the revenue number. Sales came in just under analysts' expectations, and more than half of the 6.8% year-over-year increase in revenue came from changes in exchange rates, which boost international sales but can't exactly be counted on. Stateside sales were actually down 3.7%.

While I'll agree that revenue is important, beating on earnings with "weak" revenue isn't that bad for a conglomerate like Johnson & Johnson. By definition, it means net margins came in better than analysts were expecting. Expanding margins has been Johnson & Johnson's shtick for much of its 125-year existence.

The declining sales in the U.S. aren't something to fret about, either. Sales of consumer products were down 4.5% as Johnson & Johnson continues to get back on its feet after the marathon of recalls. It remains to be seen how much market share Johnson & Johnson will be able to recoup from over-the-counter generics manufactured by Perrigo (Nasdaq: PRGO) and competing brand-name drugs from Bayer, Merck (NYSE: MRK), and Pfizer (NYSE: PFE) as it relaunches the drugs. But at least the year-over-year comparisons won't look so bad going forward.

Sales of U.S. pharmaceutical products slipped even more, down 6.1%, but that was entirely because of new generic competition for its antibiotic Levaquin. If sales of the drug had remained constant, overall U.S. sales would have been up 2.5%. Again, this too shall pass in a few quarters.

And Johnson & Johnson has plenty to be excited about in the pharmaceutical arena. It recently launched prostate cancer treatment Zytiga, which is rumored to be competing with Dendreon's (Nasdaq: DNDN) Provenge despite not being approved to treat patients that early in the disease progression. The health-care giant is also in the process of launching Vertex Pharmaceuticals' (Nasdaq: VRTX) Incivek in Europe, where it'll be called Incivo.

Sure, it wasn't the company's best quarter ever, but with a solid dividend, Johnson & Johnson looks like a decent long-term investment for those willing to wait for a turnaround.

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