(In paragraph 7, deletes operating from first reference to sales growth)

NEW YORK - Johnson & Johnson reported better-than-expected quarterly sales and earnings, helped by sharply lower taxes and a return to solid growth for its array of medicines, medical devices and consumer products.

But the diversified healthcare company, which is traditionally conservative in its outlook, provided a 2010 profit forecast range that barely reached Wall Street projections. Its shares fell 1.3 percent.

J&J on Tuesday said its fourth-quarter profit fell to $2.2 billion, or 79 cents per share, compared with $2.71 billion, or 97 cents per share, in the year-ago period.

Excluding special items, including an $852 million restructuring charge, J&J earned $1.02 per share. Analysts on average had expected 97 cents per share, according to Thomson Reuters I/B/E/S.

Company sales rose 9 percent to $16.55 billion, well above analyst predictions of $15.7 billion, helped by a recovering economy and newer products. By contrast, third-quarter sales fell 5.3 percent, hurt by generic competition for the company's Risperdal schizophrenia drug.

Sales beat our expectations across all three divisions, Leerink Swann analyst Rick Wise said in a research note, with fourth-quarter growth more than double his projections.

Company Chief Executive William Weldon said 2009 was the first year in 76 years that J&J failed to report sales growth. But he predicted a return to operating sales growth this quarter, meaning growth independent of foreign exchange factors.

We already are seeing promising signs we are driving significant growth and capitalizing on the investments we've made, Weldon told analysts in a conference call.

Another diversified health company, Swiss-based Novartis AG , reported a 54 percent rise in fourth-quarter net profit helped by sales of its H1N1 swine flu vaccines, and named drugs head Joe Jimenez as CEO, replacing longtime chief Daniel Vasella.

J&J's fourth-quarter pharmaceutical division sales rose 5.4 percent to $5.99 billion, medical device and diagnostic unit sales increased 11.8 percent to $6.31 billion and consumer product sales rose 10.2 percent to $4.25 billion.

The earnings beat in the quarter was due in part to an extra week of sales in the calendar year, as well as sharply lower taxes, the company said. The tax rate in the quarter, of 15.3 percent, was well below the 22.8 percent rate in the year-ago period.

J&J, which is known for making conservative forecasts, predicted a full-year 2010 profit of $4.85 per share to $4.95 per share excluding items. Analysts have expected $4.94 per share.

J&J's profit jumped almost 10 percent in 2008, but grew only 1.8 percent last year as the recession crimped sales of many products and generic competition took its toll.

The company expects earnings to rise as much as 7 percent this year -- helped by novel products such as its recently approved Stelara psoriasis drug.

J&J shares fell 81 cents to $62.41 in morning trading on the New York Stock Exchange.

(Reporting by Ransdell Pierson and Lewis Krauskopf, editing by Gerald E. McCormick, Dave Zimmerman)

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