That’s what a quick read of Wall Street analysts tells us after last night’s bombshell: Two of the healthcare giant’s overseas subsidiaries may have violated the Foreign Corrupt Practices Act by making ‘improper payments’ involving the sale of medical devices.

J&J notified the SEC and Department of Justice, and Mike Dormer, who headed global device and diagnostic sales, took the fall and retired immediately.

Morgan Stanley analyst Glenn Reicin wrote in a research note that Dormer’s departure may help J&J avoid federal enforcement action, which is important because companies convicted of a felony can be barred from selling products to Medicare programs, according to the Associated Press.

Meanwhile, Phil Nalbone of RBC Capital Markets wrote in his research report that J&J’s brief disclosure implied there would not be a material impact on sales or earnings. “The most likely outcome will be a fine, probably in the tens of millions of dollars,” easily absorbed by J&J, which ended 2006 with $4.1 billion in cash. However, he added, “we would expect more ‘retirements’ and rapid departures as a consequence.”

Lawrence Keusch, an analyst with Goldman Sachs, considers the issue “contained” and believes the financial impact will be limited. “The quick action by management,” he wrote, “should limit any hit to J&J’s reputation.”

Of course, that’s assuming there isn’t a lot more to all this.

[tags]Johnson & Johnson[/tags]