Crisis Hits Real Economy: Pepsi Flat

PepsiCo. which, like Coca-Cola, has long been considered a "safety stock" -- in good times or bad, folks drink soda -- said this morning that people actually aren't drinking soda. Result: The company will cut 3,300 jobs in the United States.

The company's stock is being hammered thanks to a trifecta of bad news from the soda giant this morning: Third-quarter profits fell short of Wall Street expectations, the company cut its full-year outlook and it refused to give guidance for 2009.

Nearing lunchtime, shares of PepsiCo. are trading down about 10 percent. It is the nation's No. 2 soda company behind Coke.

The company said the job cuts are part of a plan to save $1.2 billion over the next three years.

Soda only makes up about 25 percent of PepsiCo.'s sales. The company owns a wide array of snack foods, including Lay's, Frito-Lay's, Doritos, Cheetos and Ruffles.

Third-quarter sales in the Frito-Lay division were up 9 percent, but soda sales were down 3 percent and non-soda sales -- such as Gatorade -- were down 5 percent, the company reported.

-- Frank Ahrens

October 14, 2008; 12:03 PM ET  | Category:  business
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