Raider Nelson Peltz wants changes at Kraft (NYSE: KFT) and he may be getting them. The Wall Street Journal speculates (subscription required) that the Post cereals unit of the big food company might bring in as much as $3 billion. Pepsi (NYSE: PEP) is viewed as on of the potential buyers.
Kraft is a dog of a stock. Over the last year, its is off 5% while the S&P is up about 10%. Q2 increases in revenue and net income were both modest with total sales hitting $9.2 billion and net income $770 million.
A look at the 10-Q shows that sales by division are uneven. Most of the company's US businesses are barely growing at all. Sales at the firm's cereals division were flat at $1.61 billion. Operating income was down slightly to $226 million.
But, cereals is not the only troubled division at Kraft. Operating income dropped in four of the company's seven divisions in the last reported quarter.
Peltz is right. Time to start selling stuff off.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
8-16-2007 @ 3:06PM
Katie said...
If this rumor is true and Kraft were to sell Post, its sounding like Pepsi would be a strong candidate to perform the takeover. Newsvisual has a pretty interesting article that maps the ties between the companies, and apparently Kraft's CEO (Rosenfelt) use to be head of Pepsi's Frito-Lay division. (see article: http://www.newsvisual.com/newsvisual/2007/08/pepsico-ties-to.html).