The J.M. Smucker Company (NYSE: SJM), a food manufacturer famous for its jelly and baking products, reported a great first quarter on Friday. Adjusted earnings per share increased 12% to 92 cents. According to Reuters, management was able to beat expectations by a whopping 12 cents.

This is quite impressive given the fact that an analyst quoted by Reuters believes that more people eating at home are helping to fuel Smucker's success. I say this because, if people are deciding to dine at home more often, they are most likely doing so because of the recession.

Coffee is keeping Procter & Gamble (NYSE: PG) wired, even as it exits the home-brew business, finalizing the sale of Folgers to The J.M. Smucker Co (NYSE: SJM). The company raised its fiscal second-quarter and full-year 2009 forecasts due to better-than-expected proceeds from the sale of America's biggest-selling coffee brand. Previously, Procter & Gamble had expected a gain of 50 cents per share; now the company expects 63 cents per share in profit. The gain is partly due to the unusual method of sale called a "reverse Morris Trust" transaction; P&G will spin off Folgers to its shareholders, then simultaneously Folgers and J.M. Smucker will merge to form a new company.

As a result, earnings per share will be $1.63 for the quarter, the company said, and between $4.28 and $4.38 for fiscal 2009.

The sale of Folgers may have been timely for Procter & Gamble, as consumers who have been pressed financially have not yet returned to brewing coffee at home, instead downgrading from pricey independent coffeeshops and Starbucks (NASDAQ: SBUX) to better values for enormous cups of brewed coffee (with a side of deep-fried pastries) at Dunkin' Donuts and the like. If the economy continues to decline, perhaps Folgers will see a resurgence; for now, P&G is happily focusing on its core brands while Smucker works in a different customer base which values "iconic" comfort food brands.

MAJOR PAPERS:

• In a move to help cut expenses and save on fuel prices, UAL Corporation (NASDAQ: UAUA), parent of United Airlines, will reduce its 460 airplane fleet by 70 jets. Not yet known is how may jobs will be affected, the Wall Street Journal reported.
• In an all stock deal, J.M. Smucker Co. (NYSE: SJM) is expected to buy Folgers coffee from The Proctor & Gamble Company (NYSE: PG) for an estimated $2B, according to the Wall Street Journal. Folgers, the best selling ground coffee in the U.S., has annual sales of about $1.6B.
• The Financial Times reported that Lehman Brothers Holdings Inc (NYSE: LEH) lost $500M-$700M on some of its hedging positions in Q2, which have contributed to a larger than expected loss that could result in the bank raising more capital by selling a stake to an outside investor. Lehman has begun negotiations with potential investors, including asset managers and Asian banks, sources said.

OTHER PAPERS:

• According to sources, the Rocky Mountain News reported that troubled home builder Beazer Homes USA Inc (NYSE: BZH) is pulling out of Colorado. Beazer, which is being investigated for mortgage fraud by several government agencies, has built homes in the suburbs of Denver and in Colorado Springs.