Few companies have as even-balanced revenue streams in a business line as J.M. Smucker does: it's an operational strength that's worth consideration by investors who can tolerate moderate risk.

In general, analysts like Smucker's purchase of Folgers' coffee business, with expected, annual, $100 million synergy and economy of scale benefits in FY2010, following one-time charges of $100-125 million.

J.M. Smucker (NYSE: SJM) reported earnings for Q3 on Wednesday. The company, which makes defensive-type products such as peanut butter, jelly, and biscuits, reported a net sales increase of 6%, once you strip away the effect of acquisitions -- most notably the Folgers purchase -- and the effect of foreign exchange. On an adjusted basis, J.M. Smucker increased its bottom line by 11% to $0.88 per share. This source says that management beat estimates by two pennies, although other sources, such as this one, says the beat was by a single penny.

Managers at Peanut Corporation of America must be thanking the country whose name the company invokes so boldly in its name: that it is not China. For were Peanut Corporation of America Chinese, managers would surely be facing the death penalty. Today officials at the FDA revealed that the Georgia plant responsible for the salmonella outbreak currently linked to eight deaths and 500 sicknesses across the country -- and leading to recalls of more than 100 products -- knowingly shipped peanut butter contaminated with salmonella.

In a dozen tests over a two-year period, internal testing revealed salmonella in peanut butter at the plant, but it was shipped, anyway. The plant was riddled with four separate strains of salmonella in tests conducted by the CDC. Panicky consumers (me, for instance) have already started to forgo purchasing other peanut butter products from manufacturers not linked to the recall.

Hershey (NYSE: HSY) reported earnings for the fourth quarter, and investors seemed to think they were rich and delicious. As I was writing this, shares were up 5%. Why were they up so high?

Well, earnings beat estimates. Hershey managed to deliver an adjusted $0.59 per share. Wall Street wanted $0.54, so there you go. Also, that was four pennies better than the previous year's performance. While that was good, it should be noted that Hershey had an overall problematic year, as it saw earnings per share decline a little under 10% to $1.88 per share. Currency changes are hampering sales growth, so Hershey will need to keep marketing activities as strong and efficient as possible. Margins are also being addressed, as management is hunkering down to wring out every conceivable saving in the supply chain.

It has not been a good time for me. There is a crisis going on in the Land of Peanut Butter. And if there is one thing I love (besides annual double-digit returns on my stock portfolio), it's peanut butter. You've certainly heard about the concerns regarding some Salmonella-tainted peanut paste. If not, you can check out this piece by Sarah Gilbert. The really bad part is that three deaths are possibly linked to the bacterial infection.

What health officials have advised as of now is to avoid products that use peanut butter as an ingredient. To show how bad this crisis has become, Kellogg (NYSE: K) had to recall some of its products that utilize peanut butter. Naturally, my thoughts eventually turned to Hershey (NYSE: HSY). After all, one of its flagship products is the Reese's Peanut Butter Cup.

Reese's Peanut Butter Cup is one of the best confections known to man, and it is my favorite. Every Halloween I look forward to having an excuse for gorging on the product. So, is the wonderful Reese's brand safe to consume? Just as I thought, Hershey ended up tackling the topic. The company issued a press release on January 17 stating that items from the Reese's portfolio are indeed safe to consume.

When I wrote yesterday about the recall of peanut butter due to salmonella poisoning (which is now considered possibly responsible for five adults' deaths), I worried that the "complex" and "widespread" description of the outbreak by the CDC could mean that, not only was the institutional peanut butter spread to thousands of school and corporate cafeterias, but also, the peanut butter might be in other products. Today's move by Kellogg (NYSE: K) to voluntarily pull Keebler and Austin peanut butter crackers off retailers' shelves says to me that we could have no idea how "complex" and "widespread" this disease might be. Kellogg will be investigating to see if its products include tainted peanut butter.

Kellogg products included in the investigation include peanut butter sandwich crackers, peanut butter and jelly sandwich crackers, cheese and peanut butter sandwich crackers, and peanut butter-chocolate sandwich crackers. Kellogg stock was down about 60 cents on the news, to $42.07 as of 1 p.m.

'Green' moms are calling the move by Kellogg a good one; but, as it's only removing items from shelves and not a recall (and is only one company when it could be many more which are affected by the tainted peanut butter), perhaps it doesn't go far enough. Part of the complication: Austin peanut butter crackers are sold in vending machines and small, independent convenience stores, among other places, making their removal fraught with mechanical and communication problems. And my money says more companies will soon follow suit and pull peanut butter off the market.

Peanut butter manufactured at the Blakely, Ga. plant of the Peanut Butter Corporation of America after July 1, 2008, sold under the brand Parnell's Pride and King Nut, is being voluntarily recalled this week due to potential for salmonella poisoning. The peanut butter is sold institutionally and not at the retail level; meaning that tainted product could be in your children's school lunches, in corporate cafeterias, in retirement home dining rooms, or in baked goods and other packaged foods containing peanut butter. One death in Virginia and two deaths in Minnesota are probably tied to the outbreak.

According to the CDC, "This is a complex, widespread outbreak that appears to be ongoing." The outbreak affects 43 states and, because most of the products sold to end consumers are unlabeled (and many of them are sold to the very young and very old, who are both the most susceptible to the disease, and the least likely to critically evaluate the foods they are eating), it could affecting thousands of small businesses and public companies.

This recall, certainly not the first time peanut butter has killed, brings new questions about the safety of all peanut butter products. Is one of America's favorite foods a disastrous choice (and not just for the allergic)? Will major candy makers like Hershey (NYSE: HSY) have to re-evaluate popular peanut-butter based brands? How long will consumers accept such "complex, widespread" deadly diseases before choosing to put the peanut butter sandwiches and peanut butter chocolates back on the shelf?

When the J.M. Smucker Company (NYSE: SJM) presents at tomorrow's Lehman Brother Back-to-School Consumer Conference, look for the company to make prominent mention of the fact that its brand of peanut butter, Jif, was not involved in the peanut butter recall earlier this year. But Smucker certainly profited from the recall with increased peanut butter sales that resulted in a 40% or $19.6 million rise in 1Q 2008 operating income. Net sales for the quarter increased 17% to $561.5 million, and diluted EPS increased 42% to $0.71. Investors always like when earnings grow faster than sales.

Smucker recently completed the acquisition of Eagle Brands, maker of canned milk and other baking products. This is a good fit with other Smucker baking related products including Pillsbury and Crisco. During the first complete quarter following acquisition, Eagle Brands contributed $43.5 million to net sales. The company sold its manufacturing facility in Scotland as well as its nonbranded grain products in Canada in order to concentrate on domestic manufacturing and quality control.

The company is sticking with its previously mentioned FY 2008 guidance of sales growth of 8%, half from organic growth and half from acquisitions. Commodity costs will continue to increase for Smucker, as for its competition. Smucker needs to keep a tighter lid on administrative and selling expenses in light of costs increases, some of which cannot be passed on to consumers in the form of higher prices. Interest expense increased by $4 million due to Eagle Brands acquisition, so the company must monitor its debt load.

The stock is up almost 10% for the year, opening the year trading at $49.30, and currently trading at $54.86, with a dividend yield of 2.2%.

Peanut butter manufactured under the "Peter Pan" and "Great Value" brands with the product code 2111 by ConAgra Foods (NYSE: CAG) is still making people sick, according to the latest report by the Centers for Disease Control. Although the entire batch of tainted peanut butter has long been pulled from store shelves, it's difficult to remove from consumer's shelves (especially as the two-dollar refund isn't exactly a money-maker). And processed peanut butter (as we well know) seems to last forever; I wouldn't be surprised if first-graders are still toting contaminated sandwiches to school in their lunchboxes next fall.

So as my college track buddy Josephine always said around October when the sniffles would break out around the locker room, "sickness is coming." Sickness is still coming, and likely will continue for some time; 628 cases in a whopping 47 of our 50 U.S. states have been reported, with more than 200 new since March when the CDC last reported (the peanut butter recall was announced in mid-February 2007).

ConAgra won't be producing peanut butter from its Sylvester, Ga. plant again for a while, as renovations to fix the moisture problems blamed for the contamination are still underway; but the company will reintroduce its Peter Pan brand in July. But with customers still sickening, will anyone go back? Would you eat Peter Pan peanut butter again?

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that the UAW and representatives of Kirk Kerkorian, which made a $4.5B proposal for DaimlerChrysler AGs (NYSE: DCX) Chrysler unit, met to discuss the potential of an employee stock ownership plan and other alternatives to a takeover of the struggling automaker.
• A $25B deal to take SLM Corporation (NYSE: SLM), known as Sallie Mae, private will most likely remain under the scrutiny of a federal regulator, reported the Wall Street Journal.

OTHER PAPERS:

• The Washington Post reported that the FDA knew years in advance about contamination problems at a Georgia peanut butter plant and on California spinach farms that led to disease outbreaks, documents and interviews show.
• According to an examination by the San Jose Mercury News, a criminal case against Apple Inc (NASDAQ: AAPL) CEO Steve Jobs in the stock-options backdating investigation looks unlikely.
• According to Cinco Dias, Gottschalks Inc (NYSE: GOT) has hired UBS AG (NYSE: UBS) to explore options of a possible sale or a merger.

WEBSITES:

• Digitimes.com reported that Koninklijke Philips Electronics (NYSE: PHG) has decided to withdraw from the Taiwan handset market.

While preschool was difficult for my son, who just doesn't like playing according to a schedule, I can gratefully point to one rule I needed help reinforcing: washing his hands. Like all the rest of the kids, he was required to wash hands after going to the potty and before eating snacks.

Clearly, the food workers of America did not learn this lesson.

Salmonella can infect a food in two ways: (1) if the raw meat or uncooked eggs from an infected chicken or other animal is ingested (either by eating raw food or by contaminating other foods with chicken juices, etc.) or (2) a human's feces come into contact with food. Because someone didn't wash his hands after using the potty. The CDC says the source of contamination is "still under investigation," but as this is the first-ever peanut butter contamination I'm just going to go out on a limb and say "human feces."

Peter Pan and Great Value peanut butter products (starting with code 2111) have been recalled by ConAgra Foods, Inc. (NYSE:CAG), thanks to a salmonella outbreak. I'm sure the parents who just sent their children to school with peanut butter and jelly sandwiches told them to wash their hands before lunch.

It's not like this is the first time this has happened, even in the past few months.