Food manufacturer Kraft (NYSE: KFT) is backing away from some previous earnings guidance. CEO Irene Rosenfeld said that 2008 net income should be, at the very least, $1.88 per share. This is $0.04 less than the original expectation of $1.92 per share. For 2009, the CEO thinks Kraft will deliver a minimum of $2 per share. Analysts were looking for $2.06 per share.

Should those who own shares of Kraft immediately put an order in to dump the stock? Well, shareholders know what is best for them and their specific situations, but if you want my opinion, I don't think Kraft is a sell.

For starters, that $1.88 per share figure represents an adjustment related to the sale of the Post cereal asset. It therefore doesn't bother me too much. And as for the 2009 estimate, Kraft's $2-per-share guidance includes a $0.03 charge for the Post-cereal exit and monies devoted to cost savings. Analyst estimates for the most part don't factor adjustments into their bottom-line figures. So, this guidance doesn't really frighten me.

What I think is more telling is the issue of margins. Consumer-products companies such as Hershey (NYSE: HSY), Procter & Gamble (NYSE: PG), Kellogg (NYSE: K) and PepsiCo (NYSE: PEP) all have margins on their corporate minds. From what I can tell, Kraft has been pretty successful at protecting itself from inflation by utilizing price increases.

Since July 11, the price of oil has fallen 25% from $147 to $110. This has been terrible news for holders of energy stocks -- which have nosedived. But for people who need to fill up their tanks, prices at the pump remain relatively elevated -- having fallen about 10% (I remember paying $4.11 at the peak and now pay $3.69 a gallon).

Meanwhile, the New York Times reports that companies using oil in their products are keeping their prices high despite the oil price drop. These companies seem to be acting in unison to raise prices -- suggesting there is not enough competition in their markets.

Which companies are raising prices still? Those who believe they can get away with it as they try to recoup the lost profit resulting from the recent increase in the price of oil -- which is an important raw material in their products..

• Procter & Gamble (NYSE: PG) increased prices to retailers up 7% to 10% "for items made with ingredients derived from oil to 'recover costs already incurred,'" according to a Times interview with its spokesman.
• Dow Chemical (NYSE: DOW) raised prices by 50% for the oil-based raw materials that go into diapers and polystyrene. It "does not want to give up those increases until the company recovers its old profit margins since '[its] prices continue to lag [its] cost increases,''" according to a Times interview with its spokesman.
• Goodyear Tire and Rubber (NYSE: GT) has raised tire prices by 15% and is "still making synthetic rubber tires from oil-based feed stocks bought at relatively high prices more than three months ago [and it] 'could not consider canceling the price increase until it knew whether oil prices were going to stay down,'" according to a Times interview with its spokesman.

The stock market was down yesterday and it is down again today. Bearish sentiment is roaming through Wall Street right now, so I thought I would look back on another occasion when the market was going through similar turmoil and I wrote about the following eight stocks, which I thought would be "safe havens" in such a storm.

Six of the eight did well and two did not, and of course one of those two was a disaster. Among the losers, I do not think anyone is fretting about UPS, which is still one of the few triple-A rated companies along with Berkshire Hathaway. It has been well reported that the slowing economy and higher fuel prices have been the major culprits affecting UPS's earnings. In the case of WaMu, it's demise has also been well reported, but at the time I recommended it WaMu had a stellar reputation of growth and high yield for over two decades. There is no hiding, it turned out to be a lousy pick and an ANTI-SAFE Haven

NOT SAFE:

United Parcel Service (NYSE: UPS) closed Monday at $65.30 down from $78.40; a 16.71% loss

Washington Mutual (NYSE: WM) closed Monday at $4.21 down from $45.50; a 98% loss.

Fortunately the remaining six picks have done very, very well. If you had bought the pool, the average gain over the last two years would have been 7.14%. Adding the dividends over the two years would have raised this to 13.14%.

Procter & Gamble (NYSE: PG) reported its Q4 and full-year results on Tuesday. The numbers looked very good to me (save for one, which I'll get to). P&G was up over 3% on Tuesday. Granted, the Dow saw one heck of a rally yesterday, but even so, P&G deserved a bid just due to its blue-chip corporate performance.

Revenues for the quarter increased 10%, and adjusted earnings per diluted share jumped over 19% to $0.80. For the year, revenues increased 9% and adjusted earnings per diluted share rose 15% to $3.50. As I stated in my earnings preview from the other day, Wall Street was looking for adjusted earnings to be around $0.78 per share. So P&G beat by two pennies.

Of course, the earnings beat is nice, but cash flow is even nicer. In fact, management likes to evaluate itself by comparing its free cash flow to net earnings. P&G would like the so-called "free cash flow productivity" metric to equal at least 90%. Well, shareholders need not worry, since productivity in these terms was 96% for the quarter and 106% for the fiscal year. Free cash flow for the year expanded by 21%, and it was more than enough to power P&G's great dividend.

The company that brings you Ivory Soap, Procter & Gamble (NYSE: PG), is set to divulge its Q4 numbers on Tuesday. So, what should shareholders expect from this consumer-products behemoth?

Well, I don't think it's going to be much of a surprise. Data at Earnings.com suggest that analysts believe P&G will do $0.78 per share in terms of the bottom line. Management actually expects around that number, as well. A recent piece I wrote about P&G reiterating its guidance shows that between $0.76 and $.78 per share is the range being looked at. So, I think we'll see the top end of the range reported tomorrow. P&G has a solid recent history of slightly beating expectations. Perhaps there will be a beat, but it most likely won't be by more than a penny.

This will represent pretty decent performance in a market wracked by horrible inflationary pressures. Going back to Earnings.com, the previous year's bottom-line number was $0.67 per share, so P&G will be looking at good double-digit growth. The top line, by the way, should expand at least 8%. Volume data will also be important to look at so investors can get a handle on how successfully the company is cultivating price increases. P&G has a significant advantage over competitors since its line of products is so well-known and trusted. I mean, when it comes to things like Ivory Soap, many consumers will refuse to alter their brand loyalties even if they have to pay more at the pump. Yes, sales of generic products obviously do have a challenging impact, but as I found with Kraft's (NYSE: KFT) recent earnings report, brand equity is a selective advantage in the Darwinian landscape of supermarket shelves. It's also useful for protecting margins.

The New York Times reports that Citigroup (NYSE: C) plans to commit $400 million to its naming rights deal for the stadium of the New York Mets. I say stop this deal!

Why? There are so many examples of companies that got into trouble after they named stadiums after themselves. In Boston, the stadium where the New England Patriots play was named after Gillette -- but Gillette doesn't exist anymore -- Procter & Gamble (NYSE: PG) bought it in 2005. And we had the Fleet Center, where the Boston Celtics play -- but Bank of America (NYSE: BAC) bought Fleet in 2003. And we also had the Tweeter Center, a concert venue -- named after Tweeter Home Enterprises which filed for bankruptcy last June. Fortunately, Boston's other world championship team, the Red Sox, has the good sense to deny naming rights to any company for its Fenway Park.

Now for Citi. According to the Times, it made its 20-year deal for the Mets naming rights back in November 2006 under previous CEO, Chuck Prince, after netting $5.3 billion in 2006's third quarter. But in the past three quarters, it has lost $17 billion - including a $2.5 billion loss reported on Friday.

Well-known maker of peanut-butter and jelly products J.M. Smucker (NYSE: SJM) reported earnings for Q4 and the full fiscal year on Thursday. The market didn't like the report in the least. The stock closed down well over 8% at the end of yesterday's session.

Here's what happened. For the fourth quarter, net sales increased 20%, but that was little consolation to the bottom line, which dropped 11%, as earnings per diluted share came in at $0.67 versus $0.75 in the year-ago period. The top line also was the beneficiary of some inorganic growth based on acquisitions. If you adjust for certain items, bringing the earnings up to $0.73 per diluted share, the decrease in the bottom line improves to 3%, but a decline in this case is still a decline. Plus, earnings expectations were not met. The company came in five pennies shy of Wall Street's wishes, according to estimates posted at earnings.com.

For the fiscal year, J.M Smucker's top line increased 18%, also due in part to acquisitions. On both a reported and an adjusted basis, earnings per diluted share jumped 9% to $3.00. Margins really suffered during the quarter and the year. Input costs are inflating, and they're becoming difficult to manage.

J.M. Smuckers (NYSE: SJM) closed at $53.75 Tuesday.

The WSJ is reporting SJM is near a deal to buy Folgers from Proctor & Gamble (NYSE: PG) in an all stock transaction.

Deutsche Bank says: "From an economic standpoint for SJM, we calculate the deal would be about $0.25 per share dilutive on an annual basis."

SJM over all option implied volatility of 27 is near its 26-week average according to Track Data, suggesting non-directional risk.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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.

TheStreet.com's Jim Cramer says they have successfully increased price, and their stocks have room to run.

It's tough not to be a Pollyanna after talking to Bill Johnson, the CEO of Heinz (NYSE: HNZ) (Cramer's Take), and after reading the Procter & Gamble (NYSE: PG) (Cramer's Take) quarterly transcript. Both of these companies have had to deal with hundreds and hundreds of millions of dollars of raw cost increases, and both have not only come through with flying colors but are more profitable than I bet even they thought they could be.

PG is amazing. Almost every business was up much more than people thought possible, with divisions like razors and hair care (shampoo) so strong that you would think that suddenly a large part of the populace has decided to start shaving and shampooing for the first time.

Innovations, like the Fusion blade, have produced remarkable returns in a short time, as Fusion is yet another billion-dollar brand that didn't exist a couple of years ago.

Consumers these days are so lacking in confidence that all the therapy in the world probably couldn't help them. The housing market is in a tailspin, commodities are soaring and gas prices are nearing $4 a gallon. It is against this backdrop that Procter & Gamble Co. (NYSE: PG) reported better-than-expected first quarter results.

Profit rose to $2.71 billion, or 82 cents per share, compared with $2.51 billion, or 74 cents per share, a year ago. Revenue rose 9% to $20.46 billion from $18.69 billion last year. The Cincinnati-based company was expected to earn 81 cents on revenue of $21.44 billion, according to Thomson Financial.

"P&G delivered strong results in-line with long-term targets in a challenging economic and competitive environment with broad-based sales and share growth, earnings growth and overhead cost improvement," said Chief Executive AG Lafley in the earnings release.

Shares of the maker of Tide (my favorite detergent) and Pampers (our family's preferred diaper for my son) have slumped more than 10% this year under-performing rivals including Church & Dwight Co. (NYSE: CHD) and Colgate-Palmolive Co. (NYSE: CL). Uniliver Plc. (NYSE: UL) has fared slightly worse than P&G.

Wal-Mart Stores, Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT) are in this one together, and we're not talking a battle for retail supremacy here. The two mega discount retailers face an ongoing patent lawsuit over their use of RFID technology to keep track of warehouse and retail inventory levels and automated ordering and processing.

It's hard to imagine a commodity technology being used in so many ways by retailers the world over being patented, but that's just what Houston, Tx. citizen Ronald Bormaster is claiming. Bormaster's RFID patent covers RFID in a way that ensures pallets and units of merchandise don't "collide" when being handled in an automated fashion, and he assigned the patent to a Houston company called "RFID World" -- which is not even using the system on a commercial basis to this day.

Wal-Mart and Target both have asked the patent lawsuit to be thrown out, arguing that it has no merit and that Bormaster's patent isn't a patent in the first place. The retailers say, based on a 2005 University of Arkansas study, that RFID allows in-store merchandise to be replenished three times more quickly when RFID is involved as opposed to manually-scanned bar code systems. Would customers see visible inconveniences in stores if this patent lawsuit was won by Bormaster and RFID was no longer allowed to be used by the two retailers? They say yes. Procter & Gamble Co. (NYSE: PG)'s Gillette brand is also involved with this dispute since it's a large proponent of using RFID in its mass production facilities with its partners. All three companies want the case to be thrown out in its entirety.

Consumer products maker Procter & Gamble Co. (NYSE: PG) reported this morning a rise of 14% in its fiscal second-quarter profit, helped by higher sales and cost-cutting measures.

Strength in emerging markets that offset slower growth in North America and Western Europe made the company's quarterly profit rise up to $3.27 billion, or 98 cents per share. P&G had reported a profit of $2.86 billion, or 84 cents per share, in the same period a year ago. Analysts, on average, expected Procter & Gamble show earnings of 97 cents per share.

The company's results also show a 9% jump in revenue to $21.58 billion, up from $19.73 billion a year earlier. P&G said its increase in revenue reflects double-digit sales gains in such products as Head & Shoulders hair-care line and Duracell batteries. Analysts had forecast $21.25 billion in revenue, according to Thomson Financial.

I drink a lot of coffee. Is it good for me? Nah. And when I get a throbbing headache from it, sometimes there's nothing better to do than just feed the monster and drink more. So, yeah, I drink too much coffee but what's a father of five supposed to do?

So, when I read today's BBC article, Coffee May Make Diabetes Worse, my ears perked up and I took note. The BBC quotes a study that suggests that "daily consumption of caffeine in coffee, tea or soft drinks increases blood sugar levels for people with type 2 diabetes."

Huh? It sounds like caffeine is the culprit, not necessarily coffee. If tea and soft drinks also produce the same effect, it sounds unfair to blame the holy bean.

It gets better. The article continues, "the ten people who took part in the study were monitored with a tiny glucose monitor embedded under the skin."

I always like studies that use a large, randomized subject pool. Ten people doesn't quite cut it.

Even more: the patients were studied for a whopping 72 hours. Sorry, this study doesn't quite pass the muster.

So, the lesson for investors? Don't go out and short Kraft (NYSE: KFT) or Procter and Gamble (NYSE:PG), Nestle (OTC: NSRGY), or Starbucks (NASDAQ: SBUX) based on one data point. These coffee giants produce good product that like everything else in life, when taken in moderation, is not only enjoyable but life-enhancing.

TheStreet.com's Jim Cramer says companies with great earnings might be worth a look.

Stocks are cheap on an earnings basis -- unless they have earnings risk. If they have no earnings risk, they are not cheap.

Therein lies the conundrum on a day like today. Let's say you went CAMPing today: You bought Coke (NYSE: KO) (Cramer's Take), Altria (NYSE: MO) (Cramer's Take), Merck (NYSE: MER) (Cramer's Take) and Procter & Gamble (NYSE: PG) (Cramer's Take). Do you know that even after the precipitous falls last week and the declines we expect today, that none of them is historically cheap? Do you know that most of them are up significantly since last summer?

That's a real issue. You aren't buying them at rock bottom prices because they are up so much already.

Now, let's take the examples of the cyclical stocks in the Dow. They are cheap: United Tech (NYSE: UTX) (Cramer's Take), Honeywell (NYSE: HON) (Cramer's Take), Alcoa (NYSE: AA) (Cramer's Take). But their earnings estimates are considered vulnerable to the worldwide slowdown and a U.S. recession.

You can chicken out, buy some Microsoft (NASDAQ: MSFT) (Cramer's Take), which has good earnings, or IBM (NYSE: IBM) (Cramer's Take), which just had great earnings, and in many ways those will be cheaper.