The job cuts amount to roughly 1.8 percent of PepsiCo's global work force of about 185,000 employees. The cuts will affect managerial and factory jobs both in and outside the U.S. Most will be eliminated in the coming months, Chief Financial Officer Richard Goodman said.
The nation's second-largest drink maker - which also owns the Frito-Lay, Tropicana and Quaker brands - said the cuts would generate pretax savings of more than $1.2 billion over the next three years. It plans to save $350 million to $400 million in 2009.
"While we can't control the macro economic situation, we can enhance PepsiCo's operating agility to respond to the changing environment," Chief Executive Indra Nooyi said in a statement.
In the third quarter, the company had net income of $1.58 billion, or 99 cents a share, compared with $1.74 billion, or $1.06 per share, a year ago. Revenue grew to $11.2 billion in the most recent period from $10.17 billion a year ago.
Excluding one-time costs, the company earned $1.06 per share, but that still fell short of what Wall Street had expected.
Analysts surveyed by Thomson Reuters, who typically exclude items from estimates, expected earnings of $1.08 per share on revenue of $11.2 billion.
Purchase, N.Y.-based PepsiCo Inc. also noted that the recent surge in the U.S. dollar will hurt fourth-quarter profit. At current rates, the incremental impact would be about 4 cents to 5 cents per share.
As a result, the company now expects to report 2008 earnings per share of $3.67 to $3.68, compared with prior guidance of $3.72.
Analysts expected $3.74 per share for the full year.
"Pepsi missed consensus operating earnings, lowered full year guidance and didn't provide an '09 outlook at this point," Morgan Stanley analyst Bill Pecoriello said in a note to investors. He said the negative results would likely drag down the share prices of other multinational consumer products companies.
PepsiCo shares fell $4.57, or 7.4 percent, to $57.20 in midmorning trading Tuesday.
PepsiCo announced Friday that it would renew its focus on carbonated soft drinks with a marketing campaign to be launched after New Year's. That would be a reversal of its strategy to move away from soda and toward more expensive alternatives, such as sparkling juice, energy drinks and ready-to-drink teas.
Goodman, the CFO, said the company had been planning the campaign over the last several months as a response to the consistent declines in sales volume in the U.S.
"We're looking at re-engaging consumers, keeping the ones we have and making sure we're getting additional consumers into the fold," Goodman said, adding that a lot of carbonated soft drinks "are very affordable."
Revenue at the company's PepsiAmericas Beverages unit, which sells drinks in the U.S. and Latin America, was flat with a 2.5 percent decline in the volume of drinks sold.
