4/15/2005

PepsiCo’s earnings fizz in first quarter

PepsiCo is the second largest soft drink company and owner of Frito-Lay. Their earnings for the first quarter of 2005 increased an astonishing 7 percent from $6.13 billion a year ago to $6.59 billion. This increase is attributed to a favorable tax change and strong international growth. Is it fair that a very small amount of companies are allowed to make such a large amount of money from an industry that is so wide reaching?
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1 comment:

Dr. Tufte said...

-1 on Ace's and Trudy's comments for a capitalization errors.

There are two reasons not to read too much into this number.

First, $6.59B as a percentage of what? Large companies can make a lot of money without doing particularly well.

Second, 7% growth is not out of line. This is a nominal figure. The national economy did about 4% last year, with inflation just over 2%. That means that nominal economic growth was about 6%. This is what the average company should do. Pepsi doesn't seem to far beyond this number.

11:21 PM

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