from the Chairman) The restructured PepsiCo has more revenue than Coca-Cola, but its operating profits and stock performance don't match Coke's. The company's operating profits were down due to investments in advertising and marketing and strengthened the sales and distribution systems. Looking into the future, as PepsiCo's sales momentum continues, operating profits should follow. PepsiCo's international operations span over 40 countries, which makes up for only about 20% of revenues. For the first time, Pepsi was sold more in international markets than in the United States, according to the chairman. Cokes expansion plans into Chinas, India, and Russia can also be seen as a liability. Two-thirds or sales and three-fourths of profits in 1997 came from outside the United States. This leaves Coke dependent on overseas operations. With most of the developing world in uncertainty, these large investments in non-U.S. sources look risky to short-term investors. Coca-Cola thinks the payoffs of a larger market will benefit the company in the long run. The cash allows Coke to pay dividends, expand, and buy back stock until overseas economies stabilize. For long-term investors the factors of overseas investments will not seem offensive. In several years, the company should be able to overcome this obstacle and to ensure stable income ( Knestout 46).On the other hand, Pepsi has spread its interests to manufacturing concentrate, bottling, restaurant operations, and snack production. The division from Taco Bell, KFC and Pizza Hut benefited the company tremendously. While Pepsi seemed to be generating enough revenue, the company was making less profit than its competitor. More importantly, owning fast food restaurants virtually locked them out of the fast food industry for the sale of fountain drinks. Large chains like McDonalds and Burger King have long term contracts with Coke, so Pepsi is left trying to gather smaller establish...
