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PepsiCo's 1Q to give snapshot of turnaround push

NEW YORK (AP) -- PepsiCo's first-quarter results on Thursday should give a glimpse of whether the soda and snack food maker's strategy of investing more marketing dollars in its flagship brands is starting to pay off with improved sales.

WHAT TO WATCH: Purchase, N.Y.-based PepsiCo makes Frito-Lay, Tropicana and Quaker Oats. But after facing criticism over lost market share to Coca-Cola in recent years, the company has made a particular point of strengthening its namesake soda.

In addition to inking a multiyear deal to sponsor the Super Bowl halftime show, the company hired pop star Beyonce to star in a global ad campaign. It also introduced a mid-calorie soda called Pepsi Next, which is intended to draw back people who've quit soda but don't like the taste of traditional diet sodas.

Investors will be checking to see whether the efforts have had any impact on sales volume in its Americas division. Coca-Cola Co. said Tuesday that it gained volume and value share in both carbonated and non-carbonated drinks in North America during the quarter.

WHY IT MATTERS: PepsiCo is the subject of perennial speculation on whether it will spin off is underperforming beverage unit. CEO Indra Nooyi tried to put such talk to rest last year with the introduction of the "Power of One" campaign, which pairs up one of its salty snacks with one of its sodas in ads.

But the company has yet to deliver meaningful, sustained improvement in its U.S. beverage business and has been reviewing a restructuring of the unit, with plans to provide an update on the review early next year. Meanwhile, Coca-Cola announced Tuesday that it struck preliminary deals to start refranchising its North American business.

The move is part of Coca-Cola's plan to create a national production model and improve margins by shifting distribution back to independent bottlers.

In the meantime, another potential factor has surfaced for PepsiCo. A report last month said that activist investor Nelson Peltz had taken stakes in PepsiCo and Mondelez International Inc., which makes Oreo cookies, Cadbury chocolates and Ritz crackers. The report spurred speculation that the billionaire may be laying the groundwork to agitate for a merger between the two food giants.

For the year, PepsiCo Inc. has said it expects earnings rising 7 percent from last year's adjusted earnings of $4.10 per share. That implies a $4.39 per share.

WHAT'S EXPECTED: Analysts on average expect an adjusted profit of 70 cents per share on revenue of $12.56 million, according to FactSet.

LAST YEAR'S QUARTER: PepsiCo Inc. earned $1.13 billion, or 71 cents per share. Not including one-time items, its adjusted earnings were 69 cents per share. Revenue was $12.43 billion.