Potato chips, soda and bottled water are not necessities to Americans facing an economic crisis, putting PepsiCo in a bit of a crisis itself. PepsiCo (nyse: PEP - news - people ) announced lower-than-expected earnings for its third quarter on Tuesday causing its shares to drop precipitously. The beverage and snack makers stock slid 11.9%, or $7.37, to close at $54.40 in New York trading. The down economy has consumers cutting back on beverage purchases in grocery and convenience stores. The high cost of fuel also is keeping them from spending any more than needed at gas stations and their attendant retail operations and is adding to PepsiCos costs on the delivery side. Frito-Lay North America, the companys snack business, experienced 10.7% revenue growth, to $3.1 billion, but was weighed down by hefty costs for cooking oil and fuel. Quaker Foods North America had a revenue decline of 4.9%, to $391.0 million, due to the flooding of its main plant in Cedar Rapids, Iowa. PepsiCo Americas Beverages, which includes its water division, had flat revenues at $2.9 billion, with a profit decline of 10.7%, to $662.0 million. North American carbonated soft drink volume declined 3.0%, while non-carbonated beverage volume was down 5.0%, reflecting double-digit declines in unflavored water and Propel. Goldman Sachs analyst Judy Hong said in a note to investors she was reviewing her price target and rating for the company, citing the inconsistent, weak performance of PepsiCo this quarter. She said that the beverage weakness was substantially worse than expected and the foods revenue was also disappointing. To add to the beverage makers woes is the rebounding dollar, which has cut into profits from the companys expanding international business. PepsiCo Internationals revenue grew 17.9% to $3.3 billion. "While we cant control the macro economic situation, we can enhance PepsiCos operating agility to respond to the changing environment," said PepsiCo Chairman Indra Nooyi. PepsiCo was forced to lower its guidance for the year and announce a plan to cut 3,300 jobs from its workforce of 185,000. This will include the closure of six factories. The factory closures will cost the company a charge of $550.0 million to $600.0 million in the fourth quarter. The cuts will be part of an effort by the company to save money as the economy stays uncertain. The company expects savings of more than $1.2 billion over the next three years, with $350.0 million to $400.0 million of cost savings in 2009. In the third quarter, the company had income of $1.6 billion, or 99 cents a share, down 5.9% from $1.7 billion, or $1.06 per share, in the year-ago period. Revenues grew to $11.2 billion from $10.2 billion in the third quarter of 2007. Excluding one-time costs, the company earned $1.06 per share. Analysts surveyed by Thomson Financial expected earnings of $1.08 per share on revenues of $11.2 billion. The company now expects to report 2008 earnings per share of $3.67 to $3.68, compared with prior guidance of $3.72 per share. Analysts had expected $3.74.

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