Keeping Pepsi's Fizz

Article excerpt

Byline: Rob Cox

She's wanted elsewhere, but Indra Nooyi still has work to do.

Whenever a big new job opens up just about anywhere in the world, Indra Nooyi's name enters the frame. Last year, scuttlebutt in Mumbai had the PepsiCo chief executive returning to India to run the powerful Tata Group. Earlier this year, Nooyi was floated as a candidate to run the World Bank. Now her recent recruitment of a former White House and Treasury official to Pepsi's ranks has some pegging her for a big job in Washington.

As flattering as this sounds, the chatter makes an already challenging job more difficult. Nooyi, who is determined to stay put, is still working to convince shareholders to back her vision for an integrated Gatorade-to-Doritos snack-food giant. Not that her reign has been a disaster. Since becoming the first female to lead Pepsi in late 2006, the company's earnings per share have gained around 36 percent, and its sales have nearly doubled to $65 billion. The problem is that the stock has done relatively poorly--gaining just around 10 percent during that time. For comparison, Coca-Cola has done nearly 10 times better.

Investors just haven't given the high-margin, cash-generating soft-drink business sufficient credit. In part that's because Nooyi has actively worked to dispel the notion that Pepsi is a junk-food pusher, emphasizing its healthier victuals. Yet its greatest recent successes have been products like a 24-ounce can of Mountain Dew. As a result, Pepsi suffers from what brokerage Sanford C. …