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UPDATE: Kraft Earnings Beat; Shares Down On Weaker Sales View

(Adds information on the company's earnings and possible bid for Cadbury.)

By Anjali Cordeiro

Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- Facing an impending deadline to make a formal offer for confectioner Cadbury PLC (CBY) and under pressure to demonstrate the strength of its own business, Kraft Foods Inc. (KFT) reported a better-than-expected third- quarter profit, but the company lowered its outlook for sales growth this year.

The results pushed down company's share price soon after the announcement, with Kraft's shares falling nearly 3% to $26.75 in after-hours trading. Kraft's third-quarter earnings have been closely watched as the company's September proposal for Cadbury had a stock component and as any movements in Kraft's stock price will influence the value of any offer that Kraft makes.

Kraft's shares have been under pressure for the last month because investors have been concerned about how much the company could end up paying in a takeover battle. Kraft's shares are now below the $28.10 they were at before the Cadbury proposal was announced, and the latest shift in the stock price could be an added complication in its efforts to buy Cadbury.

Chief Executive Irene Rosenfeld said in a statement accompanying earnings results that the company is still interested in Cadbury, but that Kraft will be a "disciplined" buyer.

Kraft has until Nov. 9 to make a formal bid for the confectioner and it is widely expected to unveil an offer in time to meet the deadline. Kraft in September unveiled a takeover offer for Cadbury that was then valued at $16.7 billion and was rebuffed by the chocolate maker.

On Tuesday, Kraft said its criteria for any deal with Cadbury would require that it be accretive in the second year, and allow Kraft to maintain both its investment grade credit rating and its dividend. Kraft's comments that it will stay disciplined are likely an effort to signal to its own investors and Cadbury holders that it won't overpay for the deal.

Kraft on Tuesday cut its forecast for 2009 organic revenue growth to be about 2% from its prior view of about 3%, saying it would benefit less from price increases. The company again boosted its 2009 earnings target, seeing per-share earnings of at least $1.97, up from its August view of at least $1.93. Analysts most recently expected $1.97. The company cited its strong year-to-date performance as well as a lower full-year tax rate estimate.

Kraft Foods third-quarter profit declined 40% as the food giant posted lower revenue, but lower costs again helped boost margins.

Kraft, which makes Kraft cheese, Oscar Mayer lunch meats and Planters nuts, posted a profit of $824 million, or 55 cents a share, down from $1.36 billion, or 91 cents a share, a year earlier. The prior year included a 57-cent gain from the $2.6 billion sale of Post cereals to Ralcorp Holdings Inc. (RAH).

Revenue declined 5.7% to $9.8 billion. Analysts polled by Thomson Reuters expected earnings of 48 cents on revenue of $10.32 billion.

(John Kell contributed to this article)

- By Anjali Cordeiro, Dow Jones Newswires; 212-416-2200; anjali.cordeiro@ dowjones.com

  (END) Dow Jones Newswires
  11-03-091724ET
  Copyright (c) 2009 Dow Jones & Company, Inc.