INSTANT VIEW: Kraft rev misses, cites Cadbury deal criteria

NEW YORK (Reuters) - Kraft Foods Inc posted a better-than-expected quarterly profit on Tuesday, but saw revenue fall short of Wall Street forecasts, just days before it is due to put down a formal bid for British chocolatier Cadbury Plc.

Kraft outlined its criteria for formalizing a $16.5 billion approach to Cadbury, saying a deal should add to earnings per share by the second year. Investors in both companies were looking for the maker of Velveeta cheese and Oreo cookies to show progress in cutting costs and raising organic revenue as a way of justifying the takeover.

MATT ARNOLD, ANALYST, EDWARD JONES

"There was nothing in this earnings release to help their share price, and that's one of the currencies they are using in their bid for Cadbury. So, this does nothing to improve their Cadbury offer."

"I don't expect they will change the overall bid price, or if they do it won't be by much. I think all along investors have expected them to increase the cash component of the offer since that has been seen as most attractive to Cadbury shareholders."

"They raised guidance, but part of the way they got there was by changing the tax rate and that is neither repeatable nor a sustainable change in earnings."

ERIN SWANSON, ANALYST, MORNINGSTAR

"They did show margin improvement. Sales were a little bit sluggish but they did realize a slight increase in the underlying sales and they raised their guidance for the year. So I don't think that this really impacts the bid in any way, however it plays out."

JOHN DOWLING, PORTFOLIO MANAGER, GOLUB GROUP

Dowling said he wasn't so concerned about the light revenue, given the currency effects on the company, and said it was well offset by the fact that Kraft raised its earnings forecast. The new EPS "tells me they continue to execute on their plans," said Golub, whose fund has about 8,000 shares of Kraft.

RICHARD FORAN, VICE PRESIDENT OF RESEARCH, SYMONS CAPITAL

MANAGEMENT

Foran said the EPS and revenue figures were close enough to expectations and guidance as to be no surprise.

"There's probably some slightly negative things and some slight positive things to take out of this report, but it's pretty much in line," he said. Symons Capital owns 306,795 Kraft shares company-wide.

(Reporting by Jessica Hall, Jessica Wohl and Ross Kerber; Compiled by Michele Gershberg)