Oct. 14 (Bloomberg) -- PepsiCo Inc., the world's largest snack maker, said it will cut 3,300 jobs after profit declined more than analysts estimated and the company lowered its forecast for the rest of the year. The shares dropped the most in almost 26 years in New York trading.

PepsiCo wants to save $1.2 billion over three years as it closes as many as six plants and pares 1.8 percent of its workforce, including ``overlapping'' marketing and sales jobs, Chief Financial Officer Richard Goodman said today. Third- quarter profit fell 9.6 percent, missing analysts' estimates by 2 cents.

The maker of Gatorade and Pepsi-Cola will use some of the savings to boost marketing of its beverages in North America, which make up a fourth of PepsiCo's annual revenue. Drink sales in the U.S. and Canada decreased 3 percent in the quarter as consumers cut back on soft drinks in groceries and convenience stores to better afford higher priced gasoline and food.

``The initiatives come at a time when it's evident they're necessary,'' Mark Swartzberg, a New Jersey-based analyst with Stifel Nicolas & Co., said today in an interview. ``Beverage performance in North America continues to be challenging and worse than expected.'' He recommends holding the stock.

Full-year earnings excluding some costs will be $3.67 to $3.68 a share, lower than PepsiCo's prediction of $3.72 in July. The dollar's increase against other currencies will hurt profit in the fourth quarter, the Purchase, New York-based company said.

Shares Decline

PepsiCo, the world's second-largest soda maker, dropped $7.37, or 12 percent, to $54.40 at 4:01 p.m. in New York Stock Exchange composite trading, the biggest decline since December 1982. The shares have decreased 28 percent this year, compared with a 29 percent decline for Coca-Cola Co.

PepsiCo joined Coca-Cola, the world's largest soft drink maker, in cutting costs as global credit markets freeze and stock markets drop. Consumers facing job losses and lower equity in their homes have reduced spending. Nouriel Roubini, the professor who predicted the financial crisis in 2006, said today the U.S. will suffer its worst recession in 40 years

Coca-Cola said in July it wants to cut as much as $500 million a year in expenses by 2011.

PepsiCo will ``reinvest offensively as well as defensively'' in product marketing and in research and development, Chief Executive Officer Indra Nooyi said during a conference call.

`Breathing Room'

``We want to make sure that we create the breathing room to be able to cover any challenges that happen because of macroeconomic volatility,'' Nooyi said.

The soft-drink company will create new packages, retool brands and introduce beverages within its soft drink, Gatorade and Tropicana juice-product lines, Goodman said today in an interview.

``It's important that business return to health, and we think we can do a lot of things to make that happen,'' Goodman said. He declined to say what plants would be shut.

About 130 office workers at the Plano, Texas headquarters of PepsiCo's Frito-Lay Inc. division will lose their jobs this week, according to the Dallas Morning News, citing spokeswoman Aurora Gonzalez. Job cuts overall at Frito-Lay will total 300, including the closing of a Kettle chips plant in Canada, the newspaper said.

PepsiCo spokeswoman Jenny Schiavone said the newspaper's report was accurate and declined to provide further details.

Third Quarter

Third-quarter net income declined to $1.58 billion, or 99 cents a share, from $1.74 billion, or $1.06, a year earlier, PepsiCo said today in a statement. Sales jumped 11 percent to $11.2 billion from $10.2 billion.

Twelve analysts estimated third-quarter profit of $1.08 a share.

The job cuts and plant closings will cost the company $550 million to $600 million before taxes in the fourth quarter.

Thirteen analysts surveyed by Bloomberg estimated full- year profit of $3.74 a share.

To contact the reporter on this story: Duane D. Stanford in Atlanta dstanford2@bloomberg.net.

Last Updated: October 14, 2008 16:35 EDT