COKE SAYS PROFITS MAY FIZZLE FOR 3RD QUARTER.

Byline: Russ Bynum Associated Press 

Blaming struggling foreign economies that have impeded sales overseas, The Coca-Cola Co. said Friday that third-quarter earnings will fall short of expectations.

The news didn't go over well with investors, causing Coke's stock price to drop nearly 4 percent, or $2.125 to $57.375 in trading on the New York Stock Exchange.

The Atlanta-based Coca-Cola predicted earnings per share will be 34 cents to 35 cents this quarter, compared with analysts' predictions of 36 cents.

On top of that, the company said it will reduce earnings by an additional 2 cents to 3 cents a share because of the recall stemming from a health scare linked to Coke in Belgium and France.

Coke blamed slow growth in beverage sales on the continuing economic turmoil abroad. It's still having trouble in Russia, Venezuela, Colombia and parts of Eastern Europe, but sales are expected to improve in other foreign markets, such as Indonesia.

``Some of those markets are beginning to return to what I would call a healthy status,'' said John Sicher, editor and publisher of Beverage Digest. ``It sounds like it may now be starting to come out of some of the difficult times it's faced.''

Coke also said it expects retail sales in the United States to improve after it decided to raise prices earlier this year. Sicher agreed, saying the decision hurt Coke sales at first, but competitors are matching the higher prices.

``In the company's largest market, the United States, we're going to see improved performance in the fourth quarter and the year 2000,'' Sicher said.

Coke warned fourth-quarter earnings could also be affected by the recall. The company plans to keep up an aggressive marketing campaign to win back consumers. Efforts have included free drink giveaways and putting Coca-Cola greeters in supermarkets to talk with consumers.

``Trends indicate that consumer confidence levels are on track to return to pre-incident levels by the end of the year,'' William P. Casey, president of Coke's Greater Europe Group, said in a statement.

The company also said it expects its operations in Turkey to be affected by the recent earthquake disaster and its Chinese operations to be hurt by recent flooding.

Coke's main rival, PepsiCo, said Thursday that it also expects lower beverage sales in the third quarter, though strong sales of snack food and fruit juice will keep profits on track with forecasts.

Shares of PepsiCo closed up $1.0625 to $34.625 in trading on the NYSE.