Will 2 Bites of Kraft Taste Better?

What: Shares of Kraft Foods (NYS: KFT) popped 5% at the open on news that it would split its snack and grocery business into two publiclytraded businesses. The company also reported strong second-quarter results.

So what: CEO Irene Rosenfeld said the breakup reflects a desire to capitalize on two "strong, but distinct, portfolios." Irony? Perhaps. It was only 18 months ago that Kraft acquired Cadbury after a series of offers and counteroffers. Now, it seems, the businesses are (ahem) "distinct."

Either way, Kraft put together a fine performance in Q2. Revenue increased 13.3%, to $13.9 billion, while operating earnings per share rose two pennies to $0.62. Analysts had been calling for $0.58 on $13.15 billion in revenue, according to data compiled by Yahoo! Finance.

Management also raised full-year earnings guidance from $2.20 to $2.25 a share, slightly above Wall Street's consensus estimate.

Now what: Numbers like that deserve more attention than they'll receive today. Instead, we'll all be waiting to hear what Warren Buffett has to say about the breakup. His Berkshire Hathaway (NYS: BRK.A) (NYS: BRK.B) is Kraft's second-largest independent investor, holding 5.99% of the company's shares outstanding as of this writing.

My guess is he'll approve -- Kraft's results demonstrate good progress, while history shows that Buffett prefers to be hands-off in all but the most extreme circumstances. Do you agree? Disagree? Weigh in using the comments box below and be sure to add Kraft to your watchlist for up-to-date news and analysis on the break-up as it happens.

At the time thisarticle was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team. He owned shares of Berkshire Hathaway at the time of publication. Check out Tim'sportfolio holdingsandFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.The Motley Fool owns shares of Berkshire Hathaway.Motley Fool newsletter serviceshave recommended buying shares of Berkshire Hathaway. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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