PepsiCo Inc posted disappointing results in its first quarterly report since buying its largest bottlers, as promotions by rival Coca-Cola Co hurt its sales and the deal's benefits have yet to kick in fully.

Following the $7.8 billion acquisition, the maker of Pepsi-Cola and Frito-Lay snacks said first-quarter revenue jumped 13 percent, but it missed Wall Street estimates, as sales volume in its Americas beverage business fell 4 percent.

Chief Executive Indra Nooyi said the year started off well, with the company gaining share and doing great for the first eight weeks, until a rival lowered prices.

All of a sudden we see a competitor dropping their pants in the last couple weeks when the volume is missing, Nooyi said on a conference call. We see this behavior on and off ... but we live with it.

PepsiCo shares were down 2 percent in early afternoon trading. Shares of Coke, which earlier this week reported a 2 percent drop in North American volume and also cited some pretty deep price reductions, slipped 0.2 percent.

Nooyi said North American beverage volume trends were improving across the board and noted the company was also facing tougher comparisons with a strong first half of 2009.

In the first quarter that ended on March 20, net income was $1.43 billion, or 89 cents per share, up from $1.14 billion, or 72 cents per share, a year earlier.

Excluding items such as a one-time gain on previously held equity interests, merger charges and the impact of Venezuela's currency devaluation, earnings were 76 cents per share.

Revenue rose 13 percent to $9.37 billion.

Analysts on average expected earnings of 75 cents per share on revenue of $9.57 billion, according to Thomson Reuters I/B/E/S.

Still, the company affirmed its 2010 profit target, which calls for earnings per share to grow 11 percent to 13 percent, excluding currency fluctuations.

The forecast assumes 6 percent earnings growth in the first half of the year and mid-teens growth in the second half. The first half includes a charge of about $40 million related to the U.S. healthcare reform bill.

SNACKS STRONG IN INDIA, CHINA

PepsiCo bought its largest bottlers to have more control over drinks distribution in North America. Aside from giving it more flexibility and speed in developing new products, Pepsi sees $400 million of cost savings from the deal.

The company on Thursday raised its forecast for one-time costs associated with the deal, to $650 million. It had earlier forecast costs to be about equal to its savings.

Coke is doing a similar deal expected to close in the fourth quarter, giving Pepsi a head start of six months or more.

Jonathan Feeney, an analyst with Janney Capital Markets, said optimism about the acquisition might have led investors to expect a bigger earnings surprise.

It's a well-known reality that this company has the opportunity to recognize a large amount of synergies from the major bottling transaction they just did, Feeney said. Many of us view that as a very powerful cushion to any earnings challenges the company might face from here on, he said.

Investors may have also sought a stronger turn in consumer spending habits, especially at convenience stores, given the duration of the weakness, he said.

PepsiCo said snack sales by volume rose 1 percent, boosted by growth in markets such as India and China, which helped offset a 0.5 percent volume decline in its beverage business.

Volume in its Americas beverages business fell 4 percent. Volume in its Americas foods business rose 1 percent, with its Latin America and Frito-Lay North America volume up 1 percent and its Quaker Foods North America sales down 1 percent.

In Europe, the volume of snacks and beverages both fell 4 percent, while the Africa, Middle East and Asia division saw a 13 percent gain in snacks and a 10 percent gain in drinks.

Pepsi shares were down $1.34 at $64.64, while Coke shares were down 6 cents at $54.13.

(Reporting by Martinne Geller; Editing by Lisa Von Ahn, Maureen Bavdek and Tim Dobbyn)

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