ALEXANDRIA, VA (August 19, 1999) -- Big guns fired last night in defense of Coca-Cola (NYSE: KO) following yesterday's column in which I concluded with an initial preference for PepsiCo's (NYSE: PEP) stock. (Although I own Coca-Cola.) On the message board, GLSmyth quoted from yesterday's column (in italics), and then he responded to the quotes.

Yesterday's Drip Port quote: "The current funk at Coca-Cola, it is hoped, will pass and the glory days will return. Why? That hasn't been answered in detail."

GLSmyth: "Actually, it has -- many times. As Coke is primarily an international company and worldwide we are still seeing problems, this will limit Coke's growth in the near future. Some (okay, myself) have suggested that the fact that Coke has established nearly 30 bottling facilities in China to serve their 1+ billion people when their economy turns around as first-mover shows their vision. Near term -- forget it. However, DRiPpers are looking 10-20 years out, and that is the time when Coke will shine."

Yesterday's Drip: "Meanwhile, when PepsiCo is discussed, Fools typically proclaim that the company's future looks much brighter now. Why? The KFC, Pizza Hut and Taco Bell restaurants have been spun-off..."

GLSmyth: "I'm not understanding this first reason. Tricon (NYSE: YUM) has outperformed Pepsi by about 30% since the spinoff. Perhaps this would indicate Pepsi's inability to properly manage these three divisions."

kugel3 posted in reply that he believes spin-offs typically outperform parent companies after being spunoff, though he didn't have stats to show yet. Vlasic Food (NYSE: VL) is a good example of the opposite being true, while Lucent Technologies (NYSE: LU) is a great supporting example. A full study would include thousands of companies.

Ariel7 then posted on the issue: "Pepsi was smart to spin off the restaurants. Not because the businesses are better or worse, but because they are *different*. Even though restaurants are customers of Pepsi. Or perhaps especially.

"My family used to own Chicago Rawhide Corporation, which made buggy whips, among other things. (You know the old story about the company that made buggy whips, and failed to keep up with the times? Well, that was us, and we didn't fail ;-). CR went on to make oil seals for cars, and then bought a little company that had lost $50K on $100K of revenue in a year, trying to sell a parts cleaner to gas stations. Both automotive products right? Wrong. Totally different sales: oil seals sold as parts to Detroit, the parts cleaner service was a route service, like Frito-Lay.

"So we spun off the little company, after loaning it 4 million dollars. And we for the most part held the stock. What was it? Safety-Kleen Corporation."

tmackfool next posted in support of GLSmyth, saying that Coca-Cola's path to redemption (and growth) had indeed been discussed on the board, and the company is in a better position to expand, especially internationally, than is Pepsi.

Like a tennis match, the volley goes back and forth, sometimes with one player looking stronger, sometimes the other, until eventually the tennis ball bounces off the courts. The winning point went to Pepsi in my version of the first game. Both companies will move to the finals. I believe that we all agree that both businesses are world-class and worth a Drip investor's serious long-term consideration. We don't all agree that Coke's valuation may make the stock unattractive for a long time, however. Not to mention Pepsi's stock, which isn't exactly on sale.

To round two, then, they go. The game plays on and the message board is the best place to discuss the merits of each company on an ongoing basis. Meanwhile, the next company on deck for Drip Port is Wrigley (NYSE: WWY). Tomorrow, I will prepare us for a look at The Ultimate Chewing Gum Company in the Universe.

Now, a tidbit of news. News, news, news -- that is.

News, News, News

Yesterday, Mellon Bank (NYSE: MEL) announced a significant expansion to its online banking service with the introduction of My Mellon. (Hey, that's like My Fool! They copied the Fool! Or, more accurately, they copied the Fool copying My eBay, copying My Yahoo!, copying My AOL. My oh my!) If you're interested in online banking and you own Mellon stock, you might as well knock on Mellon's door to see if it's ripe for your business.

We'll send next month's $100 investment to Mellon on September 1, barring a major catatrosphe -- such as, if the stock is delisted. (That's a joke, Mellon. Please don't write me. We're shareholders, after all.)

The stock of Johnson & Johnson (NYSE: JNJ) is holding strong in a weak market for pharmaceutical leaders (witness Merck and Pfizer this year). J&J is benefiting from a high likelihood of EPS growth of 12% to 14% annually the few years, on an 8% to 10% annual rise in sales. Sales jumped 18.5% last quarter vs. a consensus 14% estimate.

Pharmaceutical sales are growing rapidly (up 25.4% last quarter) and the DePuy acquisition put J&J atop the $4 billion reconstructive industry with low double-digit sales growth expected in the years ahead. Finally, the company's drug pipeline is improving, helped significantly by the planned $4.9 billion acquisition of Centocor (Nasdaq: CNTO).

The $95 3/4 stock is at 28.3 times the year 2000 EPS estimate of $3.38 per share. J&J's most recent quarterly details are now available in the company's SEC filing.

Fool on!