Sara Lee (NYSE:SLE) is well into the first year of its five-year major restructuring, which W.D. Crotty already did a fine job of discussing. The plan will involve selling about $8.2 billion of its bakery and beverage business, which represents 40% of its total revenue.

It's also important to point out that the reorganization will have a significant impact on the company's near-term profitability, which is evident in its just-completed fourth quarter. Sara Lee reported a loss of $148 million, or $0.19 per share, versus last year's gain of $354 million, or $0.44 per share.

Higher commodity costs and weak sales in Europe contributed to the loss. However, the true culprit was the effect of the restructuring charges. Excluding those charges, Sara Lee would have beat estimates and posted a profit of $0.36 per share.

The company is willing to suffer through temporary setbacks to achieve its longer-term goal of streamlining its business to sustain growth and give back as much as it can to its shareholders. A Motley Fool Income Investor selection, Sara Lee is well-known for rewarding shareholders, and believes it needs the overhaul to continue to do so.

To try to boost its stock price, the company is planning a $2 billion stock repurchase program. It also continues to pay out a healthy 3.8% dividend and plans to pay down its debt by $1.5 billion over the next two years.

In the meantime, Sara Lee doesn't expect its earnings to be very impressive anytime soon. For its first quarter, which will end in September, it projects earnings of $0.22 to $0.27 per share, compared with estimates of $0.43 per share. And although its fiscal year is just under way, Sara Lee has already said its 2006 profit would be lower than analysts are expecting. It estimates annual earnings of $1.24 to $1.34, but analysts have estimates of $1.51.

Despite all of this, the company's stock was 2.6% higher yesterday as investors overlooked the poor quarterly performance and guidance. Instead, they seem to have complete confidence in Sara Lee's plans. It also probably didn't hurt that the stock approached a 52-week low early yesterday, perhaps leading some to believe that all the bad news has already been priced into the stock.

It appears I'm in the minority (yesterday's volume was more than three times its average), but I'm not quite sold on Sara Lee at this point. Is the worst behind Sara Lee? In my opinion, there are plenty of other unanswered questions to think that. Will selling off such large portions of its business lead to better performance down the road? Will it overcome high commodity costs and a tough environment in Europe? Will its financial situation be hurt by its aggressive plans to repurchase shares, pay down debt, and continue to pay a nice dividend?

It seems to me that Sara Lee still has a long way to go in its restructuring, and it seems patience may be the best approach.

For another taste, see:

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Fool contributor Mike Cianciolo welcomes feedback and doesn't own shares of Sara Lee.