When Altria (NYSE:MO) spun off its global operations into Philip Morris International (NYSE:PM), the future was bright for both companies, but Philip Morris' global growth prospects were expected to be on fire without the added risk of Altria's U.S.-based tobacco business.

Fast forward one year, and Altria is generating smokin' hot earnings while Philip Morris is dealing with the dreaded currency-exchange demon.

Like Altria, Philip Morris boosted its 2009 earnings forecast, increasing the upper range of its EPS forecast by $0.20. Philip Morris also exceeded second-quarter earnings expectations with a reported EPS of $0.83 versus analysts' estimates of $0.77.

But imagine how great things would have been without the unfavorable currency exchange. Philip Morris estimates that currency hit earnings by $0.19 per share and the company estimated adjusted EPS would have increased by 17.2%. With currency included, adjusted diluted EPS actually decreased by 4.6% for the quarter, while former parent Altria grew its EPS by 8.9%.

Lots of global companies, including Coca-Cola (NYSE:KO), McDonald's (NYSE:MCD), and Yum! Brands (NYSE:YUM), are being hit hard by the stronger dollar. But Philip Morris International is in the position of reporting all of its earnings in U.S. dollars. In comparison, Coca-Cola's global revenue is about 74% of its earnings, and the company reported a 14% impact on operating earnings passed on by unfavorable currency exchange.

Digging into the numbers, Philip Morris' revenue declined by 8.6% for the quarter, with the bulk of growth coming from Latin America and Canada, where Philip Morris has recently focused acquisition activities. Volume in the European Union was down 3%, while volume in Eastern Europe/Africa/Middle East dropped 2.1%. With acquisitions, Canadian and Latin American volume grew 10.5%, bringing overall volume to break-even levels.

Even with the negative currency impacts and organic volume decline, Philip Morris did buy back 34.7 million shares during the quarter, spending $1.4 billion in the process. The company shored up its cash position, increasing that by 70%, to $2.6 billion. However, with all of this activity, long-term debt also grew by 18.5%, to $13.5 billion.

Diversification has always been a key to investment success, so it's somewhat ironic that Philip Morris' split from Altria was meant to deliver diversified global growth without the risk of U.S. tobacco regulation, but its lack of U.S. exposure actually hurt quarterly earnings this time around. In comparison, key competitor British American Tobacco (NYSE:BTI) has been able to stay in the U.S. game through its 42% ownership of Reynolds American (NYSE:RAI), while Philip Morris relies on the non-American world to grow its business. The U.S. has a high rate of smoking, and losing this market isn't inconsequential.

As the dollar begins to stabilize, Philip Morris International's earnings growth should pick up again. But if you're deciding between an investment in Altria or Philip Morris, Altria's numbers (P/E of 11.7 and yield of 7.4%) compare well with Philip Morris' (P/E of 14.2 and yield of 4.9%). Consider Altria's aggressive cost-cutting efforts, combined with indications from yesterday's earnings release that volume declines will be minimal in spite of extraordinary excise taxes, and Altria starts to look more attractive every day.

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Philip Morris International is a Motley Fool Global Gains selection. Coca-Cola is an Inside Value and Income Investor pick. Looking for more advice in a topsy-turvy market? Give the Motley Fool's newsletters a try via the 30-day free trial.

Fool contributor Colleen Paulson does not hold positions in any of the stocks mentioned above. The Fool's disclosure policy would never put all of its eggs in one basket.