Shares of PepsiCo (PEP) eased slightly after a firm opening Wednesday as investors weighed CEO Indra Nooyi's turnaround plan against a mediocre earnings report.

Net income at the world's largest snack producer and second-largest beverage company slumped 5% to $1.9 billion, or $1.21 per share, in the most recent quarter, hurt by rising costs for commodities and increased advertising spending. Revenue fell 5.3% to $16.7 billion, below  the $16.90 billion Wall Street analysts had expected. Excluding one-time items, profit was $1.20, beating the $1.16 consensus estimate of analysts.  

Investors, though, don't have big hopes for the company, which has lagged Coca-Cola (KO) in market share for years. Nooyi has described 2012 as "rebuilding year." The company laid off thousands, revamped its management team and overhauled marketing efforts for its flagship Pepsi brand. In addition, the company has introduced Pepsi Next, which it describes as having "real cola taste" with 60% less sugar than regular Pepsi.

PepsiCo was able to offset rising costs through price increases, which helped boost volumes in Frito-Lay and its other food businesses. Revenue at PepsiCo Americas Foods rose 2.5% to $5.7 billion, though operating profit fell 6% to $1.29 billion. Operating profit at PepsiCo Americas Beverage plunged 16% to $837 million, while revenue fell 7% to $5.53 billion.  

Asia, the Middle East and Africa were bright spots, as operating profit surged 11% to $317 million, fueled by volume growth in both snacks and beverages. Revenue plunged 21% to $1.7 billion, reflecting the "impact from structural changes, principally the refranchising of bottling operations in China" along with foreign currency translations.

PepsiCo is gaining market share in North America at Coke's expense, executives said. It also is focusing on more profitable drinks and is avoiding pointless price wars.

But some storm clouds remain on the horizon. The company will continue to be targeted in the political war over the nation's soaring obesity rates for some time to come. The turnaround is still a work in progress.

Coke on Tuesday reported gains in both profit and revenue in the latest quarter but also disappointed investors.

Jonathan Berr is long Coca-Cola. Follow him on Twitter@jdberr.