By Antoine Gara

Procter & Gamble's (PG) better-than-expected​ third-quarter earnings may help the company's embattled Chief Executive Bob McDonald prove his plan to cut billions in costs is working. 

P&G's Thursday earnings also signal that an activist push by William Ackman of Pershing Square Capital Management is bearing fruit for investors, as some top shareholders -- like Warren Buffett of Berkshire Hathaway (BRK.A) -- hit the exits.

At issue for P&G is whether McDonald can lead a right-sizing of the consumer products giants' costs, as investors like Ackman of Pershing Square clamor for C-Suite change and a refocus on new product research and development.

After taking a $1.8 billion stake in P&G in July, Ackman is reported to have called for McDonald's head after two years of flat share performance, earnings misses and spiraling costs that cut into new product development, according to September reports from the Wall Street Journal.

When Ackman unveiled his P&G stake, some speculated the activist investor would push a split-up of the maker of Gillette, Duracell and Tide products, following previous break-ups at consumer products companies like Fortune Brands (FBHS). Prior to the investment, analysts at Sanford C. Bernstein said the company should consider a split if earnings don't improve.

While McDonald remains at the helm of P&G and the company's conglomerate structure is intact, the CEO has outlined a multi-year, $10 billion cost saving plan that falls in-line with some complaints expressed by Ackman, according to Wall Street Journal reports.

Thursday's earnings, which beat a low bar of expectations, signaled that McDonald is making progress in his plan to cut $10 billion in costs by 2016 and layoff 4,100 workers by 2013.  

For Buffett, who pared his P&G holdings by 19% in the second quarter, according to Bloomberg data, a turn in the company's performance may help the Oracle of Omaha profitably exit a position that still stands in excess of $4 billion and is one of Berkshire Hathaway's largest stock holdings.

That would come as the value investing legend says he's out of ideas on how to turn around P&G after shares had stalled at the $60-level since late 2009, significantly underperforming the S&P 500 ($INX)

"What goes on inside the place, what mistakes have been made, what the plans are, I don't know the answers on that," Buffett said to CNBC on Wednesday. "The jury's out on that now, because they have disappointed in terms of earnings and we'll see what happens. I know the board is actively engaged and trying to come up with a strategy they think makes sense to take the earnings forward," he added in the TV interview.

At this point, it is Ackman who may be more engaged with P&G and who might have the biggest impact on whether large shareholders like Buffett see stock gains headed into 2013.

On Thursday, P&G reported net income off $2.81 billion, or 1.06 a share, excluding one-time items, beating analyst estimates compiled by Bloomberg of 96 cents a share. The Cincinnati-based company also forecast 2012 earnings per share (EPS) of between $3.80 and $4, meeting previous guidance.

While the quarterly earnings beat is helping to drive P&G stock to five-year highs above $70 a share, the report doesn't mark the end of the company's turnaround campaign.

"We think the company has set fairly low expectations for the quarter," said JPMorgan analyst John Faucher of an expected beat, in a research note published ahead of earnings.

While P&G did beat Faucher's estimates, the company fell short on the analyst's optimism that it would boost EPS guidance past $4 a share or grow top-line sales.

Still, as Ackman wields his activist techniques to prod change at P&G, Faucher's optimistic the company can pull out of an earnings rut in coming years.

"Although the valuation of the stock has moved up, we think the company's execution and potential acceleration of its cost-savings program, together with improvement in share trends, may lead to further upside," wrote the analyst on Wednesday.

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