CHICAGO (AP) _ Quaker Oats Co. rode strong sales of snacks and its ever-growing Gatorade to a 10 percent gain in quarterly profits before special items, overcoming a slump in ready-to-eat cereals and flavored rice and pasta.

The earnings report beat analysts' expectations and signaled a tenth straight quarter of double-digit profit gains for Chicago-based Quaker, but just barely. Wall Street was unimpressed; Quaker shares fell $3, or 4 percent, to $75.12 1/2 Thursday afternoon on the New York Stock Exchange.

Excluding one-time items, operating income for the quarter was $253.5 million, or $1.11 a share, up from $229.8 million, or 95 cents a share, a year earlier. A consensus of analysts surveyed by First Call/Thomson Financial had estimated earnings at $1.06 a share.

Net income was $151.1 million, or $1.10 a share, down from $172 million, or $1.22 a share _ a decrease reflecting a one-time favorable tax adjustment a year ago of $37.7 million million, or 27 cents a share.

Sales from ongoing businesses were $1.40 billion, up 6 percent from $1.32 billion.

For the first six months of 2000, excluding unusual items, earnings were $442.8 million, or $1.88 a share, up 16 percent from $382.1 million, or $1.46 a share, last year.

While Gatorade sales continued rocketing higher, a 17 percent profits gain in the North American foods business propelled the company's earnings gains this quarter. Quaker attributed the increase to less promotional spending on ready-to-eat cereals, supply chain savings and growth in the grain-based snacks business, where sales climbed 6 percent.

Robert Morrison, Quaker's chairman and chief executive officer, said Gatorade sales rose 15 percent as the runaway leader in the sports drink market added new Fierce flavors, an eight-pack and an easier-to-grip sport bottle.

Increased marketing spending limited its profit growth, he noted, keeping operating income from the beverage division to a modest 6 percent increase.

The company, which also makes Rice-A-Roni and Aunt Jemima syrup, has long been known for its cereals, including Cap'n Crunch, Life and its namesake Quaker Oats.

But Gatorade now accounts for more than 40 percent of its sales, and the slide in cereals continued in the second quarter. Cold cereal sales fell 11 percent, while hot cereal sales were flat. Pasta declined 7 percent.

John McMillin, who follows the food industry for Prudential Securities in New York, called it ``a good news-bad news quarter'' for Quaker.

``The good news was they had surprisingly good earnings despite heavy Gatorade spending. The bad news was you can't keep delivering good food earnings gains without delivering food volume gains,'' he said.

Quaker is among the food companies being rumored as a likely candidate for acquisition, or to buy a smaller firm, as consolidation sweeps the industry. In a conference call, Morrison declined to discuss that possibility except to say that ``we have a sense that we're just fine the way we are.''