Procter & Gamble’s (PG) stock came to life last Friday after P&G chief executive A.G. Lafley revealed plans to shed some 90 to 100 non-core businesses, or more than 50% of its brands.

The fact that PG stock has been flat (including dividends) despite Friday’s 3% — and has been virtually dead for more than a year — is just about all you need to know as to why.

It’s the second time around for Lafley at the helm of Procter & Gamble, having served in the role for nearly a decade after the turn of the century. This latest reorganization of P&G — responsible for brands such as Crest, Gillette and Bounty — might be a last-ditch effort to prevent making a second exit.

PG stock has stagnated thanks to slumping sales amid a host of crosswinds, not the least of which have been tied to impact of foreign exchange given P&G’s global exposure, a deep-discount environment and a more value-oriented consumer.

What does this mean for shareholders? After all, PG is famous for shareholder-friendiness thanks to its status as a dependable dividend stock, and plans to buy back some $5 billion to $7 billion of its own shares in fiscal 2015. But that matters little if Lafley is unable to generate more shareholder value in some way — such as streamlining the business.

So will he be successful in boosting PG stock in the longer-run? Let’s take a look.

Procter & Gamble’s Dilemma

If you’re wondering why P&G is taking such drastic measures, all you need to do is observe recent performance. While the company met the targets it put forth, it must have set the bar rather low.

Procter & Gamble managed to grow fiscal 2014’s earnings per share by 5% vs. the prior-year period, and in the fourth quarter, PG actually surpassed consensus estimates by 4 cents on a per-share basis.

But the top line sagged, with sales for the year advancing a mere 1% to $83.1 billion, replicating fiscal 2013’s modest gain. Moreover, the company also saw unspectacular results across product categories, a trend that has persisted in recent years.

Here’s a look at FY2014 organic sales performance in those groups:

• Beauty: Flat
• Grooming: +3%
• Health Care: +2%
• Fabric Care and Home Care: +4%
• Baby, Feminine and Family Care: +4%

P&G can thank several things for its bottom-line performance. For one, those same buybacks certainly help EPS — after all, if you’re dividing earnings by the number of shares, simply decreasing the number of shares will make that number go up. Procter & Gamble also was an effective cost-cutter, evidenced by a 100-basis-point increase in its operating profit margin in fiscal 2014 amid lower selling, general and administrative expenses.

However, gross margin declined by 100 basis points, pressured by a host of issues from higher commodity costs to an unfavorable product mix abroad.

This performance is not what Lafley, who a year ago returned to the helm at P&G, came back for, and now he’s trying to create a more nimble company to respond to tough conditions.

Indeed, P&G’s peers are experiencing their own share of problems in a tough macroeconomic environment — a one-two punch of a slow consumer-spending recovery in the U.S. and slower-than-expected growth in emerging markets.

Lafley’s Legacy

For a guy who is trying to return P&G to its former glory, Lafley sure isn’t afraid of changing things up.

While Lafley’s first tenure at P&G was about expanding — evidenced by the company’s acquisition of the Gillette brand under his leadership — this time around, it’s about divestitures.

Since his return, he has engineered the $2.9 billion sale of P&G’s North American and Latin American pet-care business to Mars, which is now gobbling up Procter & Gamble’s pet business in Asia (another suitor is buying the European pets business.)

Now Lafley is targeting the company’s vast consumer-product portfolio, unloading brands that have been a drag on performance in pursuit of cost cuts, higher cash flow and profit growth, as well as value creation. What will remain are 70 to 80 P&G brands organized into approximately 12 segments.

Lafley’s risk is a calculated one. The brands that P&G is keeping contribute the lion’s share of sales. Of them, nearly two dozen generate between $1 billion and $10 billion in sales, while 14 of them generate $500 million to $1 billion in sales. The balance of the portfolio companies have “strong brand equity,” Lafley said on the earnings call.

With a renewed focus on these brands, P&G feels it produce stronger top-line growth.

If successful, the benefits will take a while. For instance, in fiscal 2015 the company is calling for market-share gains that are flat to modest at best — not something that investors particularly want to hear, especially in light of recent share-price performance.

Investors should watch for is the way that P&G uses the proceeds from the sales of its underperforming assets, which will be shed over the course of the next year or two. In other words, will dividend increases be more robust? Will the pace of share buybacks accelerate?

Bottom Line

How a company winds up with 90 businesses that are deemed “non-core” is perplexing, but if it’s going to happen, it’ll happen at a company like Procter & Gamble, with a rich, storied history dating back 175 years.

In fact, Sanford C. Bernstein analyst Ali Dibadj believes if P&G doesn’t exhibit signs of a turnaround in a year from now, it might need to consider a breakup of the company.

For now, investors are left with a stodgy stock with a good dividend, but whose ability to actually appreciate in price is still very much in the air. Lafley has yet to hit it out of the park, and there are no clear catalysts in sight — it’s way too early to guess how the brand-dumping will play out.

Unless you’re investing solely for the income, I would remain on the sidelines for now.

As of this writing, Gerelyn Terzo did not hold a position in any of the aforementioned securities.