Speculation is growing that when the board of

Altria

(MO) - Get Altria Group Inc Report

meets next week, it will discuss the possibility of spinning off at least one of its remaining parts.

Already this year, the company unloaded

Kraft Foods

( KFT) in order to put its focus on tobacco and to appeal to investors who prefer a corporation with a singular purpose rather than a conglomeration of businesses.

Certainly Altria has options, and the most popular suggestion is that the next component to go it alone could be the massive holding that is Philip Morris International. Chief Financial Officer Dinyar Devitre even stated at Altria's recent annual meeting that the unit was ready to stand on its own if the board so desired.

Of course, doing that would mean a very different -- and significantly smaller -- Altria than the one that exists today. In 2006, the company was still recording the results from Kraft, which allowed total revenue to grow 3.6% from the prior year to $101.4 billion. Were Kraft excluded, sales would have been roughly $67 billion.

In other words, two-thirds of the overall top line came from tobacco, and Philip Morris International was responsible for the bulk. Last year, the international division recorded net revenue from tobacco of $48.3 billion and operating income, before corporate expenses and amortization of intangibles, totaling $8.5 billion.

By comparison, North American tobacco accounted for revenue of $18.5 billion and adjusted operating income of $4.8 billion.

Cigarette shipment volume for the international business rose 3.4% from 2005 owing to strength in Indonesia and, to a lesser extent, France, Russia and Ukraine. Contributing to the increase was the purchase of Lakson, a Pakistan-based cigarette maker with an estimated annual volume of 30 million units.

The only weak spots were Germany, Spain and Japan, where tobacco consumption and volumes were down.

However, considering the work that went into the Kraft spinoff, Altria might choose to take a smaller step as opposed to another giant leap.

Usually, companies send parts out on their own when they want to streamline operations or divest underperforming businesses. With that in mind, Altria could be better off mulling an alternative, namely selling its stake in what used to be Miller Brewing, now part of

SABMiller

.

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Altria has a 28.6% economic and voting interest in SABMiller, the world's second-largest brewer, through a relationship that stretches back nearly 40 years. The company then known as Philip Morris bought 53% of Miller in 1969 for $130 million. The next year, it acquired the remaining 47% for $97 million.

Five years ago, Altria sold the bulk of the company for $3.6 billion. That's a pretty decent return on an investment. And the current market value of the remaining piece is roughly $9.6 billion.

Is now the time for cutting ties with the rest? Altria notes in its annual report that its recent performance trails that of pure-play tobacco competitors. Last year, its stock returned just under 20%. Respectable, but

Reynolds American

(RAI)

ran up 44%, and

British American Tobacco

(BTI) - Get British American Tobacco PLC Sponsored ADR Report

climbed 30%.

Meanwhile, beer sales are suffering as Americans appear to be turning more to wine and hard liquors when they want an alcoholic beverage. According to A.C. Nielsen, the dollar amount spent on beer in 2006 was up only 2%, compared with a 4.4% increase for spirits and 8.8% growth for wine.

Although SABMiller saw a 15% advance in last year's profits and is boosting the dividend, input costs for aluminum, glass and energy are rising, as well.

Paul Kleinschmidt, an analyst at Argus Research, says Altria wants to focus on its tobacco operation in the U.S., where the regulatory landscape has stabilized. The international market, he says, is more muddled with tax issues and antismoking laws, even though growth prospects make sense to stay there.

While Altria could eventually dispense with both the international unit and the holding in SABMiller, the company seems to be implying it's more interested in carving away Philip Morris International for now, Kleinschmidt says.

"It's not unlikely they could spin off these businesses, it's the order in which they'll do it," he says. "They'll get more from PMI now, and they don't have the resources and energy for two spinoffs."

However, the options don't even end there, as it could also see value in divesting Philip Morris Capital Corp., a unit that leases assets including aircraft and power-generating plants.

These days, the company isn't making new investments and is merely managing its existing portfolio. The net rental receivables dropped from $8.27 billion in 2005 to $7.52 billion in 2006, and Altria increased its allowance for losses.

"PMCC is not in sync with the company," says Kleinschmidt. "They tend to sweep it under the rug."

Regardless of its final decision, one thing Altria won't do forever is stand still.