Afternoon Roundup: Today's Top Stories
AtThe Motley Fool, we know our readers like to be informed. We have scouted out today's most relevant news items and brought them to you all on one page. We hope you find this midday edition informative and useful.
With a diminishing middle class and income disparity growing, consumer goods companies are rethinking their strategy. Procter & Gamble (NYS: PG) said its customers have been shifting toward lower prices instead of the name brand. Citigroup calls the phenomenon the "Consumer Hourglass Theory," where the ends of the spectrum are growing while the middle shrinks. For this reason, Citigroup has urged people to look at companies that cater to the extremes. Tiffany (NYS: TIF) and Saks (NYS: SKS) , which both sell luxury goods, have seen their sales increase, while their cheaper products are their worst sellers. Read more atThe Wall Street Journal.
After reviewing its strategy, McGraw-Hill (NYS: MHP) decided to spin off its education business and form two different companies. One of the companies, McGraw-Hill Education, will work on products such as textbooks, and is expected to have $2.4 billion in revenue this year. McGraw Hill Markets will include Standard & Poor's, Platts, and J.D. Power and Associates, and the company anticipates $4 billion in revenue. The split is planned to be completed by the end of 2012 through a tax-free spinoff. The company said it would accelerate the pace of share buybacks to $1 billion for the year. Read more atBloomberg.
(NAS: BRCM) agreed to buy NetLogic (NAS: NETL) , a maker of chips for wireless devices, for $3.7 billion in cash. Broadcom will pay $50 per share, which amounts to a 57% premium on Friday's closing stock price. The acquisition falls into Broadcom's plan of providing end-to-end network solutions. Some of it new costumers will include Cisco Systems and IBM. The deal will also give the company a sizable number of patents, which have become crucial in the tech industry. Read more atDealbook.
After announcing its new cost-cutting project New BAC, Bank of America (NYS: BAC) announced it was looking to cut 30,000 jobs over three years. The project is also looking to reduce costs by about $5 billion annually by 2013, according to CEO Brian Moynihan. Analysts have said Bank of America operates with unneeded branches and un-integrated systems. Since the beginning of the year, the bank's stock fell by about 50% amid fears that it would not meet new capital requirements. In order to meet these requirements, the bank would need to raise about $50 billion in upcoming years. Warren Buffett invested $5 billion in the bank in late August. Read more atReuters.
So there you have it, the top financial stories for this afternoon. If you are interested in getting all the news and commentary on these stocks sign up to My Watchlisthere-- it's free!
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At the time this article was published Michelle Zayed doesn't own any stocks mentioned.The Motley Fool owns shares of Citigroup.Motley Fool newsletter serviceshave recommended buying shares of Procter & Gamble. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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