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Thursday, September 21, 2017

Hurricane Maria's path: Track the storm here


Hurricane Maria remained a Category 3 storm Thursday evening, the National Hurricane Center said.

Maria briefly downgraded to a Category 2 storm Wednesday but gained more strength by Thursday morning.

Early Wednesday, Maria made landfall in Puerto Rico as a powerful Category 4 hurricane, destroying hundreds of homes and knocking out power to the entire U.S. territory of 3.4 million people.

The storm’s center passed near or over the U.S. Virgin Island of Saint Croix overnight Tuesday.

saint croix

The aftermath of Hurricane Maria on Saint Croix in the U.S. Virgin Islands.  (Courtesy of Alesia Georgiou)

Saint Croix, largely spared the widespread damage caused by Hurricane Irma just weeks ago, this time experienced five hours of hurricane force winds, U.S. Virgin Islands Gov. Kenneth Mapp said.

Here’s what you should know about Maria’s path.

Where is Maria today?

Hurricane Maria is approximately 90 miles northeast of Puerto Plata, Dominican Republic and 85 miles north-northeast of Puerto Plata, Dominican Republic, according to the National Hurricane Center’s 8 p.m. ET advisory Thursday.


The storm is traveling northwest at 9 mph with maximum sustained winds of 125 mph. 

What else should I know about the hurricane?

The Dominican Republic, Turks and Caicos Islands and Southeastern Bahamas are under a hurricane warning, the National Hurricane Center said.

“A warning means that hurricane conditions are expected whereas a watch means that conditions are possible,” according to the National Oceanic and Atmospheric Administration’s National Ocean Service

Maria already ravaged the Caribbean nation of Dominica, leaving “widespread devastation,” according to Dominica Prime Minister Roosevelt Skerrit.


“So far we have lost all what money can buy and replace,” Skerrit said. “I am honestly not preoccupied with physical damage at this time, because it is devastating … Indeed, mind boggling. My focus now is in rescuing the trapped and securing medical assistance for the injured.” 

saint croix

The aftermath of Hurricane Maria on Saint Croix in the U.S. Virgin Islands.  (Courtesy of Alesia Georgiou)

When Maria hit Puerto Rico Wednesday, it was the third-strongest storm to make landfall in the U.S., based on its central pressure. It was even stronger than Irma when it hit the Florida Keys earlier this month. 

Residents in Saint Croix told Fox News that the storm left them without power and turned roads into mudslides. Barges were also destroyed in the storm, residents said, causing concern not only for Saint Croix, but for nearby Saint Thomas and Saint John which had been receiving aid from the larger of the U.S. Virgin Islands. 

Fox News’ Kaitlyn Schallhorn and Zoe Szathmary and The Associated Press contributed to this report. 

After Hurricane Harvey, what will happen to the hundreds of thousands of flooded cars?


Open the car door and the stench is enough to knock you off your feet. Mold has started to bloom on the doors and there is still water in the cup holders. Three weeks after floodwaters in Houston have receded, evidence of the flood is everywhere — especially in the cars the storm left littered along highways and roads.

More than 500,000 cars are estimated to have been flooded during Harvey, and incredibly some of them may end up in an online ad or a car lot near you.

At McCree’s Ford in Dickinson, more than 1,000 vehicles flooded. “All but nine vehicles,” said Mitchell Dale, McRee’s owner. The new cars will be crushed. Used cars will be sent to salvage. Still more customer cars, flooded in the service department, await their owner’s insurance company to come decide what’s next.

It is the salvage and under- or uninsured vehicles that can often end up cleaned up and offered for sale several states away. Salvage cars are supposed to have titles that brand them clearly as such. But as Adrian Cortez, a special agent with the National Insurance Crime Bureau explains, “These documents are either altered, or they may be taken to other states in an attempt to wash that branding off of the title.” Under- and uninsured vehicles may have flooding that is never reported.

An unsuspecting customer on the other side of the country might not have flooding at the top of the mind and miss the signs that often stay with a flooded car, despite the best efforts of crooks to clean them up. Cortez says to look for corrosion in the engine and sediment in odd spots. Lights that look hazy might be a sign of previous flooding. And then there’s that smell — it’s almost impossible to get rid of. Lift up carpets and run the air conditioner. Check the trunk and spare. Cortez says always have a reputable mechanic look over a possible purchase before buying. You can also check out a car’s VIN on their website.

Back at McRee’s, despite the estimated $35 million in losses, Dale feels blessed. None of his family or his employees were harmed in Harvey’s floodwaters.

“The real sad part is how many people’s lives were impacted,” Dale said. “Our cars can be replaced.”

Fox News’ Casey Stegall and Maggie Kerkman contributed to this report.

SEC under fire for being hacked despite warnings on security


The Securities and Exchange Commission waited until Wednesday to disclose a hack of its corporate filing system that occurred last year. The disclosure raises questions about the agency’s ability to protect important financial information and comes as Americans are still weighing the consequences of the massive hack at Equifax.

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The SEC, the federal agency responsible for protecting investors and ensuring markets function properly, is under fire after disclosing the hack of its electronic network that whisks company news and data to investors. The breach occurred despite repeated warnings in recent years about weaknesses in the agency’s cybersecurity controls.

Experts question the length of time taken to disclose the breach, and why the SEC isn’t meeting the same security standards it demands of corporate America.

“Public companies have a clear obligation to disclose material information about cyber risks and cyber events. I expect them to take this requirement seriously,” SEC Chairman Jay Clayton warned in a speech in July.

While it discovered the breach to its corporate filing system last year, the agency says it only became aware last month that information obtained by the intruders may have been used for illegal trading profits.

“It took quite a while,” said Robert Cattanach, an attorney at Dorsey & Whitney and former trial attorney for the Justice Department, whose work includes cybersecurity and data breaches. “The integrity of our whole trading system is dependent on keeping this information secure. … People have got some ‘splaining to do.”

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The SEC didn’t explain why the initial hack was not revealed sooner, or which individuals or companies may have been affected. The disclosure came two months after a government watchdog said deficiencies in the corporate filing system put the system, and the information it contains, at risk.

The agency also didn’t disclose any information about who might have carried out the breach. A hack by Chinese or Russian actors can’t be ruled out, experts say.

“Certainly state actors would be on the list of suspects that come to mind,” said Marcus Christian, a former federal prosecutor who is an attorney working in Mayer Brown’s cybersecurity and national security practices. Still, he added, the list also would include “regular old criminal actors.”

U.S. prosecutors in Manhattan brought criminal charges last December against three Chinese traders, accusing them of using nonpublic information stolen from two New York law firms to rack up nearly $3 million in illegal profits. The SEC filed a similar civil action, marking the first time the agency laid charges of hacking into a law firm’s computer network. The confidential information was said to be linked to clients of the firm considering mergers or acquisitions.

Clayton disclosed the hack in a statement posted to the SEC’s website. It comes just two weeks after the credit agency Equifax revealed a stunning cyberattack that exposed highly sensitive personal information of 143 million people.

Clayton is scheduled to appear Tuesday before the Senate Banking Committee, and he is certain to be questioned about the hack. Democratic Sen. Mark Warner of Virginia, a member of the committee, said in a statement Thursday that the disclosures by the SEC and Equifax show “that government and businesses need to step up their efforts to protect our most sensitive personal and commercial information.”

The SEC chief blamed the breach on “a software vulnerability” in the filing system known as EDGAR, short for Electronic Data Gathering, Analysis and Retrieval system. EDGAR processes more than 1.7 million electronic filings a year. Those documents can cause enormous movements in the stock market, sending billions of dollars into motion in fractions of a second.

Clayton, a Wall Street attorney appointed by President Donald Trump to the SEC post, said the agency has been assessing its cybersecurity since he took over as chairman in May. Experts note, however, that both agency and congressional investigators have been critical for years of the SEC’s handling of its information technology security.

Early this decade, the SEC inspector general’s office uncovered security lapses involving SEC staffers who examined the data-protection systems of the stock exchanges. Some of the staffers used unencrypted laptops to store sensitive exchange information — and then carried the laptops to a Las Vegas conference for information-security professionals that is known to attract hackers. The 2011-12 investigation raised concerns of a potential breach of the exchanges’ information.

David Weber, a professor at the University of Maryland’s business school and a former assistant SEC inspector general for investigations, worked on that probe. The agency “clearly has not held itself to the same standard that it expects regulated companies to adhere to” and “needs to up its game,” he said in an interview Thursday.

In 2015, an impostor slipped through the EDGAR filing system with a bogus $8 billion takeover bid for Avon Products. The stock rocketed 20 percent, but it quickly dropped, burning anyone who’d bought shares of the cosmetics giant at pumped-up prices. The SEC later sued a Bulgarian investor for allegedly orchestrating bogus acquisition bids for Avon and two other companies.

The hack of EDGAR is especially concerning because of how widely investors have used and trusted the system, which first came online in the early 1990s. Companies periodically file earnings and a range of financial information, and they alert investors to important developments that could affect their share prices, like government investigations, executive shake-ups and approaches for a takeover.

Some experts say gaining access to the system is too easy and the SEC should consider stricter vetting, though they caution that doing so wouldn’t guarantee blocking scammers from getting through.

Experts say stricter requirements could include passwords, personal ID, secret questions and answers, security tokens that continuously flash new ID numbers, fingerprints, eye scans or voice recognition.

Drew, Goodwin take BP, eye postseason return


The Nationals could soon be getting some more offensive firepower. On Thursday, Stephen Drew and Brian Goodwin took batting practice prior to Washington’s game against the Braves at SunTrust Park.

Cuban officials blast Trump, US embargo, amid UN General Assembly


Cuban officials have taken to social media all week to denounce President Donald Trump’s speech to the U.N. General Assembly as well as his overall approach to U.S.-Cuba policy.

Cuba’s top diplomat for the Americas, Josefina Vidal, tweeted Wednesday: “Our delegation voiced strong protest at Bilateral Commission meeting w/#US4 @realDonaldTrump disrespectful/unacceptable statement on #Cuba.

The Cuban Ambassador to the U.S., Jose Cabanas, has been calling via social media for an end to the U.S.-Cuba embargo, a demand Cuban officials make at the U.N. General Assembly every year.

Cuban officials tweeted a Wednesday speech that Cabana delivered to Non-Aligned Movement, a political group at the United Nations, that strongly denounced the U.S.

Cabana said that the “U.S. government presents dangers and inevitable dilemmas.”

He said the U.S. was acting aggressively and said the trade embargo burdens Cuba with “humanitarian and economic hardships” that are “extraordinary and growing.”

“There has been a regression of U.S.-Cuba relations, as you have noticed by the unacceptable and aggressive speech by President Trump” at the U.N, Canaba said, adding: “Cuba will not make compromises in terms of our sovereignty and internal affairs.”

Cuba’s Foreign Relations Minister, Bruno Rodriguez, is scheduled to address the U.N. General Assembly on Friday, and is likely to echo the criticisms that Vidal and Cabana have pushed on social media.

Trump has vowed to roll back the Obama administration’s rapprochement with Cuba and has said he will not further ease sanctions until Havana adopts democratic reforms.

In his speech at the U.N. earlier this week, he called the Cuban government “corrupt and destabilizing.”

In an apparent effort to counter Trump’s depictions of Cuba with positive images, Vidal and Cabana retweeted posts about a joint meeting between U.S. and Cuban scientists in Cuba to discuss the environment, and Cabana retweeted a post by Rep. Rick Crawford, an Arkansas Republican, that said: “U.S. farmers and producers could benefit greatly from trade with Cuba.”

Their tweets also have included numerous denials of any Cuban government involvement in a mysterious series of health incidents that have affected American diplomats in Havana.

It said the government had ordered investigations into the incidents and asked for cooperation from U.S. authorities, which it called “essential.”

At least 21 members of the American diplomatic community in Havana have suffered from symptoms, including brain damage, believed to have come from some sort of sonic attack since late last year. The most recent incident was in August.

The Cuban diplomats retweeted a Medium article written by Sergio Alejandro Gómez, a journalist in Cuba – which controls what most journalists report – that pointedly criticized the U.S. government’s handling of the mysterious symptoms, raising questions about motives.

“The complexity of the investigation and the perplexity of the experts have not prevented some from trying to point at Cuba as the nation responsible,” wrote Gomez, “as they also try to reverse the progress achieved in the US-Cuba bilateral relations that has been taking place as from December 17, 2014.”

Elizabeth Llorente is Senior Reporter for FoxNews.com, and can be reached at Elizabeth.Llorente@Foxnews.com. Follow her on Twitter @Liz_Llorente.

Holly Bobo case: Prosecutors describe her final hours in murder trial closing arguments


A prosecutor described in graphic detail Thursday the last hours of Holly Bobo’s life, telling jurors about how she was beaten and “gang-raped” before being shot in the head at point-blank range by the man on trial for her murder.

“They ripped Holly’s clothes off — her blue jeans and her panties — and one by one they lined up,” prosecutor Jennifer Nichols told jurors in closing arguments. “They took turns.”

“That’s what she went through her last morning on earth. Then she was murdered — plain and simple,” Nichols said, before holding up an image of Holly’s skull in one hand and a photo of the beaming, blonde-haired nursing student in the other.

Nichols’ words concluded the prosecution’s closing argument in their case against Zachary Adams, who is on trial for kidnapping, raping and murdering the woman. Bobo was 20 years old when she was taken by a stranger outside her family’s rural home in Darden, Tenn., on April 13, 2011. Her partial remains turned up in woods near Adams’ home — about 10 miles to the north — in September 2014.

Holly Bobo 1

Holly Bobo

Jurors started deliberating Thursday afternoon. If convicted of murder, Adams could face the death penalty.

Prosecutors said three other men took part in the crime: Jason Autry, a co-defendant who testified in detail about his role in the murder, John “Dylan” Adams, the defendant’s brother, and Shane Austin, who committed suicide in 2015.

Zachary Adams, 33, has pleaded not guilty to felony first-degree murder, especially aggravated kidnapping and aggravated rape. In closing arguments, defense attorney Jennifer Thompson told jurors that Adams is “one hundred percent innocent of the charges he faces in this case.”

Thompson, who spoke for nearly two hours, said the prosecution’s theory was “full of holes” and claimed there was no evidence directly linking Adams to the murder.

“The cases in criminal court are not about what is possible, but what is provable without a reasonable doubt,” Thompson said in her closing statement.

Autry had testified that Adams asked for his help in disposing Bobo’s body. The two men drove to the Tennessee River with Bobo wrapped in a blanket in the back of a pickup truck, according to Autry. The plan, he told jurors, was to “gut her” and “put her in the deep end” of river so that her body would not float to the water’s surface. But when Bobo — who was thought to be dead — moved her foot and made a noise, Adams shot her in the head as Autry made sure no one else was watching, he testified.

Thompson called Autry’s version of events “ridiculous” and claimed he concocted a lie so the state would not seek the death penalty in his case.

Holly Bobo 2

Holly Bobo’s remains were found in 2014.

“Jason Autry has sold his death penalty to the government,” Thompson said. “The only price he had to pay was this tall tale he came up with in January.”

Thompson said the man responsible for Bobo’s murder is Terry Britt, a convicted sex offender known locally as “Chester the Molester” who was at one time considered a suspect by the Tennessee Bureau of Investigation. 

Earlier Thursday, Assistant District Attorney Paul Hagerman said Adams described the murder weapon to a fellow inmate before it was known to investigators and had “cracks in the secret” from the beginning.

The inmate, Shawn Cooper, testified that Adams asked him in March 2014 to tell his brother to “keep his mouth shut” or he would “put him in a hole beside her.”

At the time, both he and Cooper were being held at the Chester County Jail in separate cases. Cooper was awaiting transfer to Obion County Jail, where Adams’ brother was being held.

“He said, ‘I’m not worried because they got no body and they got no gun,'” Hagerman quoted Adams as saying at the time.

The alleged murder weapon — a .32 caliber gun — was not found by investigators until early 2017, Hagerman noted to jurors. Bobo’s remains were found in September 2014, six months after the alleged conversation between Adams and Cooper.

“Who knew in March 2014 that she had been shot?” Hagerman said. “Her body hadn’t been found.”

“Nobody in this world knew if she was strangled … stabbed,” Hagerman said.

“Nobody in this world knew except the two men who were there when it happened,” he said, referring to Adams and Autry.

As the state wrapped up its case, jurors were shown the “promise ring” that Bobo’s boyfriend gave her for Christmas in 2010. The prosecution also showed them her notebook — with “Student Nurse” and a smiley face written on the cover — and the bagged lunch Bobo’s mother had packed for her that morning.

Bobo was “just trying to be the best student nurse she could possibly be,” said Nichols. 

Cristina Corbin is a Fox News reporter based in New York. Follow her on Twitter @CristinaCorbin.

What Apple Unveiled About the Watch Last Week


Apple (NASDAQ: AAPL) held its much-anticipated unveiling event last week, and announced several changes coming to its Watch line.

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In this Industry Focus: Tech podcast segment, host Dylan Lewis and senior tech specialist Evan Niu explain what changes the Series 3 has in store, how Apple is improving its functionality, why the Watch’s target demographic seems to be shifting and what this will mean for the line, its cost and availability, and more.

A full transcript follows the video.

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This video was recorded on Sept. 15, 2017.

Dylan Lewis: Why don’t we first start talking about the Apple Watch, and what they decided to announce with that product line?

Evan Niu: Yeah, the Apple Watch Series 3. It’s the new flagship. Really, the big addition here is LTE cellular connectivity directly integrated into the Watch itself as opposed to having to tether and rely on the connection of your iPhone. It gives it the potential to be a stand-alone device.

Lewis: And this is something that has been a major limitation of this device for quite some time. The idea of being able to go out for a run and receive calls or use Maps, you can stream Apple Music with the Series 3 as well if you decide to get the LTE option. I do think that builds out functionality in the use case for a lot of people. One device is only so helpful if you have to carry around two to really use it.

Niu: Right. I do think it has some potential. I think in practice, the whole tethering and reliance on the iPhone, which theoretically it does kind of hurt it as a stand-alone product, but I think in practice, it remains to be seen. Even on here, for example, I have an older Apple Watch right now and I’ve had to make phone calls on it occasionally if my phone is in the other room or something and my wife calls and I need to pick it up. And making a phone call on your Watch is really not a great experience. You can’t hear them very well, they can’t hear you very well, the mics aren’t great. I’m sure the newer versions have better microphones and speakers. But just the experience itself isn’t that great. And just because you could do that without your phone on the new version, I’m not sure that’s going to be the game changing thing. It definitely helps in terms of increased functionality and increased independence, but I’m still waiting, I think it’s too early to call on whether or not that’s going to be the real thing that drives mainstream consumers to buy these things.

Lewis: One of the other things I saw them emphasizing quite a bit in the keynote was improvements to the wellness functionality of the device. They add the barometric altimeter, which is something that I think a lot of mountain bikers, runners, skiers, snowboarders will really appreciate. And you look at some of the Watch OS 4 updates that are going to be coming in mid-September, they redesigned their workout app, they provided some updates for swimmers, they made some changes to the heart rate monitoring and giving people some more advanced heart rate in metrics. I see all these things and it’s like, they’re making it pretty clear that this is a health and wellness device, in addition to being a cool consumer tech device.

Niu: Right. They’re definitely betting really big on the health side. I think it’s really interesting — Tim Cook did an interview recently on this — they invest in a lot of things on the health side that don’t really need to be commercialized into the business, which I think is an interesting angle to take and also kind of an advantage, because since they can afford to invest in all these other partnerships with medical researchers, and the medical community at large, they can really expand their presence, and use that data to improve the Apple Watch, even if they’re not monetizing those partnerships directly because obviously, Apple is so rich, they don’t really need to. But, they just feel like they can do a lot of good for society if they can really advance this field, which I think is something that other smartwatch makers both don’t really care as much about and also can’t afford to do.

Lewis: And to that point, we did that show on wearables a couple of weeks ago, and we put out a call to listeners and said, “We talked about use cases here, and you and I are not particularly sold on the wearables environment in general, we don’t really have use cases that make sense for us, but please write in if you have some that are super compelling for you and make it a must-have product,” and a lot of people wrote in on health and wellness type stuff — monitoring for very specific conditions, or things that force them to get in a little bit better shape. So, clearly it works for some people, and people with particular illnesses it can be particularly great for. So, it makes sense that Apple is moving that way.

Niu: And to build on that, I think it’s important because, while the number of people that really take advantage of some of these more niche features, they might be a very small number of people, but for them, these features matter a lot. They can have really huge improvements on their life, even if they’re a relatively small portion of the overall consumer base. But for them, these things are potentially game-changing to a small number of people, but huge impact.

Lewis: And looking at some of the details for the product for the Series 3, the Series 3 with cellular is going to be at $399. The Series 3 without cellular is going to be coming in at $329. They are available for order on 9/15, and actually available on the 22nd.

Dylan Lewis owns shares of Apple. Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.

Back to School With 2 High-Growth Education Companies


In this episode of Industry Focus: Consumer Goods, Vincent Shen and Motley Fool senior contributor Asit Sharma talk about two of the most exciting companies in education — Chegg (NYSE: CHGG) and 2U (NASDAQ: TWOU).

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Technology is playing a bigger role in the classroom every semester, and both companies are at the forefront of this trend. Find out how 2U is locking down partnerships with world-class universities to offer online programs, while Chegg changes the way students write and study.

A full transcript follows the video.

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The author(s) may have a position in any stocks mentioned.

This video was recorded on Sept. 19, 2017.

Vincent Shen: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. I’m your host, Vincent Shen, and it’s Tuesday, Sept. 19. We’re a bit late to the party, since schools across the country have already been in session for a few weeks, if not longer, at this point. But this is going to be our back to school special. Joining me for this class via Skype, please welcome back senior Fool.com contributor, Asit Sharma. Hey, Asit, great to have you on the show!

Asit Sharma: Great to be back, as always, Vince! Listeners, you know who you are, for some of you, this is not late to the party at all. You’re like me, you used to trip into class five minutes late, but you’re right on time today.

Shen: [laughs] There you go. In previous years on Industry Focus, we’ve approached the back-to-school theme as an opportunity to review fundamental investing or financial topics. Last year, Asit, you and I actually talked about return on invested capital. We had some real world examples of how companies applied or used that metric.

This time around, we’re actually going to look at companies in the education industry as potential investments. Some of you may have read or heard about the hits taken by for-profit universities, with enrollment at these schools declining rapidly over the past few years, and a few big names actually declaring bankruptcy as well. Instead, we’re going to focus on companies that are working somewhat behind the scenes as technology becomes a big part of education, becomes a big part of how students experience the classroom, and as online programs become more popular. Asit, the first company that we’ll cover is Chegg, ticker CHGG. This is one that you brought to my attention, and they offer a ton of different services to students. Can you give us a quick overview of the company?

Sharma: Sure. Chegg, or chegg.com, as students know it, provides textbook rentals to students. That’s primarily what they’re known for. Books were expensive when I was in school years and years ago, and they’ve only gotten more expensive. So with the tools that we have today, students can go online and go to CampusBooks or Amazon textbook rentals and rent a book at maybe a 50% discount, 60% discount, or 90% discount to the cost of the book and return it at the end of the semester. So this is what Chegg has primarily provided to students. In the past, it used to buy its own textbooks, operate them on an inventory basis, rent them out, make money that way.

But in 2015, the company actually signed an agreement with Ingram Content, which is a huge book seller, and it now has that company fulfill its rentals, and it just takes a commission of about 20% on each textbook that it rents. So it’s a more capital-light model, which is more profitable. What the company has done in the meantime is turn its attention to services. It bills itself as a “student first” platform. That means, from the time you’re in high school, it helps you select colleges, it helps you with standardized test prep. When you get into college, it has neat services such as this answer module where you can pose a question to one of 35,000 experts, and they will provide an answer, and that becomes part of a great content system that other students can later review. And it provides tutoring services, which can be as low as $0.40 a minute through this vast army of online tutors. So the company is trying to position itself as a student’s best friend in getting through not just high school but college and graduate school. It’s a massive market, there’s a lot of market opportunity here for a company like this.

Shen: Chegg management actually cites in their latest quarterly report, the education industry in total, $1 trillion industry, 7% of the U.S. GDP. The company said that in 2016, last year, they served 6.5 million students. And there are 1.2 million actual subscribers to Chegg as of the second quarter of 2017, and that number is up 54% year over year. Those 35,000 experts that you mentioned answering questions, one of the services they offer, they’ve gotten 10 million questions so far through that service.

But the big thing to remember for this business is the transition from the textbook rentals, and now that it’s taking that 20% commission, and now that Chegg considers itself a fully digital company — just remember that relieved the company of having to worry about things like its textbook inventory, so no more depreciation expense, no more shipping, no more fulfillment, no more warehouses, no more personnel costs for that. Here are some financial numbers for their business segments. Even though the top line has declined as a result of the agreement it’s made with Ingram, it’s down 16% in 2016, their gross margin for the company is improving significantly. It was about 39% in 2015, then 53% in 2016. And full year guidance from management for this current year 2017 puts gross margin at over 65%. So you can see how quickly that’s ramped up as they turn to focus more on services.

Not surprisingly, their Chegg Services segment accounts for an increasing portion of revenue. Now, it makes up the majority of the top line. In the latest quarter, the second quarter of 2017, it was reported that number for Chegg Services accounts for 79% of the top line, and year over year growth there was 50%. So the growth for this services part of Chegg’s business is pretty spectacular and very impressive to this point. A big thing that I was really impressed by, that you also mentioned, Asit, as well, before the show, is how the company uses its tech and also its data to create a competitive advantage for itself as it scales up. Can you tell us a little bit more about that?

Sharma: Traditional education is delivered by huge infrastructure. If you visualize in your mind a university, it has dormitories, classrooms, salaries of deans to pay, benefits to all the faculty. It’s a really low-margin business, even if you’re a nonprofit traditional college. And what Chegg is doing is, I feel, the TripAdvisor model. Some of our listeners are familiar with TripAdvisor. Their service as a reseller of travel through online portals is supplemented by this knowledge base that’s there. TripAdvisor reviews are a content that subscribers can access and non-subscribers, people who don’t subscribe to other TripAdvisor services can get hooked into by reading reviews of travel destinations.

And this is the same as what Chegg is doing. By using low capital technology that can be used over and over again, and delivered through multiple formats, they can increase their margins over time and make students more loyal to them. One stat that stuck out at me is, they have 1.2 million subscribers to Chegg services as of Q2 2017. So in the second quarter of this year, they have 1.2 million subscribers, and that’s up 54% versus the prior year. And what that tells me is, this light model, which is providing services digitally, is very sticky. A student who’s used the experts to get a question answered, or maybe spent an hour with a tutor, or even used their writing services, which take a paper and format it in MLA format or one of the scientific formats for notation. Once you’ve used these services, you’re much more likely to use this and pay for a subscription in the future. So through a subscription model for many of these services, they have a recurring revenue base that’s building. And that’s why I think that, although they’re operating at a loss, the move to services was smart, because over time, recurring revenue is a stable predictable source of sales for a company, and they can gradually overcome that. 

I want to flip it back to you, Vince, really quickly. We can discuss what might be a little bit of an Achilles’ heel. Whenever you look at these companies that are fast growing but are losing money, always look, listeners, to find the biggest item on the income statement, where they’re really spending the most money incurring that loss. Oftentimes, it’s compensation expenses tied to stock. I usually ignore that for a while. I want to see what real life expenditures are going on. For this company, it’s technology and development. In the first half of 2017, roughly a third of total revenue, $39 million was devoted to technology and development. That shows you both of the opportunity and the hurdle for Chegg. It has to constantly invest to grow its subscriber base and provide these value-added services to students. What are your thoughts on that, Vince?

Shen: I think ultimately, in the beginning for a company growing this quickly, that’s an acceptable risk, for it to be even that large a part of the income statement, as you said, because of the fact that, when it comes down to it, management has said that Chegg Study, which offers some of their textbooks, informational guides, and some of the tutoring services, and writing tools, which you mentioned in terms of the citations, those parts of the business have a relatively fixed cost structure. So once the investment is made, they have those strong profit margins to match them as they scale their businesses over time.

Keep in mind the ways that Chegg can expand. They can add subjects, they can add courses, as they add more questions to that Q&A network, that adds more students, the more students they have, the more cross-selling they can do. They mentioned, for example, that their Chegg tutoring customers, half of them come from other existing services. These are customers of other existing Chegg services. So it’s that cross-selling nature.

And a big part of that is this data that they have, they call it the “student graph”. I think it’s a really powerful example of how the customers and their usage of this site is being leveraged more and more to strengthen the relationship with the company and increase the customer’s value for the business. The company can take basically everything that it knows about you — the textbooks that you rent, will give you an idea of the classes you take, and then the tutoring services that you need will also give the company an idea of what you’re interested in and what you might need help with, for example, and create a very personalized experience for you. It’s actually pretty shocking. There’s a quote from the latest earnings call and Q&A section that I think really highlights just how much information the company can pull from in regards to the students who use their services. Here’s the quote:

We collect data either because people provide it directly, or because we’re able to track their behavior. If you rent a textbook, we know your college, we know your address, we know your class, we can estimate what your major is as a result of it, depending on your year and other books that you get, and we know your address, and of course, we have your credit card. When you use Chegg Study, we have a lot of that. But in addition to that, we know when you’re studying, we know what time of day, we know what time of night that you study, we know which subjects are harder for you and easier for you, we know your preference in terms of whether or not you’d rather ask questions or watch a video, or whether or not you do step-by-step solutions. And of course, as mobile continues to naturally increase, we have geography information. So, it just keeps expanding every time we offer services. In the case of writing, we are increasingly now able to tell whether you’re in high school or college. We can start to determine what your classes are based on the paper that you’re writing. So this is all information that we’re starting to get now that we didn’t get before.

So I know it’s a long quote, but you can get an idea of the CEO there listing out all the information they’re able to pull from to target their services to the students, and exactly for the classes they might need, for their major, for their class level, whatever it may be. And I think that’s very powerful as they invest in the technology behind that.

Sharma: Absolutely. What is slightly creepy to someone my age, but maybe natural to a younger person, this collection of data can be really great revenue fuel going forward. After college, maybe graduate school, you’re also going to go into a career, and I think this is a nice segue into our next segment. You may want a certification, and Chegg will be there to help you study for that certification. But I think the next company we’re going to talk about actually provides programs and certifications.

Shen: Yeah. Before we close out on Chegg and move on to another really interesting company that I’ve actually been following for some time and I’m very excited to talk about, I actually wanted to get a take on any concerns that you might have, Asit. I’ll share some of my own as well, in terms of the valuation, and also any potential challenges for this company. Just from what I’ve seen, the stock has doubled year to date. It’s more than tripled from its 2016 lows. It’s currently trading at about $14.50 a share. Valuation wise, that puts it at over 6x sales, and almost 80x free cash flow, because it is not yet profitable.

With that in mind, the bottom line is strengthening. Again, it’s strengthening pretty quickly with the help of the digital transition — 2017 guidance from management, for example, for their adjusted EBITDA, was $41 million, versus 2016, that figure was just $21 million, so doubling in the space of a year. But the main concern that I’ve had ties to comments that management made about how Chegg Tutors is potentially going to become the biggest part of the company in the distant future. They basically alluded to the idea that schools are underinvesting in resources like office hours for students, so Chegg can essentially fill the gap with those affordable, $0.40 per minute tutoring sessions at any time of day and potentially any language to help students learn. But to me, the company talks about Chegg Study, its writing tools, how it’s an initial fixed cost, it’s insignificant but it scales up very well over time. In this case, the more tutors you need, that’s much more of a variable cost that will not scale as well for the company. So that’s just something I was watching. Anything that you’d like to call attention to as well for people who are following the company?

Sharma: Obviously, profitability is always one. It’s hard to value a company which is losing money. You have to go to other ratios. What’s the price to sales? You have to strip away the book loss according to generally accepted accounting principles, and look at EBITDA, which you mentioned. So it’s always harder until the company becomes profitable to determine how it should be valued relative to its peers. That’s one problem with Chegg. We tend to be long-term holders, as Foolish investors. I’m not sure if we have a recommendation on Chegg, and I’m not advising people to rush out and buy this company. But the longer your holding period, the easier it is to absorb some potential troughs as a company starts becoming profitable and the price adjusts to the valuation.

I will just say, on the concern you have, Vince, I share that concern in the sense that education is a cyclical business. That is, higher education, certification programs, graduate schools, when the economy dips, enrollments decrease. And as school gets more expensive, it’s not a given that people will continually enroll in schools at this linearly growing rate. And that’s sort of an assumption that underlines Chegg’s optimism that, for example, with these study services or tutoring services, they’re going to grow because academic institutions are under investing in office hours, etc. Well, if enrollment drops, that’s a pressure on the demand for the tutoring services. If you’re not in school, you’re not going to be buying the tutoring services. So, we’ve seen in the past, cycles where education is roaring to life, and it seems like many of the stocks that you and I discussed for this show are having great years. So that’s one concern with the valuation. Always remember that education is tied to the economy at large. When trades are flourishing because manufacturing is up, or services businesses are booming, also higher education tends to lift as well. But when we are in a recession, the opposite initially occurs until people start realizing that, one way or another, they have to get trained and tack on a degree or two to make money again. So it can be rocky in this industry, and I do share some of your uncertainty regarding the potential valuation of all the companies that are in this sector.

Shen: Yeah. Some of these concerns and themes that we’ve touched on will pass on to this next company. Up next, we have another tech-focused, fast-growing name in education that’s helping students as well, but in this case, it’s by allowing them to get their degrees online. The company is called 2U, ticker TWOU. We already mentioned at the beginning of the show that we wouldn’t be covering the more controversial for-profit universities and online programs. Even though we’re connected online constantly through our smartphones, through social media, and a lot of other platforms out there, online education still has to grapple with more negative connotations.

But I think that is also what makes 2U really unique. This company is partnered with over 20 schools, and its roster includes some very prestigious names like Georgetown, New York University, Harvard and Yale. 2U maintains a focus on very specific graduate programs like business or nursing. The hope is to attract students who want to further their education and their career opportunities without uprootin their entire lives, so they’ll have a preference for an online program. The programs that the company offers through these schools are a mix of pre-recorded content and live classes where students can see each other. They can still give presentations, ask questions, and participate as they would in a traditional classroom experience. They’re trying to recreate that online. The company’s motto is “no back row”. Class sizes are very reasonable, they average 12 students. In the end, students will earn the same degree as their counterparts who actually attend the school in person. The students, through 2U’s partner programs, generally pay the same tuition, as well.

Asit, I’ll turn it over to you again. What parts of this business really stand out to you?

Sharma: First of all, 2U — listeners, if you’re looking this up, Vince gave you the symbol, it’s TWOU — if there’s anybody today from the marketing department of 2U who happens to be listening, we feel your pain. I believe there’s a song that’s featuring Justin Bieber which has now taken the top of the Google results. If you try to google this, you’re going to get a Justin Bieber video. You have to scroll down, use that scroll button to find it. It’s worth looking up.

Shen: [laughs] Yes, I noticed that as well.

Sharma: [laughs] The most recent quarter, revenue for 2U is up 32% to $65 million. That leaps out at you. This is a fast-growing company. How it’s been able to do this is the partnerships that Vince mentioned. It has a very strong pipeline. The company tends to look one to two years ahead to author new programs. What I mean by a program is an online offering with a reputable school which is an extension of their existing curriculum or a brand new program.

A really prominent example that the company just announced is a new certification through the Harvard Business School, it’s called the Harvard Business Analytics Program. In many cases, 2U is partnering up, suggesting a totally new program or persuading a university to take an existing program, tweak it, and offer this online version. And it’s a much more sophisticated approach than we’ve seen universities themselves be able to put out. It is more geared toward profit-making. Some of you may have taken MOOCs, which are massive online open courses. I hope I got the sequence of that right. Universities have proven to be very interested in the online learning model. They participated in the MOOCs in the past few years to build a familiarity with offering distance education. But 2U takes it quite a few steps further. The first advantage they have is, as Vince mentioned to me when we were chatting about the show, he said it’s really a technology company more than anything else. And you can see that in their CMS, which is their content management system. It’s the combination of real time, synchronous learning with educational pieces that are there that you can link to and get more in-depth on a subject. Some of you who have taken online courses may have counted on the Blackboard system, which was a pioneer for many years. This is Blackboard on steroids, really.

Beyond that, for a university to offer a degree program like this online, there has to be something in it for the university that helps them make money off their model. And what distinguishes 2U is, its back end is second to none. The company offers a host of analytics to colleges that help them acquire new students, it helps them churn statistics on what’s working and what’s not, it provides back-office functions, and all this is offered as software-as-a-service. So it’s cloud-based, it’s very easy to utilize. It’s another revenue stream for the company. What I see in 2U versus other entities which have tried to provide distance education, online education, is a really technology-based approach which pays dividends for both the students and the colleges. It puts analytical tools in the colleges’ hands, which they didn’t have before and really don’t have the wherewithal to develop on their own.

Shen: I also think it’s important to know, in terms of the way 2U approached some of these very prestigious universities and sell them on the idea of partnering on an online program, which again, some of these are still grappling with negative connotations, 2U will, for example, invest upfront up to $10 million in each partner university, getting them set up and ready to onboard students and begin with the program online. And the reason why the company is willing to do that is, the contracts that they sign with universities tend to be quite long with contractual terms of about 10 to 15 years. Beyond that, there’s tuition sharing between the company and the university, with the company usually taking about 50% to 60% of the tuition. In the end, the company and the university again also have pretty aligned interests, which is to attract new students but also keep students enrolled in the 2U affiliated programs, and for them to do well. On the other side of that, 2U also handles a lot of the recruitment in the marketing for these programs where it provides that technological infrastructure and support that you mentioned, Asit. Through the end of 2016, for example, 83% of students who have entered relevant programs with 2U and these universities either graduated or remained enrolled. That’s a pretty strong number there.

Something else I wanted to touch on as we wrap up here is, this is another company, like we talked about with Chegg, that relies heavily on data. 2U has developed what they call a proprietary algorithm that allows them to identify the universities and programs that they think are going to be the most successful as part of the 2U umbrella or portfolio. They look at things like the existing market for a degree, student demographics. In the end, with the company putting in that $10 million, for example, there’s still definitely a risk. The payback period is typically four to five years. On the bright side, the majority of the company’s earliest university partners have already chosen to renew, so they’ve seen the success that 2U has helped them to generate with these online programs, they want to continue.

In the end, the ability to scale each of these programs for a greater number of students, or for a university, to help a university scale to more programs, that opportunity also exists. And when you look ahead, 2U has spoken to some of the growth that it hopes to see and to capture through additional partnerships, and by also expanding abroad. Management has pointed to a long-term goal of 200 programs. Earlier this year, they also acquired GetSmarter for about $100 million. GetSmarter offers short courses, and it also has relationships with schools like MIT and Oxford in the U.S., U.K., and South Africa. So again, that’s the early steps of part of that international expansion.

To close out with some of the financial side, valuation side, revenue has been growing, as you mentioned, Asit, over 30% annually for several years running. The gross margin is 80% for this company, but it’s not yet profitable, and it’s spending a lot of cash to maintain that growth. Until 2U is able to diversify its partner universities, it does also face some customer concentration risk that listeners should know about, since just three schools, USC, UNC, and Simmons accounted for about two-thirds of the company’s revenue. Even though you might partner with new universities, sign up new programs, the enrollment in the most popular programs will ultimately overshadow those new ones depending on what the enrollment size is. And this company trades for almost 12x sales. Closing thoughts from you, Asit, things that you’re watching, thoughts on valuation, anything that you’d like to discuss?

Sharma: On valuation, very similar to what we discussed with Chegg, until a company turns a profit, a little bit hard to gauge how much you should be paying. I zero in on the loss. Just to keep apples to apples, we talked about Chegg having its largest expense as technology and development. 2U’s largest expense year to date has been marketing, and that’s very typical. $72 million marketing costs, it’s about 55% of revenue of $130 million. I actually see that as a little problem point but something very positive about this company.

Vince, you mentioned the long-term contractual nature of the programs it’s signing up. Right now, there’s a very heavy burden on 2U to market, to spend on acquiring students and building these programs from the ground up. But if you can fast forward in your mind, say 10 years from now, an institution like Harvard, a program which it’s building on something that’s extremely topical today for business, the Harvard Business Analytics Program, we see analytics being used in big data everywhere. That program is probably going to acquire a lot of prestige within the same contractual period that it signed up for with 2U, especially if they renew for another long period of time. So at some point in time, the prestige at these programs will start to draw students on their own, just as you have a familiar name like Wharton Business School, they really don’t need to market so much. People want to attend and get a business degree from that institution, University of Pennsylvania, in that particular program. So I see that this marketing cost as an initial upfront investment in building these long-term programs. And if everything goes well, that should decrease over the years. And I feel optimistic that the company will be able to turn a profit. I didn’t know a lot about this until Vince introduced it me, but I am intrigued by 2U, both because the market for high-quality education is so vast, and because they’re so technology-centric. I would love to revisit it in the future. When they turn a profit, we can talk more about valuation. But a very interesting company, from my perspective.

Shen: Thank you, Asit. Last thing that I wanted to mention is, the CEO, Chip Paucek, offered an analogy that online education is like online dating in that it started with a very negative stigma, but over time, you look at the popularity of TinderOkCupidMatch, dozens of other services, that stigma has fallen away. And I think 2U is in a very unique position right now as the leading company that offers what it does with the software as a service. It’s taking 50% or more of tuition and schools, as they see the popularity of these programs grow and the prestige of the programs grow, they can partner with a 2U, for example, and not have to make that large, initial investment that they would have to do if they went in to launch something like this in house. And we’ve seen schools in the past attempt things like this, and it hasn’t been quite as polished, or hasn’t been as strong of an offering. But right now, 2U, this gold standard for online education. Right now, with it only being focused on graduate programs, if the opportunity expands to undergraduate and other parts of the educational cycle, I think it’s in a very advantageous position to do well.

Otherwise, I think that’s all the time we have for today. Asit, I know you wanted to cover a few international opportunities as well but I think on our next show together, we can have a quick pow-wow and talk about some of the international companies and the education growth that we’re seeing abroad, as well. Thanks again for joining me on the show!

Sharma: Thank you! For the first time in many moons, I feel like cracking a book after this episode. [laughs] 

Shen: Absolutely. As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against any stocks mentioned, so don’t buy or sell anything based solely on what you hear during the program. Thank you, Fools, for listening! Have a great week!

Asit Sharma has no position in any of the stocks mentioned. Vincent Shen has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and TripAdvisor. The Motley Fool recommends 2U and Match Group. The Motley Fool has a disclosure policy.

3 High-Yield Stocks Safe for Retirees


Stocks that offer retirees strong dividend yields and minimal risk are out there — if you know where to look. To get you started, here are three that combine both of these key attributes. They include Cisco (NASDAQ: CSCO), Kimberly-Clark (NYSE: KMB) and Duke Energy (NYSE: DUK).

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Value and income, a winning combination

Tim Brugger: (Cisco): Cisco’s stock is up “just” 8% in 2017, causing some retirees to question the soundness of investing in this company. However, with its 3.5% dividend and a valuation that’s nearly half of the industry average as measured by its price-to-earnings ratio (P/E) of 17, Cisco pays shareholders one of the highest yields in its sector and offers tremendous value — which minimizes downside risk.

Many investors have been focused on Cisco’s 4% drop in total revenue last quarter, to $12.1 billion, but that hardly tells the Cisco story. CEO Chuck Robbins is focused on two initiatives: boosting software and subscriptions sales to build a foundation of recurring revenue, and cutting costs. Cisco’s fiscal fourth quarter was undeniably successful in both areas.

An impressive $3.75 billion (31%) of Cisco’s revenue last quarter was recurring, up from 27% a year ago. It’s a slow process building a base of recurring revenue, but in the long run, Cisco shareholders will find it translates to relatively predictable earnings. And that stability makes it ideal for retirees who generally like to avoid stocks with wild price swings.

As for expenses, Cisco again took a step in the right direction, shaving 7% off operating expenses, to $3.9 billion, excluding one-time items. This result was despite the 4% drop in total sales. The company’s earnings per share (EPS) dropped a mere 3% on an adjusted basis, to $0.61 a share. Cisco’s industry-leading dividend yield combined with its predictable source of revenue make the company an ideal high-yield stock for retirees.

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A stock that will hug and pamper you over time

Rich Duprey (Kimberly-Clark): People aren’t going to stop having babies, and Kimberly-Clark will continue to have a leadership position in diapers, even if it lost the top spot to competing brand Pampers from Procter & Gamble a few years ago. Diapers surprisingly is a rough-and-tumble business that not even Amazon.com was able to succeed at.

Everyone expected that, when Amazon bought the diapers.com site back in 2010, it would become a category killer. The e-commerce king launched its own brand, called Amazon Elements, that promised transparency about sourcing and materials, but ultimately, it couldn’t survive the Diapers Wars, and closed down the operation.

While Huggies is one of the biggest brands in its portfolio, Kimberly-Clark also owns Kleenex, Scott, Kotex, and more. Its personal-care division, which houses these brands, accounts for 50% of its $9 billion in year-to-date revenue. Its leadership position atop the personal-care products market remains assured.

So does its dividend, which currently yields 3.2%. Kimberly-Clark has increased the payout annually for 45 consecutive years, though Procter & Gamble has hiked its payout for 60 straight years. This shows the safety, security, and stability that comes from owning a broad collection of popular consumer staples.

This 4% yield will let you sleep well in retirement

Neha Chamaria (Duke Energy): As enticing as high yields can be, it’s important for retirees to ensure that the yields are also stable and secure. Otherwise, they may fail to serve the purpose of helping you build a retirement fund. Electric and gas utility Duke Energy, with its 4.2% dividend yield, is one stock that won’t leave you in the lurch.

Like most utilities, Duke’s key investing thesis revolves around its defensive business of supplying an essential service, like electricity, the demand for which isn’t subject to the whims of economic cycles. However, Duke’s intent to focus on renewable energy should keep its cash flows ringing in the years to come.

Duke demonstrated its commitment toward clean energy last year when it acquired Piedmont Natural Gas in a deal worth $4.9 billion, to treble its natural gas customer base to 1.5 million. Management smartly intends to balance capital spending between upgrading existing infrastructure and expanding its renewables footprint.

Duke expects its growth moves to drive earnings per share and dividends by 4%-6% each through 2021. When this is combined with a dividend growth yield of around 4%, shareholders can expect strong returns from the company going forward. Mind you, Duke stock may not be a highflier, as is the case with most utility stocks, but its dividend yield is among those that you can rely on for your golden years.

10 stocks we like better than Cisco Systems
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Neha Chamaria has no position in any of the stocks mentioned. Rich Duprey has no position in any of the stocks mentioned. Tim Brugger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Cisco Systems. The Motley Fool has a disclosure policy.

UN Mission: 80 civilians dying in terror attacks daily in Afghanistan


It has been 16 years since the U.S. launched the War on Terror in Afghanistan, yet civilians still are bearing the brunt of the bloodshed.

Mahmoud Saikal, the Permanent Representative of Afghanistan to the United Nations, told Fox News that the war-embattled nation each day amid the insurgency is losing on average 70 to 80 civilians — only a small percent of whom are military.

Other officials suggested the number of civilian casualties is even higher, up to 120 per day.

Saikal also noted — affirming what President Ghani previously has stated — that Afghanistan is fighting some “20 different terrorist groups” on its soil on any given day.

The U.S. recently declared it was increasing its troop commitment to Afghanistan, and it is expected that around 3,000 more troops will be deployed there in coming weeks. The decision came after months of deliberations — of which President Trump demanded answers as to why the security situation was so dire despite the trillions of dollars spent and lives lost in the seemingly intractable conflict.

Saikal said Trump was “speaking the truth” in wanting answers and welcomed the administration’s policy that U.S. support would be “condition-based” rather than “time-based.” Afghans long have lamented former President Obama’s announcement to draw down troop numbers, which was pinned to end in 2014, with many claiming that the dateline simply empowered insurgents to wait and regroup in the mountains.

Afghanistan strategically remains poised and is often fodder for influence from an array of international players from Iran and Russia as well as Pakistan and China, and Saikal highlighted that their security forces were on the right path to complete self-sufficiency.

He also pointed out that the fiscal cost of the war has fallen dramatically, and remained confident that Afghanistan will become a success story with U.S. and NATO support.

“The cost in 2012 was $110 (billion) to $120 billion. It has come down to one-tenth of that. But we must be able to continue to strengthen our defense capabilities,” Saikal told Fox News about what Afghan officials want from the soon-to-be bolstered troop numbers. “We recently doubled the amount of commandos, and what we really need is a proper Air Force.”

As it stands, the Afghan Air Force is reported to be comprised of just under 7,000 members located in three wings across the country. Last year, NATO leaders announced intentions to boost this to at least 8,000 and the Department of Defense requested over $814 million to begin to re-equip and refurbish the force, transitioning from Russian Mil Mi-17 to Sikorsky UH-60 Black Hawk helicopters as well as adding several A-29 attack aircraft and MD 530F helicopters.

Just this week, air refueling tankers arrived in Afghanistan for the first time in five years and the first slate of U.S.-made Black Hawks touched down.

Along with devoting attention and training to the Air Force, Saikal said the best use for these additional American troops would be to continue advising and training and not in combat roles. He said it would be best for the additional troops to have a particular focus on helping them to secure the porous Pakistan border, which notoriously provides a gateway for terrorists to easily come and go.

“The Taliban might be able to get in a place to launch an attack, but as soon as our forces can get there, the Taliban does not stand a chance,” he added. “We must continue making sure we have a strong and sustainable security force and this takes a long time. They are doing the job of the world, they are fighting terrorism for the world.”

Hollie McKay has been a FoxNews.com staff reporter since 2007. She has reported extensively from the Middle East on the rise and fall of terrorist groups such as ISIS in Iraq. Follow her on twitter at @holliesmckay

Harry Styles slammed for charging more for plus size versions of his tour shirt


Harry Styles’ solo tour launch got off to a rocky start when the 23-year-old pop star was called out over the pricing of his merchandise.

In a tweet, which has since gone viral, an account named Harry Styles Updates posted a pic of the questionable merchandise price list from Styles’ San Francisco show.


The price list broke down everything available for purchase at the debut concert (including an absurdly priced $15 pin that followers lamented over), and incited outrage over two items: “T-shirts XS/S/M $40” and “T-shirts L/XL/XXL $45.”

Fans immediately took to social media to express their concerns.

One tweetd, “I’m not overweight but have to get a large always because of my breasts and I have too pay extra for that.”

And another asked, “OK but why is it cheaper for skinnier people?”

One fan even pointed out the clash between the singer’s positive “kindness” message and this potential body-shaming controversy, stating, “Yeah like isn’t the point of the merch to ‘treat people with kindness?’”

However, there were some that were quick to point out that materials may cost more for larger sizes.

“It’s less material to make the smaller sizes. the only way to even it out would be to charge everyone $42.50 or not.”

Once the news of unfair pricing spread, the beloved One Direction alum and the company responsible for handling his merchandise were quick to rectify the issue.


“There was a mistake in size pricing at last night’s show; Harry and his team were unaware, and this has now been rectified,” Live Nation Merchandising told Seventeen.com.

While Styles’ team has since corrected the problem, charging more money for plus size clothes is not new in the fashion world. Most recently, U.K. based Boohoo came under fire for charging a “fat tax” on its larger sizes. 

Ex-Mafia hit man 'Sammy the Bull' Gravano now out of prison


Former Mafia hit man Salvatore “Sammy the Bull” Gravano has been released early from federal prison after serving most of a 20-year sentence for drug-related convictions in Arizona and New York.

An attorney for Gravano said Thursday that his 72-year-old client was released Monday, but wouldn’t disclose where Gravano served his time or where he plans to live now that he’s a free man.

Thomas Farinella says Gravano is “very upbeat, very positive” and figuring out what he wants to do after 17 ½ years behind bars.

Gravano was a former underboss for the Gambino crime family and confessed to involvement in 19 murders.

He later helped bring down the family’s boss John Gotti by testifying against him and moved to Arizona in 1994 under a federal witness protection program.

Airlines hope to resume flights to devastated Puerto Rico


Airlines plan to resume flights to Puerto Rico as early as Friday after Hurricane Maria left the island territory without power.

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American Airlines says it plans to send its first plane to San Juan from Miami Friday morning. Spokesman Ross Feinstein says passengers will include federal airport screeners to help run security checkpoints at Luis Munoz Marin International Airport.

Delta Air Lines expects to resume flights from Atlanta and New York to San Juan on Saturday.

A spokesman for United says the airline is still assessing the situation but won’t operate flights there on Friday.

A spokesman for Frontier says the airline plans to fly in relief supplies and take passengers out to Orlando, Florida, as soon as the San Juan airport opens.

Flights to the Dominican Republic resumed Thursday.

Mexico shocked by news: Girl trapped in rubble didn't exist


Hour after excruciating hour, Mexicans were transfixed by dramatic efforts to reach a young girl thought buried in the rubble of a school destroyed by a magnitude 7.1 earthquake. She reportedly wiggled her fingers, told rescuers her name and said there others were trapped near her. Rescue workers called for tubes, pipes and other tools to reach her.

News media, officials and volunteer rescuers all repeated the story of “Frida Sofia” with a sense of urgency that made it a national drama, leaving people in Mexico and abroad glued to their television sets.

But she never existed, Mexican navy officials now say.

“We want to emphasize that we have no knowledge about the report that emerged with the name of a girl,” navy Assistant Secretary Angel Enrique Sarmiento said.

Virgin Mary statue seen in church rubble in viral photo


An Instagram photo of a statue of Virgin Mary went viral after it was captured standing tall amid the rubble of a church.

The picture was posted on Instagram Wednesday by fashion designer Edgar Alfaro, who linked the photo to the 7.1-magnitude earthquake that rocked parts of Mexico on Tuesday. However, the picture was taken down Thursday after getting more than 5,000 likes.

The picture showed a statue of the Virgin Mary, known in biblical history as the mother of Jesus Christ, standing unharmed on what appeared to be the altar of a collapsed church. 

In a rough translation of the caption, Alfaro described the image as “incredible” and said it was “a sign that we must be aware and not damage our planet.”

“Mother Mary, our mother intercedes for our brothers #Mexico #PuertoRico and the rest of the world,” he wrote. “Have mercy on us, we raise petitions before you and pray for the forgiveness of our sins before God our Lord.”


Young flamethrower Scott admits debut nerves


BALTIMORE — A day after his Major League debut, Orioles pitching prospect Tanner Scott was all smiles: glad he got out there and glad the first one was behind him.

“I was feeling a lot of adrenaline,” said Scott, whose first warmup pitch flew to the backstop as he got ready to navigate the eighth inning in the Orioles’ 9-0 loss to the Red Sox on Wednesday. “A little nerve-wracking, but that first one is out of the way and that’s a good thing. Felt good, and [I’ll] try to get back out there.”

Scott allowed a pair of runs on two hits with two walks and a strikeout in the inning, getting Deven Marrero on a slider.

“The slider has come a long way, so it was really good to get my first strikeout on the slider,” said Scott, who sets up his offspeed with a devastating fastball that touches triple digits. “My slider has come a long way and now I can throw it whenever I want. It’s going to help me a lot.”

Ranked as the club’s No. 6 prospect by MLBPipeline.com, the 23-year-old Scott went 0-2 with a 2.22 ERA in 24 starts at Double-A Bowie this season. He struck out 87 and walked 46 in 69 innings.

Asked if he could tell a difference right away between Double-A and the big leagues, Scott said: “Yeah, the strike zone is smaller and the hitters are better.”

With plans to go to the Arizona Fall League after the regular season ends, there’s no telling how much of a look the O’s will get at Scott. But the lefty is going to use every opportunity to make an impression. And hopefully corral some of those early warmups.

“Actually, this morning I told [catcher Welington Castillo], I said, ‘Hey Welly, did that go through the doors behind the [screen]?’ He’s like, ‘Yeah, I don’t know how.’ He was laughing, so it’s OK.”

Brittany Ghiroli has covered the Orioles for MLB.com since 2010. Follow her on Facebook and Twitter @britt_ghiroli, and listen to her podcast. This story was not subject to the approval of Major League Baseball or its clubs.

Tiffany names industry veteran Roger Farah chairman


Tiffany & Co. has named industry veteran Roger Farah as chairman, effective Oct. 2.

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Farah, 64, joined the upscale jeweler’s board in March and had served in leadership roles at Ralph Lauren Corp., Venator Group Inc., among others.

The move is part of a management overhaul pushed by activist investor Janna Partners to revitalize sales at Tiffany, which has struggled with intensifying competition from online players like Amazon and Blue Nile. It’s also lost some of its luster with millennials.

In July, the New York-based company named Alessandro Bogliolo as CEO, effective October. He is taking over for interim CEO Michael Kowalski, who reclaimed the spot when Tiffany pushed out Frederic Cumenal in February.

Farah will replace Kowalski, who has been chairman since 2002. He will remain as a director.

Couple unable to afford their own wedding ask guests to contribute


A groom in the U.K. has asked guests to pay for his wedding.

In a “business model” devised by Ben Farina, the groom-to-be has asked for guests to fork out more than $250 (about $200 USD) to attend their big day in June 2018.

The 33-year-old, along with his partner Clare Moran, “sold it” a bit like an all-inclusive holiday to their guests — on the basis that “people always pay a large amount of money to go to a wedding anyway.”

The wedding, which the pair have invited 60 guests to attend, will include a three-night stay at the Knockerdown Cottages hotel in Ashbourne, Derbyshire, near Manchester.

The couple, who purchased a house before Mr. Farina popped the question and were struggling to come up with the funds for the wedding, said the money will cover accommodation, food and drinks and use of spa centers and the swimming pool, according to the Derby Telegraph.

The groom has defended his decision, saying it’s like a weekend vacation for their guests.

“Knockerdown Cottages offered us a package which catered to have all the guests stay on site for the whole weekend so we didn’t have to pay any travelling costs,” he said.

“Everyone comes on the Friday and gets back home on the Monday — it’s a weekend vacation for them.”

“The guests are paying to stay in the cottages for the weekend which is £150 (approximately $200 USD) per person. With that they get use of the spa centers, swimming pool and food and drinks.

“We had a package which said you hire the cottages and the venue for the wedding is then included.

“It’s just like when you have a party and the owner says to you if you spend so much in the bar you get the venue free.

“We are not charging our guests to come and pay for our wedding — we are telling them to pay for their accommodation. We’ve told guests it costs this much if you want to come.

“We are still having to pay for the registrar, the suits, the food, the dresses.”

Speaking to the BBC, Ms. Moran said the concept was a “brilliant way” to have a wedding.

“We had spoken about marriage because we’ve got a little girl together and I always said we wouldn’t be able to afford to do it, or it would have to be a registry office wedding, not a big wedding,” she said.

“This is a brilliant way to do it and I can’t wait. He has put a lot of thought into it.”

Appeals court sidesteps decision on US fracking regulations


A federal appeals court has sidestepped a decision on whether oil and gas regulations enacted by the Obama administration are legal, noting that the current administration plans to rescind them.

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A Denver-based appeals court said Thursday it would be a waste of time to rule on the regulations because the Trump administration has said they’ll be revoked.

The 2015 regulations govern hydraulic fracturing or fracking on federal lands.

The ruling left the status of the regulations unclear, and federal agencies didn’t immediately respond to requests for comment.

Environmentalists say the fracking rules are in force until the Trump administration formally revokes them, and that could take months and get tied up in court.

Industry groups said the government won’t enforce regulations it plans to repeal.

Kim Jong Un: 'Deranged' Trump will 'pay dearly' for threat


North Korean leader Kim Jong Un called President Donald Trump “deranged” and said in a statement carried by the state news agency that he will “pay dearly” for his threats.

Kim said that Trump is “unfit to hold the prerogative of supreme command of a country.” He also described the president as “a rogue and a gangster fond of playing with fire.”

“I will make the man holding the prerogative of the supreme command in the U.S. pay dearly for his speech calling for totally destroying the DPRK,” said the statement carried by North’s official Korean Central News Agency in a dispatch issued from Pyongyang on Friday morning.

DPRK is the abbreviation of the communist country’s official name, the Democratic People’s Republic of Korea.

The statement responded to Trump’s combative speech at the U.N. General Assembly on Tuesday where he mocked Kim as a “Rocket Man” on a “suicide mission,” and said that if “forced to defend itself or its allies, we will have no choice but to totally destroy North Korea.”

Kim characterized Trump’s speech to the world body as “mentally deranged behavior.”

He said Trump’s remarks “have convinced me, rather than frightening or stopping me, that the path I chose is correct and that it is the one I have to follow to the last.”

Kim said he is “thinking hard” about his response and that Trump “will face results beyond his expectation.”

It is unusual for the North Korean leader to issue such a statement in his own name. It will further escalate the war of words between the adversaries as the North moves closer to perfecting a nuclear-tipped missile that could strike America.

In recent months, the North has launched a pair of intercontinental missiles believed capable of striking the continental United States and another pair that soared over Japanese territory. Earlier this month, North Korea conducted its most powerful nuclear test to date drawing stiffer U.N. sanctions.

Guatemala lawmakers again vote not to lift Morales' immunity


Guatemalan lawmakers have voted for a second time in two weeks against stripping President Jimmy Morales of his immunity so that prosecutors could pursue a campaign finance investigation.

This time the votes in favor of lifting his immunity reached 70, 45 more than the last vote, but still well short of the 105 required.

The vote followed massive street protests calling for the resignation of Morales and legislators.

The government said in a statement Thursday that the vote should be understood within the context of the separation of powers.

Prosecutors say they found $825,000 of hidden expenditures and additional unexplained financing from Morales’ 2015 campaign.

Last month, Guatemala’s chief prosecutor and the U.N. anti-corruption commission chief requested that Morales’ immunity be lifted. Morales then tried to expel the commission’s chief.

The 3 Workplace Benefits Employees Want the Most


We all want to earn as high a salary as possible at our jobs. But the amount of money you get in your paycheck is only a portion of your total compensation package. In fact, in some cases, stellar benefits can more than make up for an otherwise mediocre salary.

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So which benefits are most important to workers today? Capital Group did some digging and found that millennials, Gen Xers, and baby boomers alike all agree on the following top three:

  1. Health insurance.
  2. Vacation time.
  3. A 401(k) plan with a matching incentive.

If you’re offered a job that doesn’t come with these key benefits, you may want to think twice before accepting it. Either that, or make sure your salary is more than enough to make up for it.

1. Health insurance

Though employer-subsidized health insurance could spell the difference between obtaining coverage and walking around uninsured, not all companies offer a health plan. In fact, in 2015, 16% of workers weren’t offered health insurance through their jobs.

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But it’s not just an insurance plan you should be looking out for; you’ll also want a decent subsidy. Without one, you’ll be on the hook for the majority of your insurance costs, and that could get pricey. In 2016, the average cost of employer-sponsored health insurance was $18,142. Of that, workers paid an average of $5,277, which means that employers covered the remaining $12,865. In other words, employers paid roughly 70% of the cost of insurance premiums, leaving workers to pay for just 30% of their total costs. And that’s not such a bad deal.

Of course, it could be the case that your employer covers 100% of your premium costs, but offers a lousy plan. If that’s the scenario you’re facing, then you’ll need to consider the additional out-of-pocket expenses you’re likely to face as a result of having lackluster health insurance, from high deductibles to hefty copays.

2. Vacation time

We all need an opportunity to escape the daily grind, tend to personal matters, or simply recharge our minds. Yet U.S. companies are notoriously stingy when it comes to paid time off. The average American worker, in fact, gets a mere 10 days of paid vacation per year, and while some companies are at least good enough to distinguish between vacation and sick time, others combine both into a single pool so that if you happen to get the flu one year, you can kiss that trip to Europe you’ve been planning goodbye.

In addition, the more money you make, the greater your chances of getting paid time. Though an estimated 91% of full-time U.S. employees receive paid vacation days, less than half of workers in the bottom fourth of earners are privy to this benefit.

Even if your company offers vacation time, it pays to do some digging and see what its policy really entails. It could be that you’re given 15 paid days off per year, but that your sick time is included in that bucket. You should also be aware that many companies won’t let you take paid time off until you’ve actually accrued it, so if you’re new to a job and need a day off early on, you may have to take it unpaid. Finally, be wary if your company offers an unlimited vacation-day policy, as these don’t always work out in employees’ favor.

3. A 401(k) match

An estimated 79% of Americans work for employers that sponsor a 401(k). If you’re one of them, you’re probably in luck, because of those companies that do sponsor retirement plans, 92% also offer to match employee contributions to varying degrees.

If you’re offered an employer match, be sure to contribute enough to take full advantage of it. Currently, a good 25% of workers don’t contribute enough of their earnings to capitalize on an employer match, and as such, give up a whopping $24 billion annually. On an individual level, the average employee who doesn’t snag a full match loses out on $1,336 a year, so if you’re offered free money from your company, be sure to actually get your hands on it.

A strong benefits package can carry just as much weight as your salary itself. Remember, perks like the ones above have an actual value, so if your company offers them, you might consider yourself lucky.

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3 Stocks With eBay-like Return Potential


Of all the dot-coms to go public during the late 1990s, only a few are still around today. eBay (NASDAQ: EBAY) is one such player — having found a business model, clientele, and interface that’s worked for almost two decades.

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Those factors have helped the stock surge over the years — from a split-adjusted $0.72 the day after its IPO to $38.50 today. That’s good for a 53,500% return — and shares of PayPal from the company’s spinoff, to boot.

Below, three Motley Fool investors try to single out other stocks that could have the same type of wealth-creating returns that eBay shareholders have enjoyed. Read on to see why Lending Club (NYSE: LC)Splunk (NASDAQ: SPLK), and Shopify (NYSE: SHOP) might be your best bets today.

Is this peer-to-peer lender finally turning things around?

Matt Frankel (Lending Club): Peer-to-peer lending platform Lending Club is finally starting to show signs of growth after several quarters of stagnant loan originations. With the stock down 74% since its first trading day in 2014, there’s certainly potential for a big investment win if things continue to go well.

For the second quarter of 2017, Lending Club’s loan originations grew by 10% year over year as well as sequentially, which came as a pleasant surprise to investors. Revenue grew by an impressive 35% from last year, and profit margins improved tremendously. What’s more, Lending Club’s CEO said that the company could approach GAAP profitability as we head into 2018, which would be a major improvement from the first half of the year.

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In the third quarter, Lending Club is expecting more impressive growth, with revenue growth of at least 10% over the second quarter.

Lending Club’s loan portfolio is currently about $11.1 billion in size, which may sound like a lot, but consider that the U.S. nonrevolving (loan) consumer lending market has more than $2.7 trillion in outstanding balances, not including mortgages, according to the Federal Reserve. To say that there’s room for growth would be a huge understatement.

While it’s too early to say whether Lending Club’s growth will continue, the potential is certainly there, and the recent data has been extremely positive. So, Lending Club could be worth a closer look for investors with a relatively high level of risk tolerance.

Big goals for big data

Rich Duprey (Splunk): Data analytics is evolving from even just a few short years ago when everyone seemed to be climbing aboard the so-called “big data” train. Yet being able to effectively transform the massive amounts of data that corporations produce into something usable that they can act is still a viable and growing industry.

Splunk is one of the more dynamic players in the space that helps businesses capture, store, analyze, and curate the information they generate. While it was dealt a bit of a blow after software giant Symantec decided against buying the company because it viewed Splunk as being overvalued, there is still tremendous opportunities for the big data player ahead.

In its latest earnings report, Splunk added over 500 new customers to its roster, giving it more than 14,000, and revenue recently surpassed $1 billion in trailing-12-month sales. It’s gunning for 20,000 customers by 2020 and over $2 billion in revenue.

Its stock trades in nosebleed territory at 84 times next year’s estimates, but it looks more reasonable at 56 times the free cash flow it produces. That would normally be an exorbitant price to pay and would seemingly validate Symantec’s valuation assessment, but with sales continuously rising and new business manifesting itself regularly as new devices hit the market regularly, creating even more data that needs to be processed, the losses Splunk is reporting today may very well turn into profits soon and the price at which its stock trades now may one day make Symantec look back wistfully on what it could have acquired.

Counting on an equally strong moat for superior returns

Brian Stoffel (Shopify): One of the biggest keys to eBay’s success was its moat: the network effect. As more and more sellers went to the platform, more buyers visited the site. And as more buyers visited, more sellers flocked to the platform. It was a virtuous cycle.

Shopify isn’t in the auction business — it focuses on helping small and medium-sized businesses develop an e-commerce presence and handle the logistics of bringing customer packages to their doorstep — but it is protected by an equally powerful moat: high-switching costs.

Any small business must spend most of its time focusing on what makes it special. If employees are spending too much time focusing on e-commerce interfaces or delivery logistics, they aren’t focusing enough on meeting their bigger goals. Because of that, and the actual costs associated with switching to another e-commerce platform, most companies would be loath make a change once they’ve signed on with Shopify.

That’s why the company’s growing user base is so important: Once customers sign on, they are largely locked in. When the company went public in 2015, it had 162,000 merchants signed on and revenue of $123 million. Fast-forward just over two years, the company now boasts over 500,000 merchants and trailing revenue of $509 million. That type of growth, protected by a durable moat, makes Shopify a stock to own if you’re looking for eBay-like returns.

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Brian Stoffel owns shares of Shopify. Matthew Frankel owns shares of PayPal Holdings. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends eBay, PayPal Holdings, Shopify, and Splunk. The Motley Fool has a disclosure policy.

Mormon-owned BYU ends ban on caffeinated soda


Mormon church-owned Brigham Young University ended a six-decade ban Thursday on the sale of caffeinated soft drinks on campus, surprising students by posting a picture of a can of Coca-Cola on Twitter and just two words: “It’s happening.”

The move sparked social media celebrations from current and former students, with many recalling how they had hauled their own 2-liter bottles of caffeinated sodas in their backpacks to keep awake for long study sessions.

The university never banned having caffeinated drinks on campus, but held firm to the ban on sales even when The Church of Jesus Christ of Latter-Day Saints in 2012 clarified that church health practices do not prevent members from drinking caffeinated soft drinks.

The ban has been in place since the mid-1950s. But officials with the school of 33,000 students in Provo, Utah, said Thursday that increasing demand prompted the change.

Students were abuzz about a change that meant they’ll no longer have to make off-campus runs to load up on their favorite caffeinated sodas to jolt their sleep-deprived brains.

“It’s about time,” said Sara McLaws, a junior advertising and graphic design major from Park City, Utah. “BYU is a great school but it’s behind in some ways. Just the small change of allowing caffeinated beverages — because it’s not against our religion — it’s high time.”

As cafeteria workers stocked refrigerators in the student center food court with caffeinated Diet Coke, Coca-Cola and Mr. Pibb, students joked about it being the “best day ever.

“I absolutely love it. It’s been a big game changer, even just day one,” said Mckay Murphy, a junior statistics major from Springville, Utah. “I’m a really big fan of caffeine and just soda in general so it’s nice to have it on campus with easy access.”

Caffeinated soft drinks will also be sold at sporting events that draw tens of thousands of fans. Sales of highly caffeinated energy drinks are still banned.

The Utah-based Mormon religion directs its nearly 16 million worldwide members to avoid alcohol and hot beverages such as coffee and tea as part of an 1833 revelation from Mormon founder Joseph Smith.

Alumni applauded a change many said was long overdue.

“I drank a lot of caffeinated beverages while I was here but none of them was purchased on campus,” said Christopher Jones, 34, a visiting BYU history professor and former student. “I never thought I would see the day so it’s exciting.”

Jones said he didn’t know whether to believe it when he saw the announcement on his phone so he walked to a student center and saw the first bottles being stocked in vending machines and refrigerators. He was one of the first people to buy one.

“Did I just buy the first-ever caffeinated Coke Zero Sugar sold in #BYU’s Wilkinson Student Center?” he tweeted. ‘Yes, yes I did.”

BYU alum Karl Jepsen, 48, was visiting his daughter who is now a student and basked in being able to drink “real Diet Coke” from the fountain machine.

“It’s a big day because we can finally drink on campus what we’re allowed to drink in real life,” said Jepsen, a 1994 graduate. “It’s been ridiculous that we couldn’t have caffeinated soda on campus.”

Amber Whiteley said she used to get nasty looks when she brought Mountain Dew to campus when she was a BYU student nearly a decade ago.

“You youths will never understand the struggle we went through,” Whiteley wrote jokingly in a Facebook post.

In a telephone interview, Whiteley said the change could impact views among Mormons about caffeine. She said some older Mormons in her Salt Lake City congregation still believe all caffeine is prohibited.

“Maybe this will be one more way to get the word out that it’s OK to have caffeine,” said Whiteley, a mother who is pursuing her doctorate in counselling psychology.


AP writer Michelle L. Price contributed to this story.

The Latest: Analysts say Alaska gets help in health bill


The Latest on the Republican effort to craft a health care law (all times local):

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6:20 p.m.

Analysts say that the health care bill that Republicans hope to push through the Senate next week contains language helping Alaska.

That’s the home state of Sen. Lisa Murkowski, among a handful of GOP senators who’ve not said how they’ll vote and whose backing party leaders desperately need. A showdown is coming next week.

The language would shield Alaska from cuts the legislation would make in Medicaid by limiting spending to a specified amount per beneficiary under the health care program for the poor.

That does not ensure Murkowski’s vote.

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She says she’s studying how the measure would affect Alaska. And studies released by the nonpartisan Kaiser Family Foundation and the consulting firm Avalere Health count Alaska among many states that would lose federal money under the GOP bill.


4 p.m.

An inscrutable provision in the Republican health care bill would apparently steer extra cash to Wisconsin. That’s the home state of GOP Sen. Ron Johnson, a co-sponsor of the bill.

One health care consultant says the language could mean hundreds of millions of dollars for Wisconsin, though others say it’s hard to tell how much money is at stake. Several analysts said they weren’t aware the provision would apply to any states but Wisconsin.

Johnson says in a statement “the innovative reforms of Wisconsin” should be reflected in funding formulas to correct “grossly unfair” distribution of money under President Barack Obama’s health care law.

Analysts say the language would let states count federal Medicaid dollars they’d rejected in a formula determining the size of states’ new health care block grants.


3:50 p.m.

A group that represents state officials who administer Medicaid programs is telling Senate Republicans to slow down and rethink their latest health care bill.

The board of the National Association of Medicaid Directors says its members are concerned that the Senate is rushing to make major changes in health programs for low-income people — with far-reaching consequences for state budgets that aren’t fully understood.

The group wants Congress to revisit Medicaid changes.

Republicans control 34 governors’ mansions, so the group’s statement stands as a bipartisan warning to GOP senators intent on voting next week.


11:45 a.m.

A study finds the latest GOP effort to end “Obamacare” would take federal dollars away from states that expanded Medicaid under the Affordable Care Act. The study says the states that didn’t expand Medicaid would initially get more federal dollars under the Republican Graham-Cassidy bill.

The nonpartisan Kaiser Family Foundation study came out Thursday. It estimates the states that didn’t expand Medicaid would get an average of 12 percent more.

The study says states that expanded Medicaid to serve more low-income adults would face a cut of around 11 percent from 2020-2026.

The biggest losers, percentage-wise, would be: New York, Oregon, Connecticut, Vermont and Minnesota. California would be the biggest loser in dollars.

The biggest winners would be: Mississippi, Texas, Kansas, Georgia, South Dakota, and Tennessee.

But the study says those gains could vanish over time.


3:55 a.m.

The Republican drive to upend ‘Obamacare’ with a new health law is getting a boost from a sense of political necessity.

There’s fresh evidence GOP voters are adamant that the party achieve its long-promised goal of replacing the Obama-era law. Success is far from assured but many Republicans are feeling pressure to get it done.

GOP Sens. Bill Cassidy of Louisiana and South Carolina’s Lindsey Graham have spent weeks concocting and selling the party’s new approach to scrapping Obamacare.

They say their proposal, shifting money and decision-making from Washington to the states, nearly has the votes it would need in a showdown expected next week, a deadline that’s focused the party on making a final run at the issue.