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USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.

Q: What happens to US Airways after the combination with American Airlines?

A: US Airways is about to fly off into the sunset.

The airline is in the process of being acquired by AMR, the parent company of American Airlines. Pending approval by shareholders and regulators, the deal is expected to be completed by the third quarter of this year.

Following the deal, US Airways will largely vanish. Existing shareholders in US Airways will receive a share of the new combined airline. US Airways investors, all told, will end up owning 28% of the new airline, which is estimated to be worth roughly $11 billion. The new airline is on pace to be the most valuable U.S. airline, with $40 billion in revenues based on 2013 projections.

US Airways investors will have a choice. They can sell the shares of the combined airline and realize their profit or loss. Or they can hold on, with the bet that the new, larger airline will have operational efficiency that makes it a more lucrative investment.

Long-term, investors haven’t done all that well with airline stocks. These stocks tend to be highly volatile and good for short-term speculation. The consummation of this deal will be the perfect opportunity for investors to decide if they’re in it for the long haul or not.

Copyright © 2013 USA TODAY, a division of Gannett Co. Inc.

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USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.

Q: How much needs to be invested to pay for college?

A: The rising costs of higher education have some students wondering if college is worth it. But many are making the decision without considering the role a portfolio can play to pay the costs.

There’ s no question that college costs continue to mount faster than the rise in many people’s incomes. The average cost, including all four years of tuition and fees at a public institution, was $37,800 in 2013, up 4.2% from 2012, says SavingforCollege.com. And college costs have risen by a 7.0% average annual rate since 1984, according to an analysis from Index Funds Advisors. That is a remarkable rate of increase, well exceeding the 2.9% average annual inflation rate measured by the consumer price index.

But investors should remember that if they start saving for kids’ college early and wisely, a well-balanced portfolio can help make the cost of college more affordable. A new tool from IFA used advantage financial modeling techniques to help investors figure out how much they must save for college: http://www.ifacollegesavings.com/.

Assuming the first year of college costs $15,000 and increases by 6% a year, investors would need to start investing $4,200 when their child was 5 years old and increase by 3% a year. Doing so, based on a portfolio of index funds that throttles back risk as college nears, would give the investor a 50% chance of having enough saved, IFA says.

VIDEO: Options for paying off your student loans

Copyright © 2013 USA TODAY, a division of Gannett Co. Inc.

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Facebook, the No. 1 social media company, just joined the Fortune 500 for the first time, according to this year’s list out Monday.

The annual list of companies, which ranks them by their 2012 revenue, is a way for investors to gauge the relative size of the operations of companies. Fortune magazine publishes the widely followed list once a year.

Facebook entered the list at 482nd with revenue of $5.1 billion, coming in just after cellphone carrier MetroPCS being bought by T-Mobile and just ahead of utility Pepco Holdings. Facebook is just one of 24 companies that were newly added to the list this year.

The list, though, also serves as a big reminder of how relatively small Facebook is given the inordinate amount of attention it gets.

The Fortune 500 is again topped by retailer Wal-Mart Stores with revenue of $469.2 billion, recapturing the spot held last year by Exxon Mobil, which is second on this year’s list, with revenue of $449.9 billion and Chevron, at No. 3, with revenue of $233.9 billion.

Another big riser is Apple, the maker of gadgets, which hit No. 6 on the list, thanks to its revenue of $156.5 billion. Were the rankings calculated by profits rather than revenue, Apple would have been second on this year’s list, courtesy of the high prices it charges for its products.

There aren’t many companies with young CEOs on the list, which makes Facebook somewhat unusual. Just two CEOs of companies are under 40, including Facebook CEO Mark Zuckerberg and Yahoo’s Marissa Mayer, who are 28 and 37 years old respectively. The oldest CEO with a company on the list is Dole Food’s David Murdock, age 90.

Copyright © 2013 USA TODAY, a division of Gannett Co. Inc.

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Famed investor Warren Buffett on Saturday addressed investors’ concerns his Berkshire Hathaway is getting too big to be effective and generally commented on the company’s future without him.

Thousands of attendees flocked to Omaha, the headquarters of the company that has large holdings in insurance, railroads and other stakes in big companies including Coca-Cola, to get the latest thoughts from Buffett at the annual shareholders meeting.

Even during the question-and-answer period, there weren’t any startling revelations, as Buffett largely used the meeting as a chance to expound on what he already said in the annual report.

While Buffett’s long-term investment track record makes him a rock star in the industry, at the meeting he faced a number of tough questions from investors questioning whether the company can keep up its run.

One high-profile investor bearish on Buffett’s prospects, Doug Kass of Seabreeze Partners, quizzed Buffett on whether Berkshire could continue to outperform the market when it is so large and needs to make bigger deals to make a difference. Buffett responded that he is still being disciplined about what he’s paying for the very good businesses he is finding.

Kass also pressed Buffett on the company’s CEO succession plan, raising doubts that Berkshire can continue to be a standout without Buffett.

Although Buffett didn’t give specifics, he did say that Berkshire is becoming a point of stability in the financial markets. When other investment firms are being overly aggressive and find themselves running low on cash, Berkshire will be there with ample pools of capital to make investments at attractive prices. At that point, the brand Berkshire Hathaway will generate solid returns for investors.

Buffett was also asked about the risks of the Federal Reserve’s current plan to buy Treasuries to keep interest rates very low. Buffett said he has faith in Federal Reserve Board Chairman Ben Bernanke, but did acknowledge that it will be a “shot heard round the world,” as soon as it looks like the Fed’s Treasury buying plan winds down.

The so-called Oracle of Omaha also briefly discussed his recent decision to join Twitter, an online forum for short messages shared over the Internet, and how social media could affect BusinessWire. BusinessWire is a system that’s traditionally used to disseminate corporate information, one that Berkshire Hathaway owns. The Securities and Exchange Commission recently gave companies the OK to share information on social media including Twitter, as long as they tell investors where to find the information. Buffett said that it’s critical for companies to get information out quickly, but also uniformly, and he cautioned companies against jumping into unproven forums.

Much of the contentiousness in some of the questions from the Berkshire investors is the result of Berkshire Hathaway reporting a 14.4% increase in book value per share in 2012, the yardstick of success Berkshire investors have used for decade. That increase lagged the 16% total return of the Standard & Poor’s 500. Furthermore, Berkshire has lagged the S&P 500′s total return in three of the past five years.

Berkshire also reported Friday first-quarter net earnings of $4.9 billion, an increase of 51%. And yet, during the first quarter, Berkshire’s book value increased 5.5%, trailing the 10% gain of the S&P 500.

“The philosophy is so clear and simple and clearly and simply stated that I am able to correctly anticipate the substance of all answers,” says Lawrence Cunningham, professor of law at George Washington University, who is attending the event. “The replies to Doug Kass’ questions about post-Buffett reflect the enduring power of the institution as far greater than any single person.”

Copyright © 2013 USA TODAY, a division of Gannett Co. Inc.

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Famed investor Warren Buffett is the latest celebrity to jump into the Twittersphere.

The well-known CEO of investment holding company Berkshire Hathaway sent out his first tweet, which read: “Warren is in the house” on May 2. His Twitter handle is @WarrenBuffett.

Buffett was not available for comment, but a spokeswoman at the Omaha-based company confirmed that the Twitter handle is authentic.

The Twitter feed displays the Verified account badge, a designation handed out by Twitter to confirm the identity of well-known personalities. Buffett’s joining Twitter comes just two days before the annual Berkshire Hathaway meeting for shareholders in Omaha, which draws throngs of Buffett fans and observers.

Berkshire has not put out an official press release or a regulatory filing alerting the public that Buffett plans to use the Twitter handle.

The Berkshire spokeswoman couldn’t confirm whether Buffett will use the account only for personal matters or will disseminate information about the company.

By mid-day, Buffett already had 130,581 followers. He was not following anyone.

Joining Twitter is “totally out of character” for Buffett, since the investor isn’t known for being particularly fond of technology, says Lawrence Cunningham, professor of law at George Washington University. And Buffett is best known for his lengthy, carefully written annual reports to shareholders known for thoughtful discourse and turn of phrase. There have been recent security breaches with Twitter, and there’s a risk that hackers can send messages pretending to be a celebrity like Buffett, Cunningham says.

But Buffett was perhaps attracted to Twitter by the fact the Securities and Exchange Commission recently gave the forum a thumbs up as a way to communicate with investors, Cunningham says. Twitter “remains an unusual forum for him,” Cunningham says. But the race of people to follow Buffett’s messages “is a verification of his leadership,” he says.

Copyright © 2013 USA TODAY, a division of Gannett Co. Inc.

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Investors still uncertain on Facebook’s future a year after its initial public offering got little to convince them either way after it reported first-quarter earnings Wednesday.

The company’s posted results were inconclusive. Adjusted earnings per share came in at 12 cents, a penny under Wall Street estimates. But unadjusted earnings per share of 9 cents beat the Street ‘s estimate by 2 cents.

Meanwhile, the company’s revenue growth continues to slow even as the number of users keeps climbing, up 26% to 665 million in March.

Soaring costs, up 60% in the first quarter vs. a year ago, are cutting into the social media giant’s bottom line.

Net income rose just 6.8% to $219 million vs. the same quarter in 2012. Uncertainty about Facebook’s outlook is reflected in the stock price.

Shares rose 13 cents a piece to $27.56 each in after-hours trading Wednesday. That’s 57% above the stock price’s 52-week low hit in September, no doubt a welcome development for shareholders. But the price remains 39% below the all-time $45 a share intraday high hit on the first day Facebook was public, when shares debuted at $38 a share.

Investors are wondering whether CEO Mark Zuckerberg can ramp up revenue growth. It was 37.8% in the first quarter, down from the 44.7% revenue growth in the same quarter a year ago and the 40.1% pace Facebook achieved in the final quarter of 2012.

Another big issue is skyrocketing costs, which others companies in the Internet industry are confronting. First-quarter expenses totaled $1.1 billion, a 60% increase over the same period a year ago.

And rising costs are eating away at profit growth. Facebook’s first-quarter net income grew just 6.8% to $219 million vs. the same quarter in 2012.

But while Facebook financials may not have been a home run, the company’s customer base hasn’t stopped growing — no small feat. In March, the number of people who use its service actively on a daily basis is heading toward 700 million.

Copyright © 2013 USA TODAY, a division of Gannett Co. Inc.

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LOS ANGELES — Apple is selling $17 billion in bonds in what’s expected to be the largest corporate bond sale in history, as the cash-rich tech company uses financial engineering to return money to shareholders while avoiding paying taxes.

The gadget maker is borrowing not because it has to: Apple is sitting on a pile of $144 billion in cash and investments. It’s taking the move for financial and tax purposes, allowing Apple to pay a dividend to investors without diverting cash piled up mostly outside the U.S. and triggering a tax.

A chunk of Apple’s cash, more than $100 billion, is held overseas, and bringing that money back to the U.S. could trigger tax rates of 20% to 25%. By borrowing instead, Apple frees up cash for a dividend while taking advantage of rock-bottom interest rates for companies, especially for those with the top credit ratings like Apple, says Marilyn Cohen of Envision Capital Management.

“Apple doesn’t want to bring money back to the U.S. and pay tax on it,” Cohen says. “Borrowing is cheap, so why not?”

Apple’s bond offering is one for the record book. If the $17 billion offering is sold successfully, and Cohen suspects it will as demand is roughly three times greater than supply, it would top the $16.5 billion offering by Switzerland’s Roche in February 2009, says Dealogic.

Whetting bond investors’ appetite even more, Apple is carving the bond sale into several parts with different terms to appeal to those with different goals. Some of the bonds mature in as little as three years, while others extend out to 30 years. “There is certainly a flavor for everyone,” says Diane Vazza of Standard & Poor’s.

Apple is under intense pressure from investors to find a way to return part of its massive pile of cash to investors as its growth stalls, profits fall and the smartphone market matures. The company has announced plans to pay $100 million to investors though the end of 2015 in the form of dividends and buying back stock, in a move that makes outstanding shares more valuable by reducing the number.

After initiating a dividend in March 2012, Apple is already paying out $11.5 billion in a annual dividend, making the company the largest dividend payer, topping ExxonMobil and AT&T. Apple shares rose $12.66 to $442.78, putting the dividend yield at 2.8%.

Apple is copying the moves by other large companies, including big tech firms, that have already been borrowing to take advantage of historically low rates. Last week, Microsoft sold nearly $2 billion in debt.

But while these companies are taking advantage of rates that are nearly 30% lower than they were a year ago, the question is why investors are buying.

Some large investors and pension plans look to diversify their holdings, and a position in tech can be welcome for some, Cohen says. But for individuals, the question is whether the low yields on debt sold by big companies are adequate to compensate for the risk.

“I wouldn’t buy (Apple bonds) for individuals, they tend to be more yield oriented,” Cohen says.

Copyright © 2013 USA TODAY, a division of Gannett Co. Inc.

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LOS ANGELES — Apple is selling $17 billion in bonds in what’s expected to be the largest corporate bond sale in history, as the cash-rich tech company uses financial engineering to return money to shareholders while avoiding paying taxes.

The gadget maker is borrowing not because it has to: Apple is sitting on a pile of $144 billion in cash and investments. It’s taking the move for financial and tax purposes, allowing Apple to pay a dividend to investors without diverting cash piled up mostly outside the U.S. and triggering a tax.

A chunk of Apple’s cash, more than $100 billion, is held overseas, and bringing that money back to the U.S. could trigger tax rates of 20% to 25%. By borrowing instead, Apple frees up cash for a dividend while taking advantage of rock-bottom interest rates for companies, especially for those with the top credit ratings like Apple, says Marilyn Cohen of Envision Capital Management.

“Apple doesn’t want to bring money back to the U.S. and pay tax on it,” Cohen says. “Borrowing is cheap, so why not?”

Apple’s bond offering is one for the record book. If the $17 billion offering is sold successfully, and Cohen suspects it will as demand is roughly three times greater than supply, it would top the $16.5 billion offering by Switzerland’s Roche in February 2009, says Dealogic.

Whetting bond investors’ appetite even more, Apple is carving the bond sale into several parts with different terms to appeal to those with different goals. Some of the bonds mature in as little as three years, while others extend out to 30 years. “There is certainly a flavor for everyone,” says Diane Vazza of Standard & Poor’s.

Apple is under intense pressure from investors to find a way to return part of its massive pile of cash to investors as its growth stalls, profits fall and the smartphone market matures. The company has announced plans to pay $100 million to investors though the end of 2015 in the form of dividends and buying back stock, in a move that makes outstanding shares more valuable by reducing the number.

After initiating a dividend in March 2012, Apple is already paying out $11.5 billion in a annual dividend, making the company the largest dividend payer, topping ExxonMobil and AT&T. Apple shares rose $12.66 to $442.78, putting the dividend yield at 2.8%.

Apple is copying the moves by other large companies, including big tech firms, that have already been borrowing to take advantage of historically low rates. Last week, Microsoft sold nearly $2 billion in debt.

But while these companies are taking advantage of rates that are nearly 30% lower than they were a year ago, the question is why investors are buying.

Some large investors and pension plans look to diversify their holdings, and a position in tech can be welcome for some, Cohen says. But for individuals, the question is whether the low yields on debt sold by big companies are adequate to compensate for the risk.

“I wouldn’t buy (Apple bonds) for individuals, they tend to be more yield oriented,” Cohen says.

Copyright © 2013 USA TODAY, a division of Gannett Co. Inc.

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Being debt-free and scoffing at dividends used to be points of pride for the best-known tech companies when they were scrappy upstarts. Not anymore.

Apple is in the process of selling debt for the first time in more than two decades, following Microsoft, which sold nearly $2 billion in debt last week. These companies are looking forward to taking advantage of interest rates at or near unheard-of lows. Apple’s debt is expected to be priced as soon as Tuesday.

“It’s just free money,” says Bill Larkin of Cabot Money Management. “It’s very cheap (to borrow) right now, so companies figure, ‘Let’s lend to them.’ ”

But the move of these tech giants to sell bonds is unfamiliar ground, since many have long prospered by using their cash flow to plow money into their operations and research. Big tech, though, is rethinking its aversion to debt for a variety of reasons, including:

• Irresistibly low interest rates. Companies with the highest credit ratings, which Microsoft and Apple are among the tops, can borrow by paying just 1.47 percentage points more on average than U.S. Treasuries with comparable lending periods, says Bank of America Merrill Lynch. That’s 27% cheaper than it was a year ago. “Credit spreads are very narrow,” says Jay Mueller of Wells Fargo. Microsoft sold its bonds carrying an overall rate of 2.41%, with the 10-year bonds at a 2.125% rate. That’s just 0.46 percentage points over the 10-year Treasury note yield.

• Raising cash in the U.S. to avoid taxes. While tech companies may be flush with cash, much of the money is overseas, says Jamie Rizzo of Fitch Ratings. Bringing that cash back to the U.S. would trigger taxes, with rates totaling 20% to 25%, he says. Raising money by selling bonds here avoids the need to pay that tax, he says.

• Desire to return cash to shareholders. Tech companies, especially Apple, continue to be under pressure to return their record piles of cash to shareholders, Mueller says. Tech companies, including Apple and Microsoft, have been paying dividends, increasing those dividends or looking to buy back their shares in order to make outstanding shares more valuable.

Meanwhile, with investors seeking yield amid low interest rates, there’s ample appetite for bonds from cash-rich tech companies, says Diane Vazza of Standard & Poor’s. So far this year, U.S. companies sold $292 billion in debt, on pace to surpass the $1 trillion issued last year, Vazza says. Investors are grabbing up bonds, and big tech is happy to sell to them. “There’s so much demand for credit,” Vazza says.

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The corporate profit machine may be churning out better-than-expected results, but investors are getting increasingly bothered by companies’ inability to find real growth.

At a quick glance, the first-quarter earnings season appears to be a banner one, now that more than half, 271, in the Standard & Poor’s 500 have reported first-quarter results. These companies are reporting 3.6% earnings growth so far, a big upside surprise given that back on April 1 analysts were only predicting earnings would rise 0.5%, says S&P Capital.

At this, clip companies are expected to report a record pile of corporate profit this year, topping last year’s record, says Howard Silverblatt of S&P Dow Jones Indices. A big driver of the better-than-expected bottom line comes from the fact that 73% of companies have beaten expectations, a powerful surprise that continues a trend in the previous four quarters of bonanza profits, says John Butters of Factset.

But while these headline statistics give a positive view on what has been a big driver behind the market’s powerful rally to new highs, there are reasons to worry the results may not be as good as thought, including:

• Disappointing revenue growth. Investors were hoping by this point in the economic cycle, companies would be able to find growth selling new products and services or tapping new customers. But in the first quarter, revenue is coming in 0.6% lower than in the year-ago period, down from the 0.9% growth expected at the beginning of the year, Butters says. Just 44% of companies have beaten revenue estimates, while 56% have missed, making it the third quarter in the past four with more cases of revenue falling short than coming in better than expected.

• Lingering stagnation from Europe. Much of the revenue weakness is hitting companies that rely most on Europe, says Sam Turner of Riverfront Investment Group. The biggest sources of upside revenue surprises have been sectors like utilities and telecom, which don’t rely on Europe, while large technology and industrials have been hurt most, Turner says. Of the 23 Dow Jones industrial average components to report so far, 15 have missed expectations including International Business Machines, Caterpillar and United Technologies, Butters says.

• Separation of sectors. There’s a wide discrepancy between the earnings growth of various sectors. Telecom is coming in with the strongest growth, up 16.7%, powered by Verizon and Sprint. But technology remains the sole area looking at a profit decline, falling 0.4%, says S&P Capital IQ.

Looking forward, companies aren’t all that optimistic, either. Roughly 80% of the companies that have given guidance have been negative and analysts have cut their profit forecast for the second quarter to 2.4% from 4.5% at the end of March, Butters says.

Ironically, investors see these negative results as a positive for the stock market, which is up 11% this year, since it keeps government stimulus coming, Turner says. “The expectation is that the data is so bad, it’s good, for central banks around the world to keep the foot on the pedal,” he says.

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