TIME Cloud Computing

IBM Is Stumbling Its Way Into the Future

A general view of IBM's 'Watson' computing system at a press conference at the IBM T.J. Watson Research Center on January 13, 2011 in Yorktown Heights, New York.
Ben Hider—Getty Images A general view of IBM's 'Watson' computing system at a press conference at the IBM T.J. Watson Research Center on January 13, 2011 in Yorktown Heights, New York.

Despite ambitious plans for its future, the technology giant faces serious hurdles

The problem with being a tech giant is that, no matter how hard you try to charge into the future, you’re always weighted down by the past. And lately, no company has exemplified this conundrum better than IBM.

In the past few months, IBM has rolled out innovation after promising innovation. The company launched an analytics tool for the healthcare industry based on its Watson artificial-intelligence platform. Watson tools for other industries are on tap, and meanwhile Watson has written a cookbook.

IBM is also building a cloud platform for the Internet of things that companies can use to make sense of data collected from far-flung sensors embedded in a wide variety of devise. The company not only announced its Hybrid Cloud–meshing IBM’s own cloud with a client’s on-premise machines–it signed the US Army up as a key customer. Oh, and it’s building new computers that mimic the human brain.

The company is serious about investing in these new ideas. CEO Ginny Rometty told investors in February IBM would spend $4 billion this year in growth areas like analytics, cloud computing, mobility and security software. These areas accounted for only 27% of IBM’s total revenue in 2014, but Rometty sees revenue growing to $40 billion from $25 billion in four years.

This all sounds encouraging, but now look at the first-quarter earnings report IBM delivered on Monday. Revenue fell 12% year-over-year to $19.6 billion and came in $100 million shy of analysts’ consensus forecast. That marked the 12th straight quarter of falling revenue and the eighth time in the last nine quarters that IBM missed its revenue estimate. In fact, it was IBM’s lowest quarterly revenue since the first quarter of 2002.

Explaining the weak revenue, IBM pointed out that the decline reflected the sale of certain assets like its low-end server unit and the effect of a strong US dollar. (IBM warned that if the dollar stays at current levels it could slice 80 cents a share off full-year EPS.) Excluding those factors, IBM’s revenue was still flat with the year-ago quarter. Net income fell 2.4% to $2.3 billion.

How can IBM have so many promising technologies and such a weak financial performance? The answer is a classic innovator’s dilemma, in which successful companies struggle to stay atop their industries as they face newer, more efficient technologies and business models that slowly drain life from their cash cows.

Enterprise IT giants like IBM, SAP and Oracle face one such threat from cloud computing. The choice they face is an ugly one: Dig in and maintain a profitable but slowly dying business; or invest in those same innovations, thereby cannibalizing their core business. IBM has made the bold choice to invest in the future, even if it’s eating into its present success.

This isn’t new. Throughout its history, IBM has backed out of aging businesses to focus on new areas of growth. In the past four decades, it’s sold off its Selectric typewriters to Lexmark, its copier business to Eastman Kodak, its hard-disk drive unit to Hitachi, and its PC and low-end server divisions to Lenovo. In the late 90s, the company broke from its roots to push into IT services. Under Rometty, IBM is again making a transition into areas it sees as growing for years.

The catch is that areas like cloud-based services are growing because they’re cheaper, lither versions of the legacy services IBM and others have depended on for profits. In a conference call discussing earnings Monday, CFO Martin Schroeter talked about “a pretty dramatic shift of spending within IBM… Some of what you’re seeing in that core business decline is that engineered shift toward the strategic imperatives.”

“Strategic imperatives” is IBM-speak for the growth markets it’s pushing into: data analytics, cloud, mobile and security. Behind the bigger headlines of falling revenue, IBM is actually seeing some success here. Analytics revenue rose more than 20% last quarter. Cloud revenue—including the hardware that lets clients build their own “private cloud”—jumped 75%. This business has brought in $7.7 billion in revenue during the past 12 months.

Looking at cloud as a service alone, revenue totaled less than $1 billion. Again, this represents a tiny portion of IBM’s total revenue. But consider that at an annual rate it’s bringing in $3.8 billion. By way of comparison, Amazon’s Web Services, which focuses on cloud hosting, brought in $4.6 billion in revenue in 2014 with razor-thin margins. From that perspective, it’s not hard to imagine IBM as a rising leader in the emerging cloud economy.

As promising as this future growth sounds, it doesn’t change the fact that slowing revenue has pulled IBM’s stock down 22% in the past two years, a stretch when the S&P 500 has risen 32%. Investors remain patient, however, partly because IBM has doled out $26 billion in stock buybacks over that period, in addition to $8 billion in dividends.

Investors may grumble, but few are rebelling. Earlier this month, Reuters said top shareholders were seeking out activist investors to shake up IBM. But at least two such activist firms balked, in part because they felt Rometty was doing as good a job as could be expected with a tough transition. Another deterrent was Warren Buffett, who seems to support Rometty’s work. Berkshire-Hathaway has been adding to its position in IBM, which now stands at a 7.8% stake.

So go ahead and shake your head at IBM’s earnings. Yes, the company set clear goals for 2015 profits and has fallen short. Yes, revenue is shrinking and may do so in future quarters. But the company deserves credit for the painful work of building a foothold in the future of tech, even at the cost of easy profits today. IBM has chosen to address the investor’s dilemma head on, knowing no giant can endure over time without some pain along the way.

Read next: All Your Modern Technology Is Thanks to This 50-Year-Old Law

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MONEY College

When a Two-Year College Degree Pays Off

Dental hygienist
Peter Dazeley—Getty Images

You generally do better with a four-year degree, but sometimes a quicker diploma can launch you on the road to success.

Steven Polasck of Corpus Christi, Texas, liked math and science in high school. He considered attending a four-year college but ultimately decided to use his strengths to get a two-year degree in instrumentation from Texas State Technical College. He has not looked back.

“I went to work on the Monday after graduation,” said Polasck, 27, who monitors and fixes systems at a Valero Energy Corp refinery. “The first year I made almost $80,000.”

An associate’s degree has long been considered an inferior alternative to a bachelor’s degree. Now that more states are tracking their graduates’ incomes, however, it is becoming apparent that some two-year degrees offer much higher earnings than the typical four-year degree—at a fraction of the cost.

Making more students and parents aware of these better-paying options could help ease the college affordability crisis, which has so far led to more than $1 trillion in student loan debt.

The average net annual cost of a community college education—for tuition, fees, room and board, minus financial aid—is just under $6,000, according to the College Board. The average undergraduate at a four-year public college pays twice that amount out of pocket, and most students attending a public school now take five or more years to complete their degrees.

The fact that people still think a bachelor’s degree is always the better option is probably due to popular charts that hang in many high school guidance counselor offices, said Michael Bettersworth, vice chancellor and chief policy officer for Texas State Technical College, which has nearly 30,000 enrolled students.

The “chart” is a graphic representation of earnings by educational attainment, using Bureau of Labor Statistics data showing professional degrees at the top, bachelor’s degrees in the middle and associate’s degrees just above high school diplomas.

Median weekly earnings for those with bachelor’s degrees last year reached $1,101, or $57,252 a year, compared to $792, or $41,184 annually, for those with an associate’s degree, according to BLS.

But the chart fails to capture the full range of salaries earned by those with two-year degrees, particularly those in technical fields, Bettersworth said.

“It’s far more important what you study than how much you study,” he said.

While the average starting salary for somebody with a bachelor’s degree in Texas is around $40,000 per year, many technical associate’s degrees offer first-year pay of more than $70,000, according to College Measures, which tracks earnings and other outcomes for higher education.

Some well-paying jobs require less than two years of study. A line worker certification, a requisite for working on electrical power lines, takes about a year and brings an average starting salary of $70,000, Bettersworth said.

Texas is one of the states that has been gathering income data as a way to gauge and improve the success of its public college graduates. Other states conducting similar studies include Arkansas, Colorado, Florida, Tennessee, and Virginia.

The earnings advantage of some two-year degrees can persist throughout a worker’s lifetime. More than one in four people with associate’s degrees end up making more than the average of somebody with a bachelor’s degree, according to a 2011 report by Georgetown University’s Center on Education and the Workplace.

Four of the 30 fastest-growing job categories according to BLS require associate’s degrees. The jobs include dental hygienist (median annual earnings of $70,210), diagnostic medical sonographers ($65,860), occupational therapy assistants ($53,240) and physical therapist assistant ($52,160).

Other jobs with strong growth and above-average pay that require two-year degrees are funeral service managers ($66,720), web developers ($62,500), electrical and electronics drafters ($55,700), nuclear technicians ($69,060), radiation therapists ($77,560), respiratory therapists ($55,870), registered nurses ($65,470), cardiovascular technologists and technicians ($52,070), radiologic technologists ($54,620), and magnetic resonance imaging technologists ($65,360).

Polasck said it is not unusual for experienced people with his type of degree to make up to $150,000 a year with “reasonable” amounts of overtime. Job prospects are good even with declining oil prices, since refineries produce gas and other byproducts regardless of prevailing prices.

“If I can go to this school for two years, and not be in much debt at all at the end, and be making pretty good money to start, why wouldn’t I do that?” Polasck said. “It’s common sense.”

TIME Media

Why Investors Are So in Love With Netflix Right Now

The Netflix company logo is seen at Netf
Ryan Anson—AFP/Getty Images The Netflix company logo is seen at Netflix headquarters in Los Gatos, CA on April 13, 2011.

Nothing is ever straightforward about Netflix earnings–and last quarter was no exception: Netflix shares surged 12% in after-hours trading Tuesday after it reported earnings per share of 38 cents, a long way from the 63 cents a share that analysts had been expecting.

To explain that disconnect, you either have to conclude that Netflix investors have lost their minds or that there’s something else they saw and liked in the numbers. With Netflix, it can be both at once.

Because it’s as if there are multiple companies being analyzed here: the one poised to take over the world, or the one that is breaking the bank to get there. The stock that’s risen 4,000% over the past decade, or the speculative stock with the PE ratio above 160. In the case of Netflix, there’s plenty of room for both arguments.

One reason investors were willing to overlook the big earnings miss is that much of it was caused by the strong US dollar, which lowered international revenue 48%. Without the foreign-exchange losses, Netflix would have reported a 77-cents-a-share profit, above the Street’s expectations. As it was, Netflix reported a $14.7 million net profit, less than half the $35.8 million profit a year ago.

Investors, it seems, are willing to overlook that because of another metric, one that’s particularly scrutinized at Netflix these days: new subscribers. In the US, Netflix added 2.3 million new subscribers net of cancellations, which was well above the 1.8 million adds it had expected. Internationally, Netflix added 2.6 million net subscribers, also above the 2.25 million it forecast.

That was largely because of new original programming the company has creating, like the third season of House of Cards and the debut of new Netflix creations like Tina Fey’s Unbreakable Kimmy Schmidt and the star-studded drama Bloodline. Netflix has been cultivating series that can appeal in the US as well as abroad, and the new subscriptions suggest it’s working for now.

This quarter, the company is rolling out even more original content, such as the Marvel series Daredevil, released last Friday; a documentary series, Chef’s TableGrace and Frankie, a comedy starring four Emmy award winners; Sens8,a scifi series created by the Wachowskis; and the return of Orange Is the New Black. Those should keep new subscribers signing up, but they’re also adding to spending.

It’s the mounting spending that the Netflix bears often point to. Streaming content obligations (basically, licensing fees for titles coming in the future) rose to $9.8 billion in the last quarter from $7.1 billion a year ago. These figures don’t necessarily affect the current income statement as much as give an indication of how spending will happen in the future, but they are daunting numbers nonetheless.

For the last quarter’s spending, Netflix offers another home-brewed metric, contribution profit. It’s revenue minus content spending and marketing expenses, so it excludes tech infrastructure or administrative costs. It’s an unorthodox metric, but it at least shows how, as Netflix pushes into new markets, content and marketing are performing against revenue.

In the last quarter, the contribution profit from US streaming operations rose 55% year over year to $312 million, or 32% of revenue. International streaming, however, incurred a contribution loss of $65 million, up from a loss of $35 million a year ago. In the current quarter, the contribution loss will swell to $101 million.

On a video call discussing earnings (like its home-brewed metrics, Netflix has its own style of conference call, where a pair of rotating analysts ask questions on a Google hangout), CFO David Wells was asked about how long the spending would keep growing. He reiterated a warning Netflix has made before, that the losses could grow throughout 2015, thanks in good part to marketing in newer markets in Europe and Asia.

“We’ve said we are committed to running the business at global breakeven and we have ambitious plans for international growth,” Wells said. “We’ll have some bigger launches, and we’ve described them as meaningful and significant investments in back half of this year. So you should expect those losses to trend upward and into ’16, and then improve from there.”

The case Netflix has been making has been that it’s spending aggressively to take advantage of a global, long-term trend away from traditional broadcast and cable TV and toward TV streamed over the Internet. Others, like HBO, Hulu and possibly Apple are approaching the same market, but Netflix is racing less to compete with them today than to be ready as the audience and demand for Internet TV emerges.

To get there, Netflix has made it clear it will spend what it needs to, even at the risk of losses or shrinking profits this year. Future content obligations are growing, Wells said, but not faster than current revenue. The company’s big bet is the spending today will translate into faster growth and more profit starting in 2016.

This explains why subscription growth is so closely watched. It’s the clearest measure of whether the spending on new programs and new markets is actually delivering. The bulls believe this long-term growth will come as Netflix has promised.

What it doesn’t explain is why the stock sees such volatile swings whenever Netflix reports its quarterly earnings. For that, you need to look to the stock speculators, who have for years driven Netflix shares to euphoric heights that make its executives uncomfortable, if not themselves.

Netflix’s business may be as bullish as ever, but that doesn’t mean the stock price is fairly valued. It rose $56 to $531.50 on Tuesday’s earnings, making it worth 162 times the profit Netflix is expecting this year. Netflix is making some risky but realistic investments in its future growth. But that risk is nothing compared to what investors are taking on by buying at such a crazy valuation.

TIME Companies

This Company’s Stock Goes Up With Demand for Police Transparency

The share price of body camera maker TASER International has ticked up since last summer

The series of controversial incidents of police brutality that have rocked the U.S. in recent months has ignited a movement for increased transparency among law enforcement officers — and the evidence can be seen in the market performance of one of the nation’s leading manufacturers of police body cameras.

The public, activists and some lawmakers have clamored for greater police accountability in the wake of a string of deaths linked to law enforcement brutality, including the death of Staten Island resident Eric Garner in July while being held in an illegal ‘chokehold’ by an NYPD officer, the shooting of unarmed teenager Michael Brown in Ferguson in August, and Saturday’s shooting of Walter Scott in South Carolina by a white cop during a traffic stop.

In response, many local police authorities have begun testing or using police body cameras which record their interactions with the public. And while detailed statistics on the adoption of such equipment are thin on the ground, activity on Wall Street suggests increased demand.

Though best known for its stun guns, TASER International has become the market leader among police body camera makers. Its stock price has ticked upward as it sealed agreements with high-profile police departments in Los Angeles and New York City, and analysts took note. Oppenheimer analyst Andrew Uerkwitz stated in a December research report that he believes TASER has an “opportunity for long-term growth.” Uerkwitz summarized his analysis of the Arizona-based company by stating it has a “shockingly strong story.” The chart below shows the company’s performance over the past year:

The company’s stock leapt again on Thursday on the back of a deal to provide body cameras and digital storage for the City of London police department, and it is now nearing a 52-week high. A smaller rival, Digital Ally, has also seen its share price soar over the past few days.

TASER CEO and co-founder Rick Smith says incidents like the one in South Carolina have shown the need for better availability of equipment and more transparency. “The [shooting of Walter Scott] to me feels even more impactful because we know more about it. And frankly, it’s hard to watch that video and not feel sick,” he tells TIME. “A year ago a number of agencies were questioning whether officer-worn cameras were a good idea. That is completely flipped.”

Though TASER’s overall performance may reflect a growing appetite for police body cameras, the market hasn’t yet reached anything like its full potential. President Barack Obama requested last December $263 million for a three-year investment package to increase body cameras nationwide. Meanwhile, other police departments, like the NYPD, have recently launched body camera pilot programs as they begin introducing the technology.

“Current surveys suggest a quarter of police departments are using to some extent body cameras,” ACLU senior policy analyst Jay Stanley tells TIME. “There are 17,000 police departments roughly in the U.S. I’d expect that over the next three to five years, we’ll see the number of departments using them really skyrocket, up to 70 or 80 percent.”

TIME Careers & Workplace

There’s Actually a Secret to Getting a Raise—And This Is It

money-calendar
Getty Images

And, no, it's not switch careers

It’s no surprise that working in a big city like New York, Chicago or Los Angeles means you might earn more, but as it turns out, where you live can affect how much you earn pretty much anywhere in the country. In other words, if you’re not happy with what you make, think about switching cities rather than careers.

TheLadders.com crunched the numbers to see just how big of a difference location can make in your earnings potential. It identified 21 jobs with salary gaps of 98% or higher as well as the highest- and lowest-paying average salaries by city.

The top-paying location for nine of the 21 jobs is San Francisco, and three others are in two more California cities, Monterey and Sacramento. “San Francisco’s booming technology sector has created an unmet demand for particular skill sets, forcing companies to compete for these scarce talent resource and pushing up top tier salaries,” says Shankar Mishra, vice president of data science at TheLadders.

San Francisco is also a notoriously expensive place to live, of course. Longtime residents have protested what they see as an intrusion by big tech companies like Google pushing rents higher and clogging the streets with private shuttle buses for employees.

Many of the jobs with the biggest gaps are in marketing or communications, but almost every field turns up somewhere on the list, from tech to law to financial services to healthcare. In fact, a technology job tops the list. Information security officer jobs have the biggest gap identified by TheLadders at 139%. Workers in Boston make an average of $113,000, but people doing the same kind of job in Miami only pull down an average of $47,000.

In terms of dollars, the job with the biggest gap — a whopping $91,000 — is an enterprise account manager. People with this job make an average of $168,000 in Baltimore, but earn a comparatively paltry $77,000 in Milwaukee. (It’s kind of a vague title, but generally, it refers to a professional who sells and manages telecommunications or technology services to corporate clients.)

Once again, resurgent tech boom is a driving force behind this trend, Mishra says. “Big players in the technology industry are influencing the top end of salaries quite a bit, and the impacts aren’t just on tech-specific roles, but for other functions too,” he says.

For instance, this is why so many jobs in marketing and communications show up with big variations in pay and command much higher salaries in cities with strong high-tech sectors like San Francisco and the Silicon Valley area.

“Demand for most of the top-paying jobs in this field is being driven by the technology sector,” Mishra says. “To contrast, demand for these kinds of jobs is much lower in cities like Little Rock or Charleston,” he says. Those two Southern cities had the lowest average salaries for director of marketing and director of communications positions, respectively.

Two legal jobs — associate general counsel and associate attorney — made the list, and the results are similar. These positions pull down top salaries in the nation’s capital, while the lowest pay for both is in Louisville.

“The excess of lawyers combined with a lack of demand in Louisville has suppress their median salaries,” Mishra says. “The presence of the federal government in D.C. generates enough demand to keep pushing the top end of salaries in this field even higher.”

MONEY Warren Buffett

Warren Buffett Just Predicted the Next 50 Years for Berkshire Hathaway

Warren Buffett
Lacy O'Toole—NBCU Photo Bank via Getty Images

While the days of Berkshire's amazing 20% average annual returns are likely a thing of the past, Buffett expects Berkshire to outperform the market.

Berkshire Hathaway is one of the most fascinating stories in the history of investing. In the 50 years Warren Buffett and his management team have been running things, a struggling textile company has transformed into one of the largest corporations in the world, with dozens of household-name subsidiary companies and an equally impressive stock portfolio. In the process, early investors have gotten very rich, with the per-share book value rising from $19 to $146,186 during the past half-century.

In Buffett’s most recent letter to shareholders, he discussed his thoughts on Berkshire’s next 50 years. Here’s what Berkshire investors can expect — straight from the pen of the Oracle of Omaha:

Berkshire will not be a good short-term trade, ever

Buffett said that the chance of permanent capital loss with Berkshire is the lowest among any single-company investment. But he added a caveat: If the company’s valuation is high, say approaching two times book value (it’s at about 1.5 times book value now, so not too far off), it could be years before investors realize a profit.

In other words, Berkshire has never been, and will never be, a good “traders’ stock.” The company has one of the most shareholder-friendly business models in the world, but it is geared exclusively toward long-term investors. As a result, Buffett recommends that investors should look elsewhere for investment options if they plan to hold their shares for less than five years.

Berkshire can survive the “thousand-year flood”

Not only will Berkshire be prepared to withstand any economic storm, but the company is positioned to capitalize when things go bad. The company maintains a huge earnings stream, a great deal of liquid assets, and virtually no short-term cash requirements.

This combination keeps Berkshire immune to virtually any adverse market conditions. This is illustrated by the company’s performance during the financial crisis of 2008-09, when Berkshire not only survived, but took advantage of “discounts” in companies like Goldman Sachs.

Berkshire will maintain rather large stockpiles of cash (at least $20 billion at all times, according to Buffett) in order to weather any storm and capitalize on developing opportunities. As Buffett said, “if you can’t predict what tomorrow will bring, you must be prepared for whatever it does.”

Earnings power will continue to grow

Perhaps Buffett’s boldest prediction is that Berkshire can build its per-share earning power every year. This might sound like a lofty expectation, considering he’s talking about a five-decade period. However, it could be achievable.

Now, this prediction doesn’t mean earnings will increase every year. It does, however, mean that each and every year, Berkshire will create the potential to earn more than it did the year before. Actual earnings gains (and declines) will depend on the U.S. economy, but the company will keep moving forward no matter what the economy is doing.

Past performance will not be duplicated

Many casual observers were put off by the following line from the letter: “Berkshire’s long-term gains … cannot be dramatic and will not come close to those of the past 50 years.”

However, this really shouldn’t be much of a surprise. There is only a finite amount of money and investment opportunities in the world, and as companies grow, it gets tougher and tougher to maintain a high growth rate. For example, Apple has increased in value by more than 100-fold since 2004. Would it be reasonable to expect the same over the next decade? Of course not! That would make Apple a roughly $70 trillion company.

The same principle applies to Berkshire. Repeating its performance of the past 50 years would produce a book value per share of roughly $1.2 billion, along with a market capitalization of more than $900 trillion, which would be completely impossible in the absence of extreme inflation.

But the right people are in place to deliver for shareholders

While his time at the helm might be nearing its end, Buffett reassured investors that over the next 50 years, no company will be as shareholder-oriented as Berkshire. Buffett is completely confident the company will have the right CEO, management team, and investment specialists in place, as well as safeguards to protect shareholders in the event that the wrong person is put in charge.

As Buffett stated in a past letter to shareholders: when the market soars, Berkshire may underperform; when the market is down, Berkshire will outperform; and over any full economic cycle, Berkshire will outperform the markets. While the days of Berkshire’s amazing 20% average annual returns are likely a thing of the past, the company’s winning philosophy and business model remain the same, and will deliver for shareholders for decades to come.

MONEY College

Graduates of These Colleges Make the Most Money (and It’s Not Just the Ivies)

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Lawrence Sawyer—Getty Images

Party schools do better than you'd think—but there's a twist.

Far and away, the nation’s science, math, technology, and Ivy League colleges produce the highest-earning graduates, according to PayScale.com salary data released today.

The average grad of math- and science-heavy colleges such as Harvey Mudd, CalTech, and the Georgia Institute of Technology out-earned grads of any other type of college, netting $677,000 more in earnings over 20 years than someone who didn’t attend college at all (minus the cost of attending the college).

Graduates of the Ivy League came in a close second, netting $650,000 in extra earnings over the first 20 years of their career. Both groups of schools report returns on investment that are at least 80% higher than any other type of school in PayScale’s analysis.

Hope if You’re Hopeless at Math

But what if you’re not a math genius, or lucky enough to get into an Ivy League college?

PayScale says the next-highest-earning group of colleges are so-called “party schools,” such as the University of Florida, Syracuse University, and Penn State, whose graduates’ salaries over 20 years added up to a net extra $354,000.

Graduates of research universities, such as large private universities and flagship public schools, and so-called “sober” schools, such as religious schools, commuter colleges, and military academies, earned just slightly less, on average, than party school alums.

Graduates of arts and liberal arts schools reported comparatively low salaries, notching a return on investment over 20 years of about $200,000. Music school graduates had the lowest average 20-year return of just $128,000 over their costs.

So Party On?

PayScale spokeswoman Lydia Frank says neither parents nor students should take the party school findings too seriously, however. “That was just a fun comparison and kind of surprising,” she says. “Apparently there is some studying happening in between partying.”

What’s more, the salaries reported on PayScale.com are only for college graduates whose education ended with a bachelor’s degree and who work full-time. All the students who couldn’t balance partying with class work and dropped out aren’t counted.

That could be a big number. There is plenty of research that shows that students whose partying involves lots of drinking flunk or drop out at a higher rate than those who have more moderate social habits. And federal earnings data show that college dropouts have a harder time finding jobs, and earn less, than college graduates do.

Meanwhile, other studies shows that the more time undergraduates spend intensely studying–especially studying alone–the better their odds of getting a good job after school.

Scott Carrell, an economist at UC Davis who has studied how alcohol use affects academic performance, says that the PayScale findings could reflect one important truth: Students who manage to graduate from a party school may have developed self-restraint, social skills, and networks of friends that help them find better paying jobs after graduation.

But Carrell also questioned the accuracy of Princeton Review’s labeling of selective universities such as the University of Florida and UC Santa Barbara as “party schools” over less selective and, perhaps, jollier schools such as Chico State University.

The bottom line, Carrell says, is that students shouldn’t conclude from the PayScale data that it pays to go to a “party” school because, he says, “you don’t know if you will be the one who drops out.”

The Top 10

These 10 colleges were ranked highest in PayScale’s latest return on investment analysis: the total average earnings for each school’s graduates over 20 years, minus the cost of attendance and the average pay of someone who didn’t attend college.

College 20-year ROI
Harvey Mudd College $985,300
California Institute of Technology (Caltech) $901,400
Stevens Institute of Technology $841,000
Colorado School of Mines (in-state) $831,000
Babson College $812,800
Stanford University $809,700
Massachusetts Institute of Technology (MIT) $798,500
Georgia Institute of Technology $796,300
Princeton University $795,700
Colorado School of Mines (out-of-state) $771,000

Money uses PayScale.com earnings data as a part of its college rankings, but balances that data with graduation rates, student loan repayment rates, educational quality indicators, and value-added measures. See which colleges Money judges offer the best value overall.

MONEY Earnings

The 3 Best Ways to Boost Your Earnings This Year

hand holding dumbbell with coin at the end
Sarina Finkelstein (photo illustration)—Getty Images(2)

To pump up your salary, switch up your career routine.

Welcome to Day 8 of MONEY’s 10-day Financial Fitness program. By now you’ve seen what shape you’re in, bulked up your savings, and cut the fat from your budget. Today, add some muscle to your paycheck.

When you hit a fitness plateau, taking a new class or picking up a sport can be the key to breaking through to the next level. The same concept applies to your career. Landing a new job will likely result in a salary 18% to 20% higher than what you’d get via an internal promotion, according to a study by Wharton professor Matthew Bidwell.

Thanks to a rapidly rebounding job market, this is the best year since the recession to get a new gig. More than one-third of employers expect to add full-time employees in 2015, according to CareerBuilder’s annual job forecast, up from one in four last year. Here’s how to stand out.

1. Get the Inside Scoop

Employee referrals generate a full 40% of new hires, according to the JobVite 2014 Recruiting Survey. So rather than scouring the job boards, talk to people you know and ask about openings at their firms. Love a certain company but don’t know anyone there? Reach out to your personal network or tap your LinkedIn contacts to see if anyone can connect you to an employee.

2. Make Yourself Poachable

Employers are increasingly courting passive job seekers, says John Hollon, editor of TLNT.com, which covers HR trends: “These are employed workers who may be willing to switch jobs but aren’t actively searching.” Recruiters like these candidates because they’re successful and valued at their current jobs. Interested? Get on hiring managers’ radar by peppering your LinkedIn profile with keywords related to the type of job you want. You can also sign up with the website Poachable, and get the Poacht app. List your dream job and resume for recruiters to browse.

3. Be Bold

That said, maybe you love your job or just can’t move right now. That doesn’t mean settling for a middling raise. While the biggest bumps do go to top performers, simply asking goes a long way. A new study from Payscale found that 75% of employees who requested an increase got one, with 44% landing the exact figure they asked for. The odds of receiving your requested amount are even better if you’re already a high earner: Those with a salary of $150,000 or more had a success rate of 70%. Before you ask, get a sense of the budget. You have more influence when you show you see the boss’s side, says career coach Lee Miller.

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MONEY Social Security

Why a Better Job Market Can Mean a Social Security Bonus

Getting back to work for even a few years before you retire can make a big difference to your income.

More Americans over 55 are finally getting back to work after the long recession. The strong national employment report for January released last week confirmed that. The unemployment rate for those over 55 was just 4.1% in January, down from 4.5% a year ago and well below the national jobless rate. The 55-plus labor force participation rate inched up to 40% from 39.9%.

That is good news for patching up household balance sheets damaged by years of lost employment and savings, and also for boosting future Social Security benefits.

Social Security is a benefit you earn through work and payroll tax contributions. One widely known way to boost your monthly benefit amount is to work longer and delay your claiming date. But simply getting back into the job market can help.

Your Social Security benefit is calculated using a little-understood formula called the primary insurance amount (PIA). The PIA is determined by averaging together the 35 highest-earning years of your career. Those lifetime earnings are then wage-indexed to make them comparable with what workers are earning in the year you turn 60, using a formula called average indexed monthly earnings (AIME); finally, a progressivity formula is applied that returns greater amounts to lower-income workers (called “bend points”).

But what if you are getting close to retirement age and have less than 35 years of earnings due to joblessness during the recession?

The Social Security Administration still calculates your best 35 years. It just means that five of those years will be zeros, reducing the average wage used to calculate your PIA.

By going back to work in any capacity, you start to replace those zeros with years of earnings. That helps bring your average wage figure up a bit, even if you are earning less than in your last job, or working part time.

“Any earnings you have in a given year have the opportunity to go into your high 35,” notes Stephen C. Goss, Social Security’s chief actuary.

I ran the numbers for a an average worker (2014 income: $49,000) born in 1953, comparing PIA levels following 40 years of full employment with the benefit level assuming a layoff in 2009. The fully employed worker enters retirement at age 66 (the full retirement age) with an annual PIA of $20,148; the laid-off worker’s PIA is reduced by $924 (4.6%). Getting back into the labor force in 2014, and working through 2015, would restore $720 of that loss.

That might not sound like much, but it would total nearly $25,000 in lifetime Social Security benefits for a female worker who lives to age 88, assuming a 3% annual rate of inflation. And for higher income workers, the differences would be greater.

You also can continue “backfilling” your earnings if you work past 60, Goss notes. “You get credit all the way along the way. If you happen to work up to age 70 or even beyond, we recalculate your benefit if you have had more earnings.”

The timing of your filing also is critical. You’re eligible to file for a retirement benefit as early as age 62, but that would reduce your PIA 25 percent, a cut that would persist for the rest of your life. Waiting until after full retirement age allows you to earn delayed filing credits, which works out to 8% for each 12-month period you delay. Waiting one extra year beyond normal retirement age would get you 108% of your PIA; delaying a second year would get you 116%, and so on. You can earn those credits up until the year when you turn 70, and you also will receive any cost-of-living adjustment awarded during the intervening years when you finally file.

Getting back to work will be a tonic for many older Americans, but what they might not realize is that it is also a great path to filling their retirement gap with more robust Social Security checks.

TIME Food & Drink

3 Charts That Show Why No One Wins the Coke vs. Pepsi Fight

Coke Pepsi Charts
Bloomberg via Getty Images

It's no longer a matter of who's winning—it's about who's losing the least

It’s a question that’s been around about as long as the oldest human living on Earth: Coke or Pepsi?

Lately, the answer is “neither.”

Health-conscious consumers have been turning away from sugar-sweetened beverages, and that’s causing headaches for the country’s top soda sellers. Coca-Cola reported a 55% drop in quarterly profit Tuesday, while PepsiCo investors are also bracing for less than stellar news when that company posts earnings Wednesday. Coke actually saw its first rise in North American sales in four quarters, but that was thanks to price hikes rather than increased demand.

All told, nobody’s really winning the soda wars. Soda sales have been in decline since 2005, falling 3% in 2013 alone, according to market research publication Beverage-Digest. Coke and Pepsi have both posted negative yearly sales changes for the last 11 years, though Coke has better weathered the storm:

If you think soda’s salvation lies in the word “Diet,” think again. Health experts have for years rejected the myth that “diet” soda is a healthy alternative. Now, consumers are distancing themselves not just from sugar-sweetened drinks, but also their artificially-sweetened cousins:

One corner of the beverage industry that’s actually winning? Energy drinks. Compared to the contracting Coca-Cola and PepsiCo businesses, energy drink companies like Monster and Red Bull have consistently experienced positive yearly growth:

Both Coca-Cola and PepsiCo have gotten in on the energy drink game: Coca-Cola bought a stake in Monster last year, while PepsiCo has shunned acquisitions, instead focusing on its own Mountain Dew Kickstart. Those moves have turned energy drinks into the latest battle ground between these perennial beverage titans.

Read next: This Smart Cup Knows What’s Inside of It

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