Microsoft profit dips ahead of Office revamp

SEATTLE (Reuters) - Microsoft Corp said its quarterly profit fell as Office software sales slowed ahead of a new launch, offseting a solid start for its new Windows 8 operating system.

Profit at the world's largest software company slid to $6.4 billion, or 76 cents per share, in the fiscal second quarter, from $6.6 billion, or 78 cents per share, in the year-ago quarter.

Wall Street had expected 75 cents per share, on average, according to Thomson Reuters I/B/E/S.

Overall sales rose 3 percent to $21.5 billion, Microsoft said on Thursday, in line with analysts' estimates.

With the loss of some deferred revenue to account for discounted upgrades to new software, Office revenue fell about 10 percent to $5.7 billion, which is not unusual ahead of a new launch, expected next week.

Windows sales, which included some deferred revenue from the launch of Windows 8 last October, jumped 24 percent to $5.9 billion.

Microsoft said it has sold more than 60 million Windows 8 licenses since launch, a solid but unspectacular start for its latest operating system.

Microsoft shares fell slightly in after-hours trading.

(Reporting by Bill Rigby; Editing by Richard Chang)

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Te'o tells Couric 'pain' and 'sorrow' was real

NEW YORK (AP) — Manti Te'o told Katie Couric the feelings he had for what turned out to be a fake, online girlfriend were real and reiterated he had nothing to do with the hoax.

The All-American linebacker said he was truly sorrowful and pained after finding out the woman he knew as Lennay Kekua died in September.

Te'o's once-heartwarming tale of inspired play after the deaths of his grandmother and girlfriend on the same day in September was exposed as a bizarre hoax on Jan. 16. Deadspin.com broke the news that the woman Te'o had claimed to be in love with did not exist.

Te'o, who led Notre Dame to a spot in the national championship, has admitted that when his girlfriend's "death" became a story, he misled reporters into thinking he had met her in the flesh.

The star player recounted the whole, strange episode in an interview with Couric that was broadcast Thursday.

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Fox orders “Sleepy Hollow,” two other drama pilots

LOS ANGELES (TheWrap.com) – Ichabod Crane will ride again – this time on Fox.

The network has given a pilot order to an adaptation of the “Sleepy Hollow” legend from “Fringe” and “Transformers” team Alex Kurtzman and Bob Orci, the network said Tuesday.

A modern-day supernatural thriller based on the Washington Irving tale, “Sleepy Hollow” will be written and executive-produced by Kurtzman and Orci, with Heather Kadin and Len Wiseman also executive-producing. The series comes from K O Paper Products in association with Twentieth Century Fox TV.

Fox also ordered two other drama pilots on Tuesday, including “Delirium,” from writer/executive producer Karyn Usher (“Bones,” “Prison Break.”). Produced by Chernin Entertainment in association with Twentieth Century Fox TV, “Delirium” is based on a best-selling trilogy “about a world where love is deemed illegal and is able to be eradicated with a special procedure.” With just 95 days to go before undergoing her scheduled procedure, the drama’s protagonist, Lena Holoway “does the unthinkable: she falls in love.”

Peter Chernin and Katherine Pope are also serving as executive producers on “Delirium.”

A third pilot, “The List,” revolves around the murders of members of the Federal Witness Security Program, and the U.S. Marshal who leads the hunt for a person who stole a file with the identities of every member of the program. Paul Zbyszewski (“Lost,” “Hawaii 5-0″) is writing and executive-producing, with “Zombieland” director Ruben Fleischer also executive-producing. “The List” is being produced by Twentieth Century Fox TV.

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Penalty could keep smokers out of health overhaul

WASHINGTON (AP) — Millions of smokers could be priced out of health insurance because of tobacco penalties in President Barack Obama's health care law, according to experts who are just now teasing out the potential impact of a little-noted provision in the massive legislation.

The Affordable Care Act — "Obamacare" to its detractors — allows health insurers to charge smokers buying individual policies up to 50 percent higher premiums starting next Jan. 1.

For a 55-year-old smoker, the penalty could reach nearly $4,250 a year. A 60-year-old could wind up paying nearly $5,100 on top of premiums.

Younger smokers could be charged lower penalties under rules proposed last fall by the Obama administration. But older smokers could face a heavy hit on their household budgets at a time in life when smoking-related illnesses tend to emerge.

Workers covered on the job would be able to avoid tobacco penalties by joining smoking cessation programs, because employer plans operate under different rules. But experts say that option is not guaranteed to smokers trying to purchase coverage individually.

Nearly one of every five U.S. adults smokes. That share is higher among lower-income people, who also are more likely to work in jobs that don't come with health insurance and would therefore depend on the new federal health care law. Smoking increases the risk of developing heart disease, lung problems and cancer, contributing to nearly 450,000 deaths a year.

Insurers won't be allowed to charge more under the overhaul for people who are overweight, or have a health condition like a bad back or a heart that skips beats — but they can charge more if a person smokes.

Starting next Jan. 1, the federal health care law will make it possible for people who can't get coverage now to buy private policies, providing tax credits to keep the premiums affordable. Although the law prohibits insurance companies from turning away the sick, the penalties for smokers could have the same effect in many cases, keeping out potentially costly patients.

"We don't want to create barriers for people to get health care coverage," said California state Assemblyman Richard Pan, who is working on a law in his state that would limit insurers' ability to charge smokers more. The federal law allows states to limit or change the smoking penalty.

"We want people who are smoking to get smoking cessation treatment," added Pan, a pediatrician who represents the Sacramento area.

Obama administration officials declined to be interviewed for this article, but a former consumer protection regulator for the government is raising questions.

"If you are an insurer and there is a group of smokers you don't want in your pool, the ones you really don't want are the ones who have been smoking for 20 or 30 years," said Karen Pollitz, an expert on individual health insurance markets with the nonpartisan Kaiser Family Foundation. "You would have the flexibility to discourage them."

Several provisions in the federal health care law work together to leave older smokers with a bleak set of financial options, said Pollitz, formerly deputy director of the Office of Consumer Support in the federal Health and Human Services Department.

First, the law allows insurers to charge older adults up to three times as much as their youngest customers.

Second, the law allows insurers to levy the full 50 percent penalty on older smokers while charging less to younger ones.

And finally, government tax credits that will be available to help pay premiums cannot be used to offset the cost of penalties for smokers.

Here's how the math would work:

Take a hypothetical 60-year-old smoker making $35,000 a year. Estimated premiums for coverage in the new private health insurance markets under Obama's law would total $10,172. That person would be eligible for a tax credit that brings the cost down to $3,325.

But the smoking penalty could add $5,086 to the cost. And since federal tax credits can't be used to offset the penalty, the smoker's total cost for health insurance would be $8,411, or 24 percent of income. That's considered unaffordable under the federal law. The numbers were estimated using the online Kaiser Health Reform Subsidy Calculator.

"The effect of the smoking (penalty) allowed under the law would be that lower-income smokers could not afford health insurance," said Richard Curtis, president of the Institute for Health Policy Solutions, a nonpartisan research group that called attention to the issue with a study about the potential impact in California.

In today's world, insurers can simply turn down a smoker. Under Obama's overhaul, would they actually charge the full 50 percent? After all, workplace anti-smoking programs that use penalties usually charge far less, maybe $75 or $100 a month.

Robert Laszewski, a consultant who previously worked in the insurance industry, says there's a good reason to charge the maximum.

"If you don't charge the 50 percent, your competitor is going to do it, and you are going to get a disproportionate share of the less-healthy older smokers," said Laszewski. "They are going to have to play defense."

___

Online:

Kaiser Health Reform Subsidy Calculator — http://healthreform.kff.org/subsidycalculator.aspx

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Ian McKellen, Patrick Stewart heading to Broadway

NEW YORK (AP) — Serious theater fans have a reason to suddenly freak out: Ian McKellen and Patrick Stewart will team up on Broadway this fall in two of the most iconic plays of the 20th century.

Producers announced Thursday that Stewart and McKellen will star in Harold Pinter's "No Man's Land" and Samuel Beckett's "Waiting for Godot" which will play in repertoire under the direction of Sean Mathias.

The Broadway theater, performance dates, the two supporting actors and the schedule of performances will be announced later.

Stewart and McKellen starred in a production of "Waiting for Godot" in London's West End in 2009. Prior to Broadway, they'll tackle "No Man's Land" in an as-yet-unspecified out-of-town tryout this summer.

Mathias told The Associated Press all three men struggled to make "Waiting for Godot" as honest and realistic as possible — an approach they'll likely replicate with Pinter's play.

"What we tried to do, with so much effort, was make it real. Make them human beings, compassionate, funny, flawed and vulnerable and cocky — all the things human beings are," Mathias said. "We never wanted to make it esoteric. I'm sure this is how we will approach the Pinter as well."

Stewart, 72, and McKellen, 73, first worked together in 1977 in Tom Stoppard's "Every Good Boy Deserves Favour." They've also starred in the "X-Men" movie franchise as Professor Xavier and Magneto.

Stewart will play Vladimir in "Waiting for Godot" and Hirst in "No Man's Land;" McKellen will play Estragon in "Waiting for Godot" and Spooner in "No Man's Land."

"My main feeling is it's lovely to be back with friends and it will be lovely to be back in New York," said McKellen, who is doing a sit-com in England and next goes to Middle Earth to film scenes for "The Hobbit" franchise. "But I've got an awful lot to do in the meantime."

McKellen made his Broadway debut in Aleksei Arbuzov's "The Promise" in 1967 and won a Tony Award for his performance in "Amadeus" in 1981. His films include "Apt Pupil," ''Gods and Monsters" and "The Lord of the Rings."

Stewart, perhaps best known as Capt. Jean-Luc Picard of "Star Trek: The Next Generation," first appeared on Broadway in Peter Brook's production of Shakespeare's "A Midsummer Night's Dream" in 1971 and has recently been in David Mamet's "A Life in the Theatre" and "Macbeth."

Putting the Beckett and Pinter plays together in repertoire makes theatrical sense since both require four male actors and they both mine a surreal, witty vein.

"Both plays play tricks with our memory, with time, with what time is," said Mathias. "Both plays are dealing with a landscape of poetry, a landscape of psychology, a landscape that is both real and isn't real. So there are incredible reverberations and resonances."

Stewart and McKellen will sink their teeth into Beckett and Pinter after spending the summer filming "X-Men: Days of Future Past." Mathias, a Tony nominee in 1995 for "Indiscretions," will be directing "Breakfast at Tiffany's" on Broadway this spring.

Now a thorny question: Who gets top billing on Broadway — McKellen or Stewart? After all, both actors have gotten knighthoods for their services to drama and the performing arts.

"For me there's no question," Stewart said. "Ian was a star actor while I was still working in regional theater. To be absolutely frank, I was in awe of him and his work long before I knew him."

___

Follow Mark Kennedy on Twitter at http://twitter.com/KennedyTwits

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United to cut 600 front-office jobs

United Continental Holdings Inc. will cut about 600 front-office jobs through voluntary and involuntary cuts, the company said Thursday as it announced disappointing financial losses for 2012.

The world's largest airline did not detail where cutbacks will take place, but Chicago is likely to be most affected considering the corporate headquarters and network operations center are in downtown Chicago and that Chicago O'Hare airport is one of the airline's largest hubs.

The job cuts were announced Thursday morning during a conference call about the airline's profits. United officials said they were disappointed in the airline company's 2012 performance and pledged to improve in 2013, both in financial performance and the airline's operational reliability.

They said they intend to win back corporate customers who defected to other airlines last year when the airline experienced periods of poor on-time performance and high cancellations rates. The operational problems, which have abated since the fall, stemmed from numerous computer-related glitches after the airline merged United and Continental customer reservation systems onto a common platform last March.

United CEO Jeff Smisek called 2012 "the toughest year of our merger integration," but that the airline was "back on track."

"Despite our integration pains, we accomplished an enormous amount and we are now in a position to go forward as a single carrier and compete effectively on a global scale," he said. "Our operations are running smoothly. Our many product improvements are rolling out and our customer satisfaction scores are climbing."

Smisek also said the airline maintains its confidence in the Boeing 787 Dreamliner, which was grounded in the U.S. and elsewhere after numerous glitches, including a serious fire hazard with its lithium ion batteries.

He said he had confidence in the airplane and "Boeing's ability to fix the issues just as they have done on every other new aircraft model they've produced."

Smisek said he has no indication on when the Federal Aviation Administration will allow the planes to fly again, including Dreamliner on a route between Chicago and Houston. Boeing is also based in Chicago.

United, the only U.S. carrier currently operating 787 planes, has six Dreamliners. Smisek said the company expects to take delivery of two additional 787s in the second half of this year.

EARNINGS

United Continental said it lost $723 million in 2012, or $2.18 per share. Excluding special charges of $1.3 billion, mostly related to merging United and Continental, the company earned $589 million, or $1.59 per share, meeting Wall Street analyst expectations.

In the fourth quarter, United lost $620 million, or $1.87 per share, compared with a loss of $138 million, or 42 cents per share, in the same quarter a year earlier.

It took charges of $430 million in the quarter, with much of that tied to paying off pension debt and costs for systems integration and training and severance. Excluding items, United said the 2012 quarterly loss was 58 cents a share, compared with a 61 cent loss expected by analysts on average, according to Thomson Reuters I/B/E/S.

Revenue fell 2.5 percent to $8.7 billion.

Superstorm Sandy, which barreled through the U.S. Northeast in late October, reduced revenue by about $140 million and profit by about $85 million in the fourth quarter. The storm caused shutdowns at major New York area airports, including New Jersey's Newark Liberty International where United operates a major hub.

CUSTOMER SERVICE

Customer service will be a larger focus for the airline, Smisek said during the conference call.

That focus includes a comprehensive customer service training program for airport agents, contact center agents and flight attendants, he said. It will also roll out a program called "It's Our Job," a companywide approach to customer service "that clearly explains our customer service standards and expectation for front line coworkers," Smisek said.

It will also include an expanded recognition program to reward employees for outstanding service, collecting more customer-satisfaction data and roll out of a new set of tools for airport agents, he said.

JOB CUTS

As far as the job cuts, they will not affect unionized workers, such as pilots, flight attendants and airport ground workers, a spokeswoman said. The airline in December reduced the officer ranks by several positions, representing 7 percent of managers with titles of vice president and higher. It will reduce management and administrative staff by 6 percent through voluntary and involuntary cuts and not filling empty positions.

Those cuts will begin in early February, Smisek said in a letter to employees Thursday morning.

gkarp@tribune.com

 

UAL data by YCharts

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CPS chief 'shocked and appalled' at coaches' role in fight

Simeon coach Robert Smith and Morgan Park coach Nick Irvin each have been suspended for four games by Chicago Public Schools officials as a result of their conduct at a Jan. 16 basketball game, CPS said in a statement Wednesday.

CPS chief executive officer Barbara Byrd-Bennett said in a statement that the coaches violated the CPS code of conduct with their words and actions at the game.

After a 53-51 Simeon victory over Morgan Park, a fight broke out between the teams in the handshake line at Chicago State. It was quickly cleared up, but coaches from the teams continued to yell at each other after the teams were sent to their locker rooms.

Outside of the gymnasium after the game, a 17-year-old Morgan Park student was shot to death.

"Coaches in Chicago Public Schools must serve as mentors, instructors and role models for our students both on and off the court or field of competition,” Byrd-Bennett said in the statement. “The children under their charge take their cues from them on what is acceptable behavior and what is not. Knowing this, coaches must at all times conduct themselves in a professional and sportsmanlike manner.

“Through both words and actions, the boys basketball coaches of Morgan Park and Simeon High Schools on Jan. 16 violated the Code of Conduct to which they all must subscribe as a basic responsibility of their positions. We have taken the proper disciplinary steps to address their actions."

Among the games that Smith will miss is Saturday's meeting with No. 1 Young. Smith and Irvin are each required to attend the games during their suspensions in a non-coaching capacity.

In a letter drafted to send out to CPS schools Wednesday, Byrd-Bennett said she was “gravely concerned about the culture of our athletic competitions, and (was) both shocked and appalled at the unsportsmanlike conduct exhibited, not only by students, but by coaches as well.”

She said that what administrators and coaches do to “address this grave concern will ultimately determine whether our sports program is promoted or eliminated.” All CPS coaches are required to attend a meeting Feb. 2, when expectations will be discussed in more detail.

Mayor Rahm Emanuel said the schools' coaches had a responsibility to be role models for their players.

"I think all the adults that went to that game have a role to play in setting an example for our kids," Emanuel said when asked about the suspensions at an unrelated news conference. "That includes the refs. That includes the parents in the bleachers, and it also includes the coaches. Players look to you. Kids going to the schools, as well as going to the games, look to you. And if you had any role or position in which you did not set an example, that's more than just unfortunate."

Calls to Smith and Irvin were not returned Wednesday afternoon. Morgan Park and Simeon administrators referred inquiries to CPS when reached by phone Wednesday morning.

The Chicago Sun-Times and the website Illinois Prep Bulls-eye first reported the suspensions.

ckane@tribune.com

Twitter @ChiTribKane

Contributing: David Haugh, John Byrne.

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Apple revenue misses again, iPhone disappoints

SAN FRANCISCO (Reuters) - Apple Inc reported quarterly revenue that slightly missed Wall Street expectations as sales of its flagship iPhone came in below target, sending its shares down more than 4 percent.

The world's largest technology company shipped 47.8 million iPhones, lower than the roughly 50 million that Wall Street analysts had predicted. Sales of the iPad came in at 22.9 million in the fiscal first quarter, about in line with forecasts.

Sources this month have pointed to production cutbacks at Apple's component suppliers as a sign that demand may be waning for the iPhone, which accounts for half of the company's sales, and the iPad.

The disappointing numbers come after Apple undershot revenue targets in the previous two quarters. The results will prompt more questions on what Apple has in its product pipeline, and what it can do to attract new sales and maintain its growth trajectory.

Apple said on Wednesday its fiscal first quarter revenue rose to $54.5 billion, below the average analyst estimate of $54.73 billion, according to Thomson Reuters I/B/E/S.

For the fiscal first quarter it posted net income of $13.07 billion, or $13.81 a diluted share, compared to $13.06 billion, or $13.87 a share, a year earlier.

(Reporting By Poornima Gupta; Editing by Bernard Orr)

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Seau's family sues NFL over brain injuries

Add Junior Seau's family to the thousands of people who are suing the NFL over the long-term damage caused by concussions.

Seau's ex-wife and four children sued the league Wednesday, saying the former linebacker's suicide was the result of brain disease caused by violent hits he sustained while playing football.

The wrongful death lawsuit, filed in California Superior Court in San Diego, blames the NFL for its "acts or omissions" that hid the dangers of repetitive blows to the head. It says Seau developed chronic traumatic encephalopathy (CTE) from those hits, and accuses the NFL of deliberately ignoring and concealing evidence of the risks associated with traumatic brain injuries.

Seau died at age 43 of a self-inflicted gunshot in May. He was diagnosed with CTE, based on posthumous tests, earlier this month.

An Associated Press review in November found that more than 3,800 players have sued the NFL over head injuries in at least 175 cases as the concussion issue has gained attention in recent years. The total number of plaintiffs is 6,000 when spouses, relatives and other representatives are included.

Scores of the concussion lawsuits have been brought together before U.S. District Judge Anita B. Brody in Philadelphia.

"Our attorneys will review it and respond to the claims appropriately through the court," the NFL said in a statement Wednesday.

Helmet manufacturer Riddell Inc., also is a defendant, with the Seau family saying Riddell was "negligent in their design, testing, assembly, manufacture, marketing, and engineering of the helmets" used by NFL players. The suit says the helmets were unreasonably dangerous and unsafe.

Riddell issued a statement saying it is, "confident in the integrity of our products and our ability to successfully defend our products against challenges."

Seau was one of the best linebackers during his 20 seasons in the NFL, retiring in 2009.

"We were saddened to learn that Junior, a loving father and teammate, suffered from CTE," the family said in a statement released to the AP. "While Junior always expected to have aches and pains from his playing days, none of us ever fathomed that he would suffer a debilitating brain disease that would cause him to leave us too soon.

"We know this lawsuit will not bring back Junior. But it will send a message that the NFL needs to care for its former players, acknowledge its decades of deception on the issue of head injuries and player safety, and make the game safer for future generations."

Plaintiffs are listed as Gina Seau, Junior's ex-wife; Junior's children Tyler, Sydney, Jake and Hunter, and Bette Hoffman, trustee of Seau's estate.

The lawsuit accuses the league of glorifying the violence in pro football, and creating the impression that delivering big hits "is a badge of courage which does not seriously threaten one's health."

It singles out NFL Films and some of its videos for promoting the brutality of the game.

"In 1993's 'NFL Rocks,' Junior Seau offered his opinion on the measure of a punishing hit: 'If I can feel some dizziness, I know that guy is feeling double (that)," the suit says.

The NFL consistently has denied allegations similar to those in the lawsuit.

"The NFL, both directly and in partnership with the NIH, Centers for Disease Control and other leading organizations, is committed to supporting a wide range of independent medical and scientific research that will both address CTE and promote the long-term health and safety of athletes at all levels," the league told the AP after it was revealed Seau had CTE.

The lawsuit claims money was behind the NFL's actions.

"The NFL knew or suspected that any rule changes that sought to recognize that link (to brain disease) and the health risk to NFL players would impose an economic cost that would significantly and adversely change the profit margins enjoyed by the NFL and its teams," the Seaus said in the suit.

The National Institutes of Health, based in Bethesda, Md., studied three unidentified brains, one of which was Seau's, and said the findings on Seau were similar to autopsies of people "with exposure to repetitive head injuries."

"It was important to us to get to the bottom of this, the truth," Gina Seau told the AP then. "And now that it has been conclusively determined from every expert that he had obviously had CTE, we just hope it is taken more seriously. You can't deny it exists, and it is hard to deny there is a link between head trauma and CTE. There's such strong evidence correlating head trauma and collisions and CTE."

In the final years of his life, Seau went through wild behavior swings, according to Gina and to 23-year-old son, Tyler. There also were signs of irrationality, forgetfulness, insomnia and depression.

"He emotionally detached himself and would kind of 'go away' for a little bit," Tyler Seau said. "And then the depression and things like that. It started to progressively get worse."

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Sundance stars sound off on gun violence in film

PARK CITY, Utah (AP) — The Sundance Film Festival isn’t home to many shoot-em-up movies, but action-oriented actors at the festival are facing questions about Hollywood’s role in American gun violence.

Guy Pearce and Alexander Skarsgard are among those who say Hollywood shares in the blame.

Pearce is in Park City, Utah, to support the family drama “Breathe In,” but he’s pulled plenty of imaginary triggers in violent films such as “Lockdown” and “Lawless.” He says Hollywood may make guns seem “cool” to the broader culture, but there are vast variations in films’ approach to guns.

“Hollywood probably does play a role,” Pearce said. “It’s a broad spectrum though. There are films that use guns flippantly, then there are films that use guns in a way that would make you never want to look at a gun ever again — because of the effect that it’s had on the other people in the story at the time. So to sort of just say Hollywood and guns, it’s a broad palette that you’re dealing with, I think. But I’m sure it does have an effect. As does video games, as do stories on the news. All sorts of things probably seep into the consciousness.”

Skarsgard, who blasted away aliens in “Battleship,” says he agrees that Hollywood has some responsibility for how it depicts violence on-screen.

“When (NRA executive director) Wayne LaPierre blames it on Hollywood and says guns have nothing to do with it, there is a reason,” he said. “I mean, I’m from Sweden. . We do have violent video games in Sweden. My teenage brother plays them. He watches Hollywood movies. We do have insane people in Sweden and in Canada. But we don’t have 30,000 gun deaths a year.

“Yes, there’s only 10 million people in Sweden as opposed to over 300 (million) in the United States. But the numbers just don’t add up. There are over 300 million weapons in this country. And they help. They do kill people.”

Ellen Page, who co-stars with Skarsgard in “The East,” noted that gun restrictions are much more pervasive in her home country, Canada.

“You can’t buy some crazy assault rifle that is made for the military to kill people. And like that to me is just like a no-brainer,” she said. “Why should that just be out and be able to be purchased? That does not make me feel safe as a person.”

Skarsgard says it may be time to revisit the Second Amendment.

“The whole Second Amendment discussion is ridiculous to me. Because that was written over 200 years ago, and it was a militia to have muskets to fight off Brits,” he said. “The Brits aren’t coming. It’s 2013. Things have changed. And for someone to mail-order an assault rifle is crazy to me. They don’t belong anywhere but the military to me. You don’t need that to protect your home or shoot deer, you know.”

___

AP Entertainment Writer Ryan Pearson is on Twitter: www.twitter.com/ryanwrd .

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