FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The following table provides the assets carried at fair value measured on a recurring basis as of June 30, 2013 (in thousands):

			Fair Value Measurements, Using
	Total carrying value as of June 30, 2013		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	43,998	$	43,998	$	—	$	—
Short-term investments	163,983		163,983		—		—
Long-term investments	5,781		1,481		—		4,300

The following table provides the assets carried at fair value measured on a recurring basis as of December 31, 2012 (in thousands):

			Fair Value Measurements, Using
	Total carrying  value as of December 31, 2012		Quoted prices in active markets  (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	63,863	$	63,863	$	—	$	—
Short-term investments	158,018		154,018		—		4,000
Long-term investments	1,270		970		—		300

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value. A financial asset's or liability’s classification is determined based on the lowest level input that is significant to the fair value measurement.

The Company's convertible promissory note investments were initially recorded at cost and are classified within investments on the consolidated balance sheets.

These convertible promissory note investments are inherently risky as they lack a ready market for resale, and the note issuer’s success is dependent on product development, market acceptance, operational efficiency, the ability of the investee companies to raise additional funds in financial markets that can be volatile, and other key business factors. The companies the Company has invested in could fail or not be able to raise additional funds when needed. These events could cause the Company's investments to become impaired. In addition, financial market volatility could negatively affect the Company's ability to realize value in the Company's investments through liquidity events, such as mergers and private sales.

The Company determines the fair value of its convertible promissory note investments portfolio quarterly.  The fair value of the Company's convertible promissory note investments is determined through the consideration of whether an investee is experiencing financial difficulty and other factors.  Management performs an evaluation of the probability that the borrower will be in payment default on any of its debt in the foreseeable future.  The evaluation requires significant judgment and includes quantitative and qualitative analysis of identified events or circumstances affecting the investee, which may impact the fair value of the investment, such as:

• the investee’s revenue and earnings trends relative to pre-defined milestones and overall business prospects;

• the technological feasibility of the investee’s products and technologies;

• the general market conditions in the investee’s industry or geographic area, including adverse regulatory or economic changes;

• factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, and the rate at which the investee is using its cash; and

• the investee’s receipt of additional funding at a lower valuation.

If the fair value of a convertible promissory note investment is below the Company's carrying value, the asset will be written down to its fair value with a resulting charge to net income. Temporary impairments result in a write down of the investment to its fair value with the charge reported in shareholders’ equity.  There were no impairments of non-marketable convertible promissory note investments as of June 30, 2013.

The following table is a reconciliation of the changes in fair value of the Company’s investments in convertible notes for the three and six months ended June 30, 2013, which had been classified in Level 3 in the fair value hierarchy (in thousands):

	Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
Fair value of notes, beginning of period	$	4,300	$	4,300
Investments	—		—
Fair value of notes, end of period	$	4,300	$	4,300