Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Measurements

Note 5. Fair Value Measurements

The Company measures certain financial assets at fair value on a recurring basis, including cash equivalents, short-term investments, and equity investments. The fair value of these financial assets was determined based on three levels of inputs:

• Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities

• Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active

• Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions

Items Measured at Fair Value on a Recurring Basis

The following table presents information about the Company’s financial assets that have been measured at fair value on a recurring basis as of June 30, 2011, and December 31, 2010, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands).

	Fair Value Measurements as of June 30, 2011
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	31,075	$	31,075	$	0	$	0
Corporate notes and bonds		126,398		126,398		0		0
U.S. government agency securities		4,200		4,200		0		0
Short-term investments:
Corporate notes and bonds		52,564		52,564		0		0
U.S. government agency securities		38,578		38,578		0		0
Restricted cash equivalents and investments		10,141		10,141		0		0
Available for sale securities:
Publicly traded investments		26,150		26,150		0		0
Total	$	289,106	$	289,106	$	0	$	0
	Fair Value Measurements as of December 31, 2010
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	44,348	$	44,348	$	0	$	0
Corporate notes and bonds		120,984		120,984		0		0
U.S. Government agency securities		3,700		3,700		0		0
Short-term investments:
Corporate notes and bonds		76,157		76,157		0		0
U.S. government agency securities		22,146		22,146		0		0
Restricted cash equivalents and investments		10,000		10,000		0		0
Available for sale securities:
Publicly traded investments		27,541		27,541		0		0
Total	$	304,876	$	304,876	$	0	$	0

Investments in marketable securities classified as short-term investments and equity investments of public companies are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy. The Company carries its equity investments in private companies at cost and no fair value is derived on a recurring basis. The Company has consistently applied these valuation techniques in all periods presented.

Items Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities of the Company are measured at estimated fair value on a non-recurring basis. These instruments are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). The Company performed a valuation using Level 3 inputs of its investment in the Rhapsody joint venture as of March 31, 2010. The Company performed the analysis as a result of the restructuring and related deconsolidation of Rhapsody, which is further described in “Note 4, Rhapsody Joint Venture.” The fair value analysis used multiple valuation models and was based on assumptions of future results made by management, including operating and cash flow projections.