Note 6 - Fair Value Measurement of Assets and Liabilities

6 Months Ended

Jun. 30, 2011

Fair Value Measurement of Assets and Liabilities Disclosure [Abstract]

Fair Value Measurement of Assets and Liabilities

Fair Value Measurement of Assets and Liabilities

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010:

Description	Balance as of June 30, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
	(In thousands)
Assets:
Cash and cash equivalents	$	3,265,826	$	3,265,826	$	—
Short-term investments:
Restricted cash	23,949		23,949		—
Corporate debt securities	317,861		—		317,861
Government and agency securities	56,673		—		56,673
Time deposits	87,895		—		87,895
Equity instruments	644,722		644,722		—
Total short-term investments	1,131,100		668,671		462,429
Derivatives	17,739		—		17,739
Long-term investments:
Restricted cash	1,390		1,390		—
Corporate debt securities	2,171,405		—		2,171,405
Government and agency securities	89,434		—		89,434
Time deposits and other	5,574		—		5,574
Total long-term investments	2,267,803		1,390		2,266,413
Total financial assets	$	6,682,468	$	3,935,887	$	2,746,581
Liabilities:
Derivatives	$	30,748	$	—	$	30,748

Description	Balance as of December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
	(In thousands)
Assets:
Cash and cash equivalents	$	5,577,411	$	5,577,411	$	—
Short-term investments:
Restricted cash	20,351		20,351		—
Corporate debt securities	372,225		—		372,225
Government and agency securities	66,534		—		66,534
Time deposits	44,772		—		44,772
Equity instruments	541,521		541,521		—
Total short-term investments	1,045,403		561,872		483,531
Derivatives	37,196		—		37,196
Long-term investments:
Restricted cash	1,332		1,332		—
Corporate debt securities	1,605,770		—		1,605,770
Government and agency securities	150,966		—		150,966
Time deposits and other	4,541		—		4,541
Total long-term investments	1,762,609		1,332		1,761,277
Total financial assets	$	8,422,619	$	6,140,615	$	2,282,004
Liabilities:
Derivatives	$	4,963	$	—	$	4,963

Our financial assets and liabilities are valued using market prices on both active markets (level 1) and less active markets (level 2). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments. Our derivative instruments are valued using pricing models that take into account the contract terms as well as multiple inputs where applicable, such as equity prices, interest rate yield curves, option volatility and currency rates. Our derivative instruments are short-term in nature, typically one month to one year in duration. Cash and cash equivalents are short-term, highly liquid investments with original or remaining maturities of three months or less when purchased and are mainly comprised of bank deposits and money market funds.

In addition to the long-term investments noted above, we had approximately $810.6 million and $729.4 million of cost and equity method investments included in long-term investments on our condensed consolidated balance sheet at June 30, 2011 and December 31, 2010, respectively. Our long-term equity investments primarily pertain to our retained 30% interest in Skype. On May 10, 2011, Microsoft Corp. announced that it had entered into a definitive agreement to acquire Skype for $8.5 billion, including debt, which is subject to regulatory approvals and other customary closing conditions and is expected to close in the latter half of 2011.

In Europe, we have two cash pooling arrangements with a financial institution for cash management purposes. These arrangements allow for cash withdrawals from this financial institution based upon our aggregate operating cash balances held in Europe within the same financial institution (“Aggregate Cash Deposits”). These arrangements also allow us to withdraw amounts exceeding the Aggregate Cash Deposits up to an agreed-upon limit. The net balance of the withdrawals and the Aggregate Cash Deposits are used by the financial institution as a basis for calculating our net interest expense or income. As of June 30, 2011, we had a total of $3.4 billion in cash withdrawals offsetting our $3.4 billion in Aggregate Cash Deposits held within the same financial institution under these cash pooling arrangements.

Other financial instruments, including accounts receivable, loans and interest receivable, funds receivable, customer accounts, commercial paper, accounts payable, funds payable and amounts due to customers are carried at cost, which approximates their fair value because of the short-term nature of these instruments. Funds receivable include receivables from promotional credit products offered to certain customers that settle within 12 months ($189.0 million as of June 30, 2011)