Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements:

The Company accounts for financial assets and liabilities in accordance with a fair value measurement accounting standard. The accounting standard provides a framework for measuring fair value under generally accepted accounting principles in the United States and requires expanded disclosures regarding fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting standard also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques.

The following is a summary of marketable securities and other investment-related assets held at December 31, 2012 and 2011 (in thousands):

			Gross Unrealized					Aggregate Fair Value		Classified on Balance Sheet
										Short-term Marketable Securities		Long-term Marketable Securities
As of December 31, 2012	Cost		Gains		Losses
Available-for-sale securities:
Certificates of deposit	$	3,100	$	—	$	—		$	3,100	$	3,057	$	43
Commercial paper	7,481		2		(1		)	7,482		7,482		—
Corporate debt securities	691,931		1,269		(205		)	692,995		217,548		475,447
U.S. government agency obligations	189,607		95		(28		)	189,674		7,505		182,169
	$	892,119	$	1,366	$	(234	)	$	893,251	$	235,592	$	657,659
			Gross Unrealized					Aggregate Fair Value		Classified on Balance Sheet
										Short-term Marketable Securities		Long-term Marketable Securities
As of December 31, 2011	Cost		Gains		Losses
Available-for-sale securities:
Certificates of deposit	$	42	$	—	$	—		$	42	$	—	$	42
Corporate debt securities	524,515		873		(580		)	524,808		285,012		239,796
U.S. government agency obligations	145,995		78		(165		)	145,908		5,017		140,891
	$	670,552	$	951	$	(745	)	$	670,758	$	290,029	$	380,729

Unrealized gains and unrealized temporary losses on investments classified as available-for-sale are included within

accumulated other comprehensive income (loss). Upon realization, those amounts are reclassified from accumulated other comprehensive income (loss) to gain (loss) on investments, net in the statement of operations. Realized gains and losses are reflected in the income statement as gain (loss) on investments, net. As of December 31, 2012, the Company did not hold any investment-related assets that have been in a continuous loss position for more than 12 months.

The following tables detail the fair value measurements within the fair value hierarchy of the Company’s financial assets and liabilities, including investments, cash equivalents and the contingent consideration obligation related to the acquisition of Verivue, at December 31, 2012 and 2011 (in thousands):

	Total Fair Value at December 31, 2012			Fair Value Measurements at Reporting Date Using
				Level 1		Level 2		Level 3
Assets
Money market funds	$	22,255		$	22,255	$	—	$	—
Certificates of deposit	7,473			7,473		—		—
Commercial paper	9,482			—		9,482		—
U.S. government agency obligations	189,674			—		189,674		—
Corporate debt securities	692,995			—		692,995		—
	$	921,879		$	29,728	$	892,151	$	—
Liabilities
Contingent consideration obligation related to Verivue acquisition	$	(1,200	)	—		—		(1,200		)
	$	(1,200	)	$	—	$	—	$	(1,200	)

	Total Fair Value at December 31, 2011		Fair Value Measurements at Reporting Date Using
			Level 1		Level 2		Level 3
Money market funds	$	302,507	$	302,507	$	—	$	—
Certificates of deposit	42		42		—		—
Commercial paper	57,498		—		57,498		—
U.S. government agency obligations	145,908		—		145,908		—
Corporate debt securities	524,808		—		524,808		—
	$	1,030,763	$	302,549	$	728,214	$	—

The following tables reflect the activity for the Company’s major classes of assets and liabilities measured at fair value using Level 3 inputs for the years ended December 31, 2012 and 2011 (in thousands):

	Auction Rate Securities
Balance as of December 31, 2010	$	137,256
Redemptions and sales of securities	(137,256		)
Balance as of December 31, 2011 and 2012	$	—

	Contingent Consideration Obligation
Balance as of December 31, 2010	$	(990	)
Payments	550
Change in fair value estimate	440
Balance as of December 31, 2011	$	—
Contingent consideration obligation related to Verivue acquisition	(1,200		)
Balance as of December 31, 2012	$	(1,200	)

As of December 31, 2012, the Company grouped money market funds and certificates of deposit using a Level 1 valuation because market prices are readily available in active markets. As of December 31, 2012, the Company grouped commercial paper, U.S. government agency obligations and corporate debt securities using a Level 2 valuation because quoted prices for identical or similar assets are available in markets that are not active. As of December 31, 2012, the fair value of the Company's liabilities grouped using a Level 3 valuation consisted of a contingent consideration related to the acquisition of Verivue. The fair value of the contingent consideration payable was estimated using inputs not supported by market activity, including the likelihood of achieving defined levels of specified and other customer revenue and payments corresponding to these levels. There has been no change in the valuation from the date of acquisition to December 31, 2012.

Contractual maturities of the Company’s marketable securities held at December 31, 2012 and 2011 are as follows (in thousands):

	December 31,
	2012		2011
Available-for-sale securities:
Due in one year or less	$	235,592	$	290,029
Due after 1 year through 5 years	657,659		380,729
Due after 5 years	—		—
	$	893,251	$	670,758

For the year ended December 31, 2012 the Company recorded a small net gain on investments. For the years ended December 31, 2011 and 2010, the Company recorded net losses on investments of $0.2 million and net gains on investments of $0.4 million, respectively.