FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

As of December 31, 2012 and March 31, 2012, our cash and cash equivalents were $1,158 million and $1,293 million, respectively. Cash equivalents were valued at their carrying amounts as they approximate fair value due to the short maturities of these financial instruments.

Short-Term Investments

Short-term investments consisted of the following as of December 31, 2012 and March 31, 2012 (in millions):



	As of December 31, 2012								As of March 31, 2012
	Cost or Amortized Cost		Gross Unrealized				Fair Value		Cost or Amortized Cost		Gross Unrealized				Fair Value
	Cost or Amortized Cost		Gains		Losses		Fair Value		Cost or Amortized Cost		Gains		Losses		Fair Value
Corporate bonds	$	148	$	1	$	—	$	149	$	149	$	1	$	—	$	150
U.S. agency securities	68		—		—		68		116		—		—		116
U.S. Treasury securities	56		—		—		56		166		—		—		166
Commercial paper	2		—		—		2		5		—		—		5
Short-term investments	$	274	$	1	$	—	$	275	$	436	$	1	$	—	$	437

We evaluate our investments for impairment quarterly. Factors considered in the review of investments with an unrealized loss include the credit quality of the issuer, the duration that the fair value has been less than the adjusted cost basis, the severity of the impairment, the reason for the decline in value and potential recovery period, the financial condition and near-term prospects of the investees, our intent to sell the investments, any contractual terms impacting the prepayment or settlement process, as well as if we would be required to sell an investment due to liquidity or contractual reasons before its anticipated recovery. Based on our review, we did not consider these investments to be other-than-temporarily impaired as of December 31, 2012 and March 31, 2012.

The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of December 31, 2012 and March 31, 2012 (in millions):



	As of December 31, 2012				As of March 31, 2012
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Short-term investments
Due in 1 year or less	$	65	$	65	$	207	$	207
Due in 1-2 years	96		97		123		124
Due in 2-3 years	113		113		106		106
Short-term investments	$	274	$	275	$	436	$	437

Marketable Equity Securities

Our investments in marketable equity securities are accounted for as available-for-sale securities and are recorded at fair value. Unrealized gains and losses are recorded as a component of accumulated other comprehensive income in stockholders’ equity, net of tax, until either the security is sold or we determine that the decline in the fair value of a security to a level below its adjusted cost basis is other-than-temporary. We evaluate these investments for impairment quarterly. If we conclude that an investment is other-than-temporarily impaired, we recognize an impairment charge at that time in our Condensed Consolidated Statements of Operations.

Marketable equity securities consisted of the following as of December 31, 2012 and March 31, 2012 (in millions):



	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
As of December 31, 2012	$	21	$	38	$	—	$	59
As of March 31, 2012	$	32	$	87	$	—	$	119

Our marketable equity securities as of December 31, 2012 and March 31, 2012 consisted of common shares of Neowiz Corporation and Neowiz Games, collectively referred to as “Neowiz.” We did not recognize any impairment charges during the three and nine months ended December 31, 2012 and 2011 on our marketable equity securities. During the three months ended December 31, 2012, we sold a portion of our investment in Neowiz and received proceeds of $25 million and realized a gain of $14 million, net of costs to sell. The realized gain is included in gain on strategic investments, net, in our Condensed Consolidated Statement of Operations. Subsequent to December 31, 2012, we sold our remaining investment in Neowiz for $46 million and realized a gain of $25 million, net of costs to sell. We did not sell any of our marketable securities during the nine months ended December 31, 2011.

0.75% Convertible Senior Notes Due 2016

The following table summarizes the carrying value and fair value of our 0.75% Convertible Senior Notes due 2016 as of December 31, 2012 and March 31, 2012 (in millions):



	As of December 31, 2012				As of March 31, 2012
	Carrying Value		Fair Value		Carrying Value		Fair Value
0.75% Convertible Senior Notes due 2016	$	554	$	583	$	539	$	584

The carrying value of the 0.75% Convertible Senior Notes due 2016 excludes the fair value of the equity conversion feature, which was classified as equity upon issuance, while the fair value is based on quoted market prices for the 0.75% Convertible Senior Notes due 2016, which includes the equity conversion feature. The fair value of the 0.75% Convertible Senior Notes due 2016 is classified as level 2 within the fair value hierarchy. See Note 12 for additional information related to our 0.75% Convertible Senior Notes due 2016.