Financial Instruments

12 Months Ended

Mar. 31, 2013

Financial Instruments [Abstract]

Financial Instruments

(3)  FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

As of March 31, 2013 and 2012, our cash and cash equivalents were $1,292 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 March 31, 2013 and 2012 (in millions):

	As of March 31, 2013								As of March 31, 2012
	Cost or Amortized Cost		Gross Unrealized				Fair Value		Cost or Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses						Gains		Losses
Corporate bonds	$	177	$	1	$	—	$	178	$	149	$	1	$	—	$	150
U.S. Treasury securities	85		—		—		85		166		—		—		166
U.S. agency securities	76		—		—		76		116		—		—		116
Commercial paper	49		—		—		49		5		—		—		5
Short-term investments	$	387	$	1	$	—	$	388	$	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, severity of the impairment, reason for the decline in value and potential recovery period, the financial condition and near-term prospects of the investees, our intent to sell and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value, and any contractual terms impacting the prepayment or settlement process. Based on our review, we did not consider these investments to be other-than-temporarily impaired as of March 31, 2013 and 2012.

The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of March 31, 2013 and 2012 (in millions):

	As of March 31, 2013				As of March 31, 2012
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Short-term investments
Due in 1 year or less	$	160	$	160	$	207	$	207
Due in 1-2 years	126		127		123		124
Due in 2-3 years	101		101		106		106
Short-term investments	$	387	$	388	$	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 Consolidated Statements of Operations.

We had no marketable equity securities as of March 31, 2013. Marketable equity securities consisted of the following as of March 31, 2012 (in millions):

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

Our marketable equity securities as of March 31, 2012 consisted of common shares of Neowiz Corporation and Neowiz Games, collectively referred to as “Neowiz.” During the fiscal year ended March 31, 2013, we sold our investment in Neowiz and received proceeds of $72 million and realized a gain of $39 million, net of costs to sell. The realized gain is included in gains on strategic investments, net, in our Consolidated Statements of Operations. We did not recognize any impairment charges on our marketable equity securities during the fiscal years 2013 and 2012.

During the fiscal year ended March 31, 2011, we sold our investments in Ubisoft Entertainment (“Ubisoft”) and The9 Limited (“The9”) and received proceeds of $121 million and $11 million, respectively, and realized a gain of $28 million and a loss of $3 million, respectively, net of costs to sell. The realized gain and loss are included in gains on strategic investments, net, in our Consolidated Statements of Operations.

Due to various factors, including but not limited to, the extent and duration during which the market prices of these securities had been below adjusted cost and our intent to hold certain securities, we recognized impairment charges attributed to unrealized losses on our investment in The9 that we concluded were other-than-temporary in the amount of $2 million during the fiscal year ended March 31, 2011. The impairment charges for the fiscal year ended March 31, 2011 are included in gains on strategic investments, net, in our Consolidated Statements of Operations.

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 March 31, 2013 and 2012 (in millions):

	As of March 31, 2013				As of March 31, 2012
	Carrying Value		Fair Value		Carrying Value		Fair Value
0.75% Convertible Senior Notes due 2016	$	559	$	614	$	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 11 for additional information related to our 0.75% Convertible Senior Notes due 2016.