(3) FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

As of March 31, 2011 and 2010, our cash and cash equivalents were $1,579 million and $1,273 million, respectively. Cash equivalents were valued at their carrying amounts as they approximate fair value due to the short maturities of theses financial instruments.

Short-Term Investments

Short-term investments consisted of the following as of March 31, 2011 and 2010 (in millions):


		As of March 31, 2011				As of March 31, 2010
		Cost or Amortized	Gross Unrealized		Fair	Cost or Amortized	Gross Unrealized		Fair
		Cost	Gains	Losses	Value	Cost	Gains	Losses	Value
Corporate bonds		$ 252	$ 1	$ -	$ 253	$ 231	$ 2	$ -	$ 233
U.S. Treasury securities		124	-	-	124	83	-	-	83
U.S. agency securities		102	-	-	102	115	-	-	115
Commercial paper		18	-	-	18	1	-	-	1
	Short-term investments	$ 496	$ 1	$ -	$ 497	$ 430	$ 2	$ -	$ 432

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 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 March 31, 2011 and 2010.

The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of March 31, 2011 and 2010 (in millions):


		As of March 31, 2011		As of March 31, 2010
		Amortized Cost	Fair Value	Amortized Cost	Fair Value
Short-term investments
	Due in 1 year or less	$ 214	$ 214	$ 165	$ 165
	Due in 1-2 years	156	157	174	176
	Due in 2-3 years	126	126	91	91

	Short-term investments	$ 496	$ 497	$ 430	$ 432

Marketable Equity Securities

Our investments in marketable equity securities consist of investments in common stock of publicly traded companies and 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 will recognize an impairment charge at that time in our Consolidated Statements of Operations.

Marketable equity securities consisted of the following as of March 31, 2011 and 2010 (in millions):


	Adjusted Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
As of March 31, 2011	$ 32	$ 129	$ -	$ 161
As of March 31, 2010	$ 132	$ 159	$ -	$ 291

In May 2007, we entered into a licensing agreement with, and made a strategic equity investment in The9 Limited, a leading online game operator in China. We purchased approximately 15 percent of the outstanding common shares (representing 15 percent of the voting rights at that time) of The9 for approximately $167 million. We began selling this investment in fiscal year 2010 and sold the remaining portion in fiscal year 2011. During the fiscal years ended March 31, 2011 and 2010, we received proceeds of $11 million and $17 million, respectively, from the sale of this investment and realized losses of $3 million and less than $1 million, respectively. The realized losses for the fiscal years ended March 31, 2011 and 2010 are included in gains (losses) on strategic investments, net, in our Consolidated Statements of Operations. We did not sell any of our marketable equity securities during the fiscal year ended March 31, 2009.

In April 2007, we expanded our commercial agreements with, and made strategic equity investments in, Neowiz Corporation and a related online gaming company, Neowiz Games. We refer to Neowiz Corporation and Neowiz Games collectively as "Neowiz." Based in Korea, Neowiz is an online media and gaming company with which we partnered in 2006 to launch EA SPORTS FIFA Online in Korea. We purchased 15 percent of the then-outstanding common shares (representing 15 percent of the voting rights at that time) of Neowiz Corporation and 15 percent of the then-outstanding common shares (representing 15 percent of the voting rights at the time) of Neowiz Games, for approximately $83 million. As discussed below, we also purchased preferred shares of Neowiz, which were classified as other assets on our Consolidated Balance Sheet as of March 31, 2010. During the fourth quarter of fiscal year 2011, we exercised our option to convert all of the preferred shares to common shares.

In February 2005, we purchased approximately 19.9 percent of the then-outstanding ordinary shares (representing approximately 18 percent of the voting rights at the time) of Ubisoft Entertainment ("Ubisoft") for $91 million. As of March 31, 2010, we owned approximately 15 percent of the outstanding shares of Ubisoft (representing approximately 13 percent of the voting rights). During the fiscal year ended March 31, 2011, we sold our investment in Ubisoft and received proceeds of $121 million and realized a gain of $28 million, net of costs to sell. The realized gain is included in gains (losses) on strategic investments, net, in our Consolidated Statements of Operations.

During the fiscal years 2011, 2010 and 2009, we recognized impairment charges of $2 million, $26 million, and $27 million, respectively, on our investment in The9. During fiscal year 2009, we recognized impairment charges of $30 million, on our Neowiz common shares. We did not recognize any impairment charges on our Neowiz common shares during the fiscal years ended March 31, 2011 and 2010. 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 concluded the decline in values were other-than-temporary. In fiscal year 2009, we received a cash dividend of $5 million from The9, offsetting our $27 million impairment charge. The $2 million, $26 million, and $57 million impairments for the fiscal years ended March 31, 2011, 2010 and 2009, respectively, are included in gains (losses) on strategic investments, net, in our Consolidated Statements of Operations.

Other Investments Included in Other Assets

In April 2007, we purchased all of the then-outstanding non-voting preferred shares of Neowiz, whose common stock is publicly traded, for approximately $27 million and included it in other assets on our Consolidated Balance Sheet as of March 31, 2010. These investments were accounted for under the cost method. Under this method, the investments were recorded at cost until we determined that the fair value of the investment had fallen below its adjusted cost basis and such decline was other-than-temporary. When we conclude that an investment is other-than-temporarily impaired, we will recognize an impairment charge at that time in our Consolidated Statements of Operations. The preferred shares became convertible at our option into approximately 4 percent of the outstanding voting common shares of Neowiz in April 2008. During the fourth quarter of fiscal year 2011, we exercised this option and converted all of the preferred shares to common shares as discussed above.

We evaluated these investments for impairment quarterly and during fiscal year 2009, we recognized an impairment charge of $10 million. Due to various factors, including but not limited to, the extent and duration during which the fair value had been below cost, we concluded the decline in value was other-than-temporary. The $10 million impairment is included in gains (losses) on strategic investments, net, in our Consolidated Statements of Operations. We did not recognize any impairment charges in fiscal years 2011 and 2010 on our other investments.