FINANCIAL INSTRUMENTS

3 Months Ended

Jun. 30, 2011

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

(4) FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

As of June 30, 2011 and March 31, 2011, our cash and cash equivalents were $1,173 million and $1,579 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 June 30, 2011 and March 31, 2011 (in millions):

				As of June 30, 2011								As of March 31, 2011
		Cost or								Cost or
		Amortized		Gross Unrealized				Fair		Amortized		Gross Unrealized				Fair
		Cost		Gains	Losses			Value		Cost		Gains	Losses			Value
Corporate bonds	$	241	$	1	$	-	$	242	$	252	$	1	$	-	$	253
U.S. Treasury securities		117		1		-		118		124		-		-		124
U.S. agency securities		117		1		-		118		102		-		-		102
Commercial paper		25		-		-		25		18		-		-		18
Short-term investments	$	500	$	3	$	-	$	503	$	496	$	1	$	-	$	497

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 June 30, 2011 and March 31, 2011.

The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of June 30, 2011 and March 31, 2011 (in millions):

		As of June 30, 2011				As of March 31, 2011
		Amortized		Fair		Amortized		Fair
		Cost		Value		Cost		Value
Short-term investments
Due in 1 year or less	$	221	$	222	$	214	$	214
Due in 1-2 years		184		186		156		157
Due in 2-3 years		95		95		126		126
Short-term investments	$	500	$	503	$	496	$	497

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 Condensed Consolidated Statements of Operations.

Marketable equity securities consisted of the following as of June 30, 2011 and March 31, 2011 (in millions):

				Gross		Gross
		Adjusted		Unrealized		Unrealized
		Cost		Gains		Losses		Fair Value
As of June 30, 2011	$	32	$	140	$	-	$	172
As of March 31, 2011	$	32	$	129	$	-	$	161

During the three months ended June 30, 2010, we recognized an impairment charge of $2 million on our investment in The9. We did not recognize any impairment charges during the three months ended June 30, 2011 on our marketable equity securities. Due to various factors, including but not limited to, the extent and duration during which the market price of this security had been below its adjusted cost and our intent to hold this security, we concluded the decline in value was other-than-temporary. The impairment charge for the three months ended June 30, 2010 is included in loss on strategic investments, in our Condensed Consolidated Statement of Operations.

During the three months ended June 30, 2010, we received proceeds of $8 million and realized losses of $3 million from selling a portion of our investment in The9. We did not sell any of our marketable securities during the three months ended June 30, 2011. The realized losses for the three months ended June 30, 2010 are included in loss on strategic investments, in our Condensed Consolidated Statement of Operations.