Financial Instruments

6 Months Ended

Sep. 30, 2011

Financial Instruments [Abstract]

Financial Instruments

(4) FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

As of September 30, 2011 and March 31, 2011, our cash and cash equivalents were $930 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 September 30, 2011 and March 31, 2011 (in millions):

	As of September 30, 2011											As of March 31, 2011
		Cost or Amortized Cost	Gains		Losses			Value		Cost or Amortized Cost		Gains	Losses			Fair Value
Corporate bonds	$	169	$	1	$	-	$	170	$	252	$	1	$	-	$	253
U.S. agency securities		86		-		-		86		102		-		-		102
U.S. Treasury securities		82		-		-		82		124		-		-		124
Commercial paper		17		-		-		17		18		-		-		18
Short-term investments	$	354	$	1	$	-	$	355	$	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 September 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 September 30, 2011 and March 31, 2011 (in millions):

	As of September 30, 2011				As of March 31, 2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Short-term investments
Due in 1 year or less	$	128	$	128	$	214	$	214
Due in 1-2 years		143		144		156		157
Due in 2-3 years		83		83		126		126
Short-term investments	$	354	$	355	$	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 September 30, 2011 and March 31, 2011 (in millions):

		Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
As of September 30, 2011	$	32	$	182	$	-	$	214
As of March 31, 2011	$	32	$	129	$	-	$	161

We did not recognize any impairment charges during the three and six months ended September 30, 2011 on our marketable equity securities. We did not recognize impairment charges during the three months ended September 30, 2010 on our marketable equity securities. During the six months ended September 30, 2010, we recognized impairment charges of $2 million on our investment in The9. 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 six months ended September 30, 2010 is included in gain on strategic investments, net in our Condensed Consolidated Statement of Operations.

We did not sell any of our marketable securities during the three and six months ended September 30, 2011. During the three months ended September 30, 2010, we received proceeds of $121 million from the sale of our investment in Ubisoft and realized gains of $28 million, net of costs to sell. During the three and six months ended September 30, 2010, we sold the remaining portions of our investment in The9 and received proceeds of $3 million and $11 million, respectively, and realized gains of less than $1 million and losses of $3 million, respectively. The realized gains and losses for the three and six months ended September 30, 2010 are included in gain on strategic investments, net in our Condensed Consolidated Statement 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 (in millions):

	As of September 30, 2011
	Carrying Value		Fair Value
0.75% Convertible Senior Notes due 2016	$	529	$	608

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. See Note 12 for additional information related to our 0.75% Convertible Senior Notes due 2016.