Apple 2000 Annual Report Download - page 49

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--FINANCIAL INSTRUMENTS (CONTINUED)
recognized in the third quarter of 1998 other income of approximately $16 million to reflect its remaining 25.9% ownership interest in the
increased net book value of ARM following its initial public offering. As of September 25, 1998, the carrying value of the Company's
investment in ARM carried in other assets in the consolidated balance sheet was approximately $22 million. On October 14, 1998, the
Company sold 58 million shares (split adjusted) of ARM stock. As a result of this sale, the Company's ownership interest in ARM fell to
19.7%. Consequently, beginning in the first quarter of fiscal 1999, the Company ceased accounting for its remaining investment in ARM using
the equity method and categorized its remaining shares as available-for-sale.
EARTHLINK
In January 2000, the Company invested $200 million in EarthLink, an Internet service provider (ISP). The investment is in EarthLink's Series
C Convertible Preferred Stock, which is convertible by the Company after January 4, 2001, into approximately 7.1 million shares of EarthLink
common stock. Concurrent with this investment, EarthLink and the Company entered into a multi-year agreement to deliver ISP service to
Macintosh users in the United States. Under the terms of the agreement, the Company profits from each new Mac customer that subscribes to
EarthLink's ISP service for a specified period of time, and EarthLink is the default ISP in Apple's Internet Setup Software included with all
Macintosh computers sold in the United States. The fair value of the Company's investment in EarthLink is approximately $64 million as of
September 30, 2000.
SAMSUNG
During the fourth quarter of 1999, the Company invested $100 million in Samsung to assist in the further expansion of Samsung's TFT-LCD
flat-panel display production capacity. The investment, in the form of three year unsecured bonds, is convertible into approximately 550,000
AKAMAI
In June 1999, the Company invested $12.5 million in Akamai, a global Internet content delivery service. The investment was in the form of
convertible preferred stock that converted into 4.1 million shares of Akamai common stock (adjusted for subsequent stock splits) at the time of
Akamai's initial public offering in October 1999. Beginning in the first quarter of 2000, the Company categorized its shares in Akamai as
available-for-sale. The fair value of the Company's investment in Akamai is approximately $216 million as of September 30, 2000.
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