Yahoo 2008 Annual Report Download - page 59

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Investment Risk. We are exposed to investment risk as it relates to changes in the market value of our
investments. We invest excess cash in marketable debt securities and strategic public equity investments.
Our cash and debt investment policy and strategy attempts primarily to preserve capital and meet liquidity
requirements. A portion of our cash is managed by external managers within the guidelines of our investment
policy. Our investment policy limits the amount of credit exposure to any one corporate issuer. We protect and
preserve invested funds by limiting default, market, and reinvestment risk. To achieve this objective, we maintain
our portfolio of cash and cash equivalents and short-term and long-term investments in a variety of liquid fixed
income securities, including both government and corporate obligations and money market funds. As of
December 31, 2008 and 2007, net unrealized gains and losses on these investments were not material.
We invest in equity instruments of public companies for business and strategic purposes and have classified these
securities as available-for-sale or investment in equity interests. These investments may be subject to significant
fluctuations in fair value due to the volatility of the stock market and the industries in which these companies
participate. We have realized gains and losses from the sale of available-for-sale investments, which were not
material as of December 31, 2008 and 2007. Our investments in available-for-sale equity securities amounted to
$87 million and $126 million, respectively, as of December 31, 2008 and 2007. Our objective in managing
exposure to stock market fluctuations is to minimize the impact of stock market declines to earnings and cash
flows. Using a hypothetical reduction of 10 percent in the stock price of these available-for-sale investments, the
fair value of our equity investments would decrease by approximately $9 million as of December 31, 2008 and
$13 million as of December 31, 2007. During the year ended December 31, 2008, we recorded an other-than-
temporary impairment charge of $30 million, net of tax, within earnings in equity interests to reduce the carrying
value of our direct investment in Alibaba.com to fair value.
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