This excerpt taken from the CY 10-K filed Mar 1, 2007.
Investments in Public and Privately-Held Companies
We have investments, including marketable equity securities and warrants, in certain public companies other than SunPower. The marketable equity securities consist of common stock and are classified as available-for-sale investments. They are recorded in the Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a component in Accumulated other comprehensive income (loss). In addition, our investments include warrants to purchase shares of a public companys common stock. These warrants are classified as derivative instruments and are carried at fair value with the resulting gains or losses recognized in Other income (expense), net in the Consolidated Statements of Operations.
The fair value of the common stock and warrants is subject to market price volatility. As of December 31, 2006, the fair value of our marketable equity securities was $8.0 million. A 10% increase in the stock prices of our investments would increase the fair value of our investments by approximately $0.8 million, and a 10% decrease in the stock prices would decrease the fair value of our investments by approximately $0.8 million. As of December 31, 2006, the fair value of our warrants classified as derivative instruments was $2.1 million. A 10% increase in the stock price of the investee would increase the value of our warrants by approximately $0.2 million, and a 10% decrease in the stock price would decrease the value of our warrants by approximately $0.2 million.
Our investment portfolio also includes warrants that are not classified as derivative instruments or available-for-sale securities. These warrants are carried at cost and as of December 31, 2006, the carrying value of these warrants was $2.4 million.
We have investments in several privately-held companies, many of which can be considered in the start-up or development stages. These investments are inherently risky as the market for the technologies or products they have under development are typically in the early stages and may never materialize. As our equity investments generally do not permit us to exert significant influence or control, these amounts generally represent our cost of the investments, less any adjustments we make when we determine that an investments net realizable value is less than its carrying cost. As of December 31, 2006, the carrying value of our investments in privately-held companies was $10.5 million.