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Equity Price Risk
The fair value of our equity investments in publicly traded companies is subject to market price volatility. We may hold equity
securities for strategic purposes or to diversify our overall investment portfolio. Our equity portfolio consists of securities with
characteristics that most closely match the Standard & Poor’s 500 Index or NASDAQ Composite Index. These equity securities
are held for purposes other than trading. To manage our exposure to changes in the fair value of certain equity securities, we may
enter into equity derivatives designated as hedging instruments.
Publicly Traded Equity Securities The following tables present the hypothetical fair values of publicly traded equity securities as
a result of selected potential decreases and increases in the price of each equity security in the portfolio, excluding hedged equity
securities, if any. Potential fluctuations in the price of each equity security in the portfolio of plus or minus 10%, 20%, and 30%
were selected based on potential near-term changes in those security prices. The hypothetical fair values as of July 25, 2015 and
July 26, 2014 are as follows (in millions):
VALUATION OF
SECURITIES
GIVEN AN X%
DECREASE IN
EACH STOCK’S PRICE FAIR VALUE
AS OF
JULY 25, 2015
VALUATION OF
SECURITIES
GIVEN AN X%
INCREASE IN
EACH STOCK’S PRICE
(30)% (20)% (10)% 10% 20% 30%
Publicly traded equity securities ........... $1,096 $1,252 $1,409 $1,565 $1,722 $1,878 $2,035
VALUATION OF
SECURITIES
GIVEN AN X%
DECREASE IN
EACH STOCK’S PRICE FAIR VALUE
AS OF
JULY 26, 2014
VALUATION OF
SECURITIES
GIVEN AN X%
INCREASE IN
EACH STOCK’S PRICE
(30)% (20)% (10)% 10% 20% 30%
Publicly traded equity securities ........... $1,144 $1,307 $1,471 $1,634 $1,797 $1,961 $2,124
Investments in Privately Held Companies We have also invested in privately held companies. These investments are recorded in
other assets in our Consolidated Balance Sheets and are accounted for using primarily either the cost or the equity method. As of
July 25, 2015, the total carrying amount of our investments in privately held companies was $897 million, compared with
$899 million at July 26, 2014. Some of the privately held companies in which we invested are in the startup or development
stages. These investments are inherently risky because the markets for the technologies or products these companies are
developing are typically in the early stages and may never materialize. We could lose our entire investment in these companies.
Our evaluation of investments in privately held companies is based on the fundamentals of the businesses invested in, including,
among other factors, the nature of their technologies and potential for financial return.
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