GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2011

8. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

During the years ended December 31, 2011 and 2010, we did not identify an impairment as a result of our annual impairment test and none of our reporting units were at risk of failing step one. In addition, we considered the likelihood of triggering events that might cause us to reassess goodwill on an interim basis and concluded that none had occurred subsequent to our August 1, 2011 valuation date.

The carrying amount of goodwill for each of the two years ended December 31, 2011 is as follows (in thousands):

	Data Center Services		IP Services			Total
Balance, December 31, 2010:
Goodwill	$	—	$	152,087		$	152,087
Accumulated impairment losses		—		(112,623	)		(112,623	)
Net		—		39,464			39,464

Acquisition – Voxel (note 3)		20,007		—			20,007

Balance, December 31, 2011:
Goodwill		20,007		152,087			172,094
Accumulated impairment losses		—		(112,623	)		(112,623	)
Net	$	20,007	$	39,464		$	59,471

During the year ended December 31, 2009, we recorded an aggregate goodwill impairment charge of $51.5 million. This charge included $48.0 million for goodwill related to our former CDN services segment and $3.5 million to adjust goodwill in our IP services segment related to our FCP product and is included in “impairments and restructuring” in the consolidated statements of operations. We reclassified the original goodwill in the former CDN services segment from the former CDN services segment to IP services and data center services based on the respective estimated relative fair value of those segments.

Other Intangible Assets

During the years ended December 31, 2011 and 2010, we concluded that no impairment indicators existed to cause us to reassess our other intangible assets.

During the year ended December 31, 2009, in conjunction with the change in our business segments and the associated review of our long-term financial outlook, we performed an analysis of the potential impairment and reassessed the remaining asset lives of other identifiable intangible assets. The analysis and reassessment of other identifiable intangible assets resulted in (i) an impairment charge of $4.1 million in acquired CDN advertising technology due to a strategic change in market focus; (ii) a change in estimates that resulted in an acceleration of amortization expense of our acquired CDN customer relationships over a shorter estimated remaining useful life (from 38 months remaining as of June 1, 2009 to 11 months) to reflect our historical churn rate for acquired CDN customers; (iii) a change in estimates that resulted in an acceleration of amortization expense of our acquired CDN trade names over a shorter estimated remaining useful life (from 32 months remaining as of June 1, 2009 to 17 months) to reflect the decreased value of our acquired CDN trade names to our business; and (iv) a change in estimates that resulted in acceleration of amortization expense of our CDN non-compete agreements over a shorter estimated remaining useful life (from nine months remaining as of June 1, 2009 to one month) to reflect the decreased value of the non-compete agreements to our business.

We included the impairment charges for acquired CDN advertising technology of $4.1 million during the year ended December 31, 2009 in “Direct costs of amortization of acquired technologies” in the consolidated statements of operations. The change in estimates of remaining useful lives for the intangible assets as of June 1, 2009 noted above resulted in an increase to our net loss of $2.8 million, or $0.06 per basic and diluted share, during the year ended December 31, 2009.

The components of our amortizing intangible assets are as follows (in thousands):

	December 31, 2011					December 31, 2010
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Acquired technology	$	43,627	$	(24,844	)	$	35,927	$	(21,344	)
Customer relationships and trade names		32,247		(24,144	)		24,232		(24,117	)
	$	75,874	$	(48,988	)	$	60,159	$	(45,461	)

Amortization expense for intangible assets during the years ended December 31, 2011, 2010 and 2009 was $3.5 million, $6.1 million and $9.0 million, respectively. This amortization expense does not include impairment charges of $4.1 million during the year ended December 31, 2009. As of December 31, 2011, remaining amortization expense is as follows (in thousands):

2012	$	5,559
2013		5,546
2014		5,546
2015		2,606
2016		2,017
Thereafter		5,612
	$	26,886

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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