Stock Compensation Plans

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Compensation Plans

Stock Compensation Plans

Equity Incentive Plans

A summary of the combined activity under all of our stock option plans during the nine months endedSeptember 30, 2013 is as follows:

	Shares Subject to Options (in thousands)		Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
As of December 31, 2012	12,488		$	6.17
Granted	2,381		$	4.03
Exercised	(50	)	$	4.06
Forfeitures and cancellations	(1,079	)	$	5.77
Outstanding at September 30, 2013	13,740		$	5.84	7.0	$	322
Options exercisable at September 30, 2013	8,050		$	6.72	5.9	$	322
Options vested or expected to vest at September 30, 2013	13,004		$	5.93	6.9	$	322

The aggregate intrinsic value of stock options exercised during the nine months endedSeptember 30, 2013 and 2012 was $33,000, and $11,000, respectively. Cash received from stock option exercises for the nine months endedSeptember 30, 2013 and 2012 was $204,000 and $50,000, respectively. As of September 30, 2013, we had reserved 7.2 million shares of common stock for issuance under our stock option plans.

The following table summarizes activity related to our restricted stock awards and restricted stock units during the nine months endedSeptember 30, 2013 (shares in thousands):

	Number of Shares		Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2012	905		$	4.34
Grants and awards	1,107		$	4.01
Vested and released	(338	)	$	4.27
Forfeitures and cancellations	(157	)	$	3.99
Outstanding at September 30, 2013	1,517		$	4.11

The total fair value of restricted stock awards and restricted stock units that vested during the nine months ended September 30, 2013 and 2012 was $1.4 million and $0.6 million, respectively.

Employee Stock Purchase Plan (ESPP)

During the nine months ended September 30, 2013 and 2012, a total of 0.6 million and 0.4 million shares were purchased by the ESPP and distributed to employees at an average price of $2.49 and $2.91 per share with aggregate intrinsic values of $0.7 million and $0.2 million, respectively.

As of September 30, 2013, we had reserved 2.0 million shares of common stock for issuance under the ESPP.

Stock-Based Compensation Expense

Following are the weighted-average underlying assumptions used to determine the fair value of stock option award grants and for stock purchase rights under the ESPP:

	Nine Months Ended
	September 30,
	2013			2012
Stock option grants
Risk-free interest rate	1.2		%	1.7		%
Volatility	94.0		%	94.5		%
Dividend yield	—		%	—		%
Expected life (years)	6.9			7.6
Weighted-average grant date fair value	$	3.19		$	3.70

	Nine Months Ended
	September 30,
	2013			2012
ESPP stock purchase rights
Risk-free interest rate	0.08		%	0.14		%
Volatility	60.4		%	68.9		%
Dividend yield	—		%	—		%
Expected life (years)	0.5			0.5
Weighted-average grant date fair value	$	1.09		$	1.15

Our determination of fair value is affected by our stock price as well as assumptions regarding a number of complex and subjective variables that require judgment. The computation of the expected option life assumption is based on a weighted-average calculation combining the average historical exercise activity and assumptions regarding the estimated life of all unexercised, outstanding stock options, and stock purchased under the ESPP. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected term of our employee stock options. The expected volatility is based on the historical volatility of our stock. We have not paid any dividends on common stock since our inception and do not anticipate paying dividends on common stock in the foreseeable future.

We recognize stock-based compensation cost over the vesting period using the straight-line single option method. Stock-based compensation expense is recognized only for those awards that are ultimately expected to vest. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeitures are based on historical experience and during the nine months ended September 30, 2013 and 2012 were estimated to be 13.4% and 11.2%, respectively. Changes in forfeiture estimates impact compensation cost in the period in which the change in estimate occurs.

Total non-cash stock-based compensation expense for all stock awards and purchase rights was recognized in our condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Cost of revenues	$	239	$	286	$	767	$	853
Selling and marketing expense	651		1,017		2,215		3,001
Research and development expense	534		847		1,908		2,394
General and administrative expense	867		961		3,072		2,976
	$	2,291	$	3,111	$	7,962	$	9,224

As of September 30, 2013, there was $15.4 million of unamortized compensation cost related to unvested stock option awards, which is expected to be recognized over a remaining weighted-average vesting period of 2.5 years. As of September 30, 2013, there was $29,000 of unamortized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a remaining weighted-average vesting period of 0.3 years. As of September 30, 2013, there was $2.8 million of unamortized compensation cost related to unvested restricted stock units, which is expected to be recognized over a remaining weighted-average vesting period of 2.5 years. As of September 30, 2013, total unrecognized non-cash, compensation expense for purchase rights granted and outstanding was $0.3 million, which is expected to be recognized over a remaining weighted-average vesting period of 0.3 years.