The company will "take a US$1.05 billion to $1.15 billion pre tax charge to earnings for the fourth quarter that ended June 30 for anticipated costs under its current and enhanced Xbox 360 policies," it said.
In a conference call with analysts, Microsoft Chief Financial Officer Chris Liddell said that the charge will have no impact on the company's overall guidance for fiscal 2008. The entertainment and devices unit president, Robbie Bach, added that the company still Microsoft expects the Xbox business to become profitable sometime in fiscal 2008, thanks to factors such as the release of the highly anticipated "Halo 3" in September.
When SmartHouse first exposed the problem, Microsoft PR company, Pulse Communications, said that it would take two weeks to get a response from Microsoft. Microsoft promised to come back on the issue but failed to. See original story at.
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Microsoft specifically cited the "three flashing red lights" error message encountered by Xbox 360 users experiencing hardware failures.
The company said that it will repair or replace devices that experience the "Red Ring of Death" within three years of their purchase. Previously, Microsoft offered a one-year warranty for Xbox consoles.
Microsoft also said that it will retroactively reimburse customers who have paid for repairs related to the red-light error message.
