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Microsoft Corp. (NASDAQ: MSFT) today announced it was planning to take a more than $1 billion charge to expand a warranty program for its troubled Xbox 360 video game console. The company said it was expanding its warranty coverage to three years, because of what it views as "an unacceptable number of repairs" to its Xbox 360 consoles.
Whoops. This admittance will cost the company a bundle. The company says it will record a pretax charge of between $1.05 billion and $1.15 billion in its most recent quarter (ended June 30).
Microsoft said it would replace or repair any machine suffering from a general hardware failure indicated by three flashing red lights. That would include free shipping, too, amazingly enough. However, the extended warranty will only apply to this particular hardware failure. Units with other issues will continue to carry the standard one-year warranty, according to the company. Units thrown through living room windows are not covered.
This Xbox FAQ has more information.
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