[Kryten]

Originally Posted by Firing Squad

» Xbox 360 Warrenty Conference Call Highlights

Because Microsoft announced a charge of $1.05 billion to $1.15 billion because of today's announcement of their new three year "three red lights" Xbox 360 warranty, the company held a quick financial conference call where Microsoft Entertainment head Robbie Bach, among others, talked about the decision. Here are the highlights:

# According to Bach, the hardware problems with the Xbox 360 console "wasn't on our radar" during the console's first year in sales. The problems started to become more apparent to the company only in the last couple of months.
# Bach also said the issues were a Microsoft design problem and not an issue with assembly and manufacturing at the plants where the console is made. Bach would not say specifically what design issues were found but did say, "It's really our responsibility, not anyone else's"
# Bach also would not comment on what the Xbox 360 return rate is, saying only that "It's a meaningful number."
# Bach stated that he is confident that the Xbox 360 hardware design issues have now been resolved. The one time charge for the new warranty policy will affect Microsoft's just completed fiscal year 2007 financials. For fiscal 2008, which began on the first of July, the company is still projecting that the Entertainment division of Microsoft in general and the Xbox section in particular will become profitable.
# During the conference call, Microsoft officials stated that globally 11.6 million Xbox 360 consoles have been sold as of the end of June. This number is slightly below Microsoft's earlier projections of 12 million consoles sold by the end of their fiscal year. The conference call did not state what the company's goals are for the just started fiscal 2008 year.
# Finally, Bach said that he is confident that the Xbox 360 business is still strong despite these hardware issues, saying that 90 percent of Xbox 360 customers polled would recommend them to friends. He also said that the company would make some major announcements at next week's E3 2007 saying that their game line-up for fiscal year 2008 will be, "one of the best in games history, if not the best."