Xbox 360 customers who experienced general hardware failure indicated by three flashing red lights will now be covered by a three-year warranty, the company said.
The charge will be between $1.05 billion and $1.15 billion, before taxes, for the quarter ended June 30, Microsoft said. The software giant said it still expects its Xbox video game division to make a profit in fiscal 2008.
"Our goal has been to have Xbox profitable in the coming fiscal year 2008," said Robbie Bach, president of Microsoft's entertainment and devices unit. "We don't think this changes that in any way."