From CNet: Microsoft said on Thursday that it will take a $1 billion charge as it extends the warranty on the Xbox 360, after an investigation shows the game console can be prone to hardware failures. "As a result of what Microsoft views as an unacceptable number of repairs to Xbox 360 consoles, the company conducted extensive investigations into potential sources of general hardware failures," Microsoft said in a statement. Microsoft said its probe found "a number of factors" that can cause a general hardware failure indicated by three red flashing lights on the console. The company said that, in addition to extending the warranty, it has made unspecified design changes to the product. Microsoft said it will cover machines that experience such failures for up to three years from the date of purchase. To cover the cost of the new policy, Microsoft said it will take a pretax charge of $1.05 billion to $1.15 billion in its just-ended quarter. "The majority of Xbox 360 owners are having a great experience with their console and have from day one," Entertainment & Devices Division President Robbie Bach said in a statement. "But, this problem has caused frustration for some of our customers and for that, we sincerely apologize." Microsoft said it will reimburse customers who have already paid for repairs for the hardware problem that is indicated by the three flashing lights. Reports of glitches with the Xbox 360 began cropping up shortly after its November 2005 release. Link to CNet Article: <a href="http://news.com.com/Microsoft+to+extend+Xbox+360+warranty%2C+take+1+billion+hit/2100-1014_3-6195058.html?tag=st_lh">http://news.com.com/Microsoft+to+extend+Xbox+360+warranty%2C+take+1+billion+hit/2100-1014_3-6195058.html?tag=st_lh</a>