Quote Originally Posted by Sir Terrence the Terrible
From what I understand, the bil has to be taken in 2007, and they are prepared to set aside more to handle any future problems. While some think they have nailed down the problem, issues seems to be cropping up with even after the switch to 65 nano chip. While problems are certainly not at the level of 2005-06, they are so steady even this year that they have been forced to take this action to avoid any class action lawsuits that might have occured.
There's always some flexibility and creative ways to restate earnings where warranty expenses are involved. Though MS may very well choose to do absorb it all in one year - that way they don't have a prolonged drag on performance. This way they'd have one brutal year, and maybe come out looking like champs in 08 if 08 performance is good.
I don't know how MS's accountants record these things, so we're just speculating now, but they could certainly apply portions the refunds component the 1 billion they're giving to people who paid to have it fixed against earlier periods, and of course not all of the warranty claims are going to be filed in 2007 anyway, so there could be some 2008 expenses too. Might even be more than 1 billion when this is all said and done. Might be less is there's people that don't capitalize on the offer. Time will tell.