The 1 Billion is probably a write down only on their books. The way it works is this:Originally Posted by wezeles
When a company offers warranties, they automatically have to take a write down based on a formula. Lets say they think 25% of consoles will need to be replaced, so they use the amount of units sold, times the percent, times the repair costs. Thats the write down they took. Its really only on paper.
Once the three years is up, any consoles they didnt need to get repaired, will have the write down added back, and Microsoft will have a gain on their books, but again, only on paper...not an actual cash gain.