Weeks before he announced an "unacceptable number of repairs" to the Xbox 360, the Microsoft executive in charge of the video game console sold $6.15 million worth of company stock, or about 20% of his holdings.
According to regulatory filings with the U.S. Securities and Exchange Commission (SEC), Robbie Bach, president of Microsoft's entertainment and devices division, sold 200,000 shares in four transactions between May 3 and May 30. The total take: more than $6.1 million.
Late Friday, a Microsoft spokesman denied any connection between Bach's stock sales and the disclosure of Xbox reliability issues.On July 5, Bach was one of two Microsoft executives who spelled out the problems with the Xbox 360 to financial analysts and reporters. The game machine's design, Bach said, was defective. "Over the past couple of months, the number of repairs for the Xbox 360 console have been unacceptable to us," he said during a telephone conference call.
To handle the influx of customer complaints, Microsoft said it was immediately extending the Xbox 360's warranty from one to three years for any problem diagnosed with the three flashing lights error message, dubbed the "red ring of death" by users. To pay for the anticipated repairs, and to evaluate and fix systems still in inventory, Microsoft will take a charge of more than $1 billion against earnings for the quarter that ended June 30.
Also during the conference call, Bach said that Microsoft had been aware of the Xbox 360 problems for several months. "This set of issues wasn't visible at all for the first year and more," he said. "[But] the past couple of months, we've seen a significant increase in call volume, repair volume and attention from people."
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