In the more bad news for Microsoft department, general hardware failures in their Xbox 360 gaming console will cost Microsoft an estimated $1 to $1.15 billion dollars to repair, dealing more losses to Microsoft’s already unprofitable entertainment and devices division.

For users who experience the hardware failure, dubbed “the red ring of death” by some gamers, Microsoft will pay for worldwide shipping and repairs for three years.

Microsoft declined to detail the problems that have caused an onslaught of general hardware failures in recent months but said they will extend the warranty on the consoles to three years. Microsoft will also reimburse the “small number” of Xbox 360 owners who have already paid for shipping and out-of-warranty repairs.

“We don’t think we’ve been getting the job done” said Robbie Bach, President of Microsoft’s entertainment and devices division. “In the past few months, we have been having to make Xbox 360 console repairs at a rate too high for our liking.”

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Sophos has issued a warning of a widespread attempt to infect computers by emailing users about a bogus Microsoft security patch. If you’re unfortunate enough to install it, your computer will become infected some serious malware.

The email, purporting to be from Microsoft, has “Microsoft Security Bulletin MS07-0065” in the subject line and claims that a zero-day vulnerability has been discovered in the Microsoft Outlook email program. It goes on to warn the recipient that “more than 100,000 machines” have been exploited by the vulnerability in attempts to sell Viagra and Cialis.

The bogus email encourages users to download a patch from http:// windowsupdate. microsoft.com/ outlook/ update-0-day / download.aspx?id=63852 (without the spaces) it claims will fix the problem and prevent them from being attacked by hackers. Clicking the link in the email does not take you to the Microsoft update site. Instead, it takes you to one of many compromised websites that hosts a trojan horse identified by Sophos as Mal/Behav-112.

Examples of the fraudulent emails seen by Sophos have contained the recipient’s full name and the name of the company they work for.

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