I believe Microsoft took the $1B that the new warranty program will cost and applied it to fiscal year 2007. So, 2007 is an extra billion dollars in the hole, but since they don't have that baggage hanging on them in 2008, it's still possible that they might turn a profit in 2008.

To say the same thing in a more cynical way, if you play with the numbers enough, you can make whatever year you like profitable.