The timing of this seems very strange. Why do this right after the release of Halo 3? Is there some way to construe this as a good thing for Microsoft?

Quoted: Microsoft Corp said on Friday that Bungie, the crown jewel of its video game unit behind the hit Halo; franchise, will become a separate company, opening the possibility that it could make titles for Microsoft rivals.

Quoted: "As far as anybody should be concerned, it's business as usual with Bungie. The only difference is that they are now employees of Bungie, not employees of Microsoft," Shane Kim, head of Microsoft Game Studios, told Reuters.