/ 29 September 2006

Sony scrambles to contain growing battery troubles

Japan’s Sony, scrambling to contain the fall-out from widening defective battery problems, launched a global replacement programme after China’s Lenovo became the latest computer maker to mount a recall.

Sony will offer to replace certain battery packs for notebook computers in response to concerns at recent overheating incidents, the Japanese electronics giant announced in the United States late on Thursday.

“This is a programme to ease the worries of computer makers and consumers,” said Sony spokesperson Takashi Uehara in Tokyo.

“This is not a compulsory recall,” he said, adding it was not yet clear how many laptop computer batteries might be returned.

The programme could develop into the largest-ever recall of computer batteries by any company, according to Japanese media.

Analysts said it was hard to quantify the potential magnitude and cost of the problem but believed it so far looked manageable for Sony, which has recently rebounded under a major restructuring plan.

“The number of recalls is difficult to estimate now and there is the question of how many customers will replace batteries without any problems,” said Tatsuya Mizuho, a director at the credit rating agency Fitch Ratings.

In the latest recall, Lenovo, which took over IBM’s ThinkPad personal computer unit last year, said Thursday about 526 000 lithium-ion batteries made by Sony were susceptible to overheating and would be replaced free of charge.

The recall was announced with the US Consumer Product Safety Commission two weeks after a laptop overheated and caught fire as its owner was about to take a flight from Los Angeles International airport.

Sony shares fell 40 yen or 0,83% to 4 780 on Friday after the latest recall, bucking a stronger market.

Sony last month announced it would incur costs of up to $257-million for recalls of millions of its batteries by US computer makers Apple Computer and Dell.

“This level of cost would not be a serious concern to Sony, although it is a significant amount,” said Mizuho at Fitch Ratings.

“But if the extent of the problems expands further, it would invite worries over Sony’s technology and brand image,” he added.

Sony had insisted that the problems would spread no further than Dell and Apple but earlier this month Japan’s Toshiba also announced a recall of 340 000 laptop computers with batteries made by Sony

Sony said it would consult computer makers that use its batteries to see which companies decide to participate in the replacement programme.

The massive battery recall has hit Sony just as a painful restructuring drive had appeared to be paying off after a weak patch at the iconic Japanese company that created the Walkman portable music player.

There is also concern about prospects for two of the group’s pivotal new products — the PlayStation 3 (PS3) game console and the Blu-ray high-definition DVD player.

Sony was forced to delay the global launch of the PS3 by six months until this November.

Earlier this month it pushed back the roll-out in Europe, Russia, the Middle East, Africa and Australasia again, until March, because of technical problems with the Blu-ray player, which has been built into the PS3.

Both the PS3 and the Blu-ray DVD player are considered vital to a revival at Sony, which under its first foreign boss, Howard Stringer, is in the midst of a restructuring including 10 000 job cuts. — AFP