Dell Battery Recall.

Dell Inc.’s recall of 4.1 million laptop computer batteries came as embarrassing news to Sony, which supplied the problem batteries, but proved to be good news for rival Japanese electronics companies Sanyo and Matsushita, pushing the struggling company’s shares higher Wednesday.

Sony, Sanyo and Matsushita, maker of Panasonic brand goods, are the three major Japanese producers of lithium-ion batteries, which are rechargeable and used in laptops, digital cameras, music players, cell phones and other gadgets.

Sony Corp. in Tokyo said it was still calculating how much the incident will cost but that it has promised to cooperate fully with Dell Inc. in the largest recall of electronics-related products in U.S. history. Worries about the cost burden sent Sony shares tumbling 1.15 percent in Tokyo to 5,150 yen ($44).

Sony has been trying to overhaul its electronics operations under Welsh-born Howard Stringer, the first foreigner to head the company — and fight doubts about whether the Tokyo-based manufacturer of the Walkman portable music player and PlayStation video-game machine will ever regain its former glory.

Goldman Sachs said the recall could hurt Sony’s near-term earnings, although that would depend on how the cost of the recall is shared with Dell. In a report earlier this week, Goldman Sachs calculated the possible cost for Sony, using past sales data, at about 39.4 billion yen ($340 million).

John Yang, equity analyst at Standard & Poor’s in Tokyo, said the battery mishap, although an embarrassment for its image, wasn’t likely to be overly negative for Sony in the long run.
What would really hurt Sony would be a problem in its planned game machine upgrade, the PlayStation 3, set for worldwide sale in November, or a glitch in its booming flat-panel TV business.

“If we look at the big picture, it’s not really Sony’s core business,” he said of the batteries, adding that the recall is adding to doubts about Sony’s quality control.

Sony, based in Tokyo, recorded a 32.3 billion yen ($278 million) profit during the fiscal first quarter on the back of strong sales of flat-panel TVs and digital cameras — a big improvement on the 7.3 billion yen loss posted in the same period last year.

“We are proceeding immediately to support this recall,” Sony spokesman Takashi Uehara said, adding that Sony batteries powering Sony’s Vaio laptops don’t have the same problems.

David Gibson, senior analyst at Macquarie Research Equities, said the recall will likely cost Sony somewhere between 25 billion yen and 35 billion yen ($215 million and $300 million), assuming a replacement cost of $50 per unit.

Gibson told Dow Jones Newswires that the damage to Sony is likely to be limited because the batteries make up only a fraction of its massive business.

The problematic lithium-ion batteries could cause the Dell machines to overheat and even catch fire. Round Rock, Texas-based Dell, the world’s largest PC maker, announced the recall Monday night.

Battery packs contain cells of rolled up metal strips. During production, crimping the rolls left tiny shards of metal loose in the cells, and some of those shards caused batteries to short-circuit, according to Sony.

The problem affecting the Dell computers lies in batteries manufactured by Sony Energy Devices Corp. based in Fukushima, north of Tokyo, Sony said.

Here’s where to find out if you own one these crotch burners
https://www.dellbatteryprogram.com/

Source: http://redmondmag.com/news/print.asp?EditorialsID=7707

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