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Wednesday, Oct. 25, 2006

LOSS OF BUSINESS TO RIVALS FEARED

Sony apologizes for defective batteries


Staff writer

Sony Corp. Vice President Yutaka Nakagawa apologized Tuesday for causing concern among customers over problems with its lithium-ion batteries that have led to a massive worldwide recall.

"We take this opportunity to apologize for causing safety concerns about our lithium-ion batteries and inconvenience over their recall and exchange," Nakagawa said at a news conference.

But Naofumi Hara, a senior vice president with the company, said Sony has not considered firing or reprimanding CEO Howard Stringer, President Ryoji Chubachi or other top executives.

"What the management needs to do at this point is to recall and replace the batteries as quickly and effectively as possible, and to regain the trust of our customers," Hara said.

Sony also admitted that Toshiba Corp. is not the only company seeking compensation for lost business, although it did not provide details. Fujitsu Ltd. and Hitachi Ltd. have reportedly been considering seeking compensation over the faulty power supplies.

Sony announced details of its plan to recall and replace some 3.5 million battery packs for six computer manufacturers -- Toshiba, Fujitsu, Sharp Corp., Hitachi, Gateway Inc. and Sony.

The six have agreed to recall their Sony batteries to "relieve public concerns, although defects have not been detected," according to Sony.

"After the Lenovo incident last month, which had a huge public impact, many users were worried whether the batteries were safe," Nakagawa said. "We proposed the recall program to assuage their concerns."

Last month, a Lenovo laptop with a faulty battery began emitting smoke and sparks at Los Angeles International Airport.

Three other makers, Dell Inc., Apple Computer Inc. and Lenovo Group Ltd., have begun their own recalls, which Sony will pay for. The total number of batteries to be recalled could reach as high as 9.6 million.

Sony will ask other battery manufacturers to supply lithium-ion batteries so that all of the batteries subject to the recall can be replaced.

Observers point out that Sony may lose business to rivals because they will be helping to provide replacements.

"We think it is possible" that the PC makers will shift to other battery manufactures and no longer use Sony's batteries, Nakagawa said. "It depends on whether we can eliminate the safety concerns about" Sony's products.

He denied that Sony will stop making batteries or scale back production.

Nakagawa said the batteries may have overheated because microscopic nickel particles became trapped inside them during production.

He also maintained that the batteries may not be the sole cause of the problem and that the computers themselves should also be checked. Dell has claimed that Sony's batteries caused the overheating.

Dell began recalling 35,000 Sony lithium-ion batteries in December 2005 due to reports of overheating. Asked whether Sony should broadened its recall at that time, Nakagawa admitted that Sony employees failed to thoroughly examine the reason for the overheating incidents.

Gateway joins recall

Kyodo News Gateway Inc. issued a global recall Tuesday of about 35,000 lithium-ion batteries made by Sony Energy Devices Corp. due to the overheating problem.

About 500 of the batteries are in Gateway MX1020j laptop computers sold in the Japanese market. Owners can get the batteries replaced for free.

The computer maker, headquartered in California, said the affected laptops were shipped beginning in September 2005 and include Gateway models CX200, CX210, E100M and MX1025.

Gateway said it has not identified any problems with its notebooks overheating, but it has issued the recall in the interest of customer safety.

Some of Sony Corp.'s lithium-ion batteries have overheated and short-circuited because metal shards got in the batteries during production.

Sony last week cut its group profit forecasts for fiscal 2006 by about 40 percent to 60 percent, mainly due to global recalls of the batteries.



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