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Sony launches replacement program

Japan's Sony Corp, scrambling to contain the fallout from widening defective battery problems, launched a global replacement program after China's Lenovo Group Ltd (聯想) became the latest computer maker to issue a recall.

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

"This is a program to ease the worries of computer makers and consumers," said Sony spokesman 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.

Fujitsu spokesman Masao Sakamoto said yesterday that the company will decide soon on a recall on laptops using Sony-made batteries. The program 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 Corp's ThinkPad personal computer unit last year, said on Thursday that 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.

It was the fourth recall in recent months involving Sony batteries believed to be defective. Last month Dell Inc asked customers to return 4.1 million faulty laptop batteries and Apple Computer Inc recalled 1.8 million batteries worldwide, warning they could catch fire.

Last week, Toshiba Corp said it was recalling 340,000 laptop batteries due to a problem that caused the laptops to sometimes run out of power.

Sony last month announced it would incur costs of up to US$257 million for recalls of millions of its batteries by Apple 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.

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

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 rollout 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.
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