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Fri, Oct 27, 2006 - Page 10 News List

Defective batteries land Sony in the red


Sony Corp said yesterday it suf-fered an operating loss of ¥20.8 billion (US$175 million) for the three months to September largely due to a mounting defective battery crisis.

The electronics giant, which reported a ¥74.6 billion in operating profit a year earlier, said it booked a¥51.2 billion provision for the quarter "that relates to charges expected to be incurred as a result of the [battery] recall."

Its net profit for the quarter plunged 94.1 percent to ¥1.7 billion as it incurred a pre-tax loss of ¥26.1 billion, compared with a pre-tax profit of ¥95.4 billion for the same period last year.

Despite the battery woes, sales of its electronics products as well as revenue from its film businesses remained brisk, raising total revenue for the quarter by 8.3 percent to a record ¥1.85 trillion.

Sony left its full-year forecast unchanged from its latest projection announced last Thursday when it more than halved its operating profit target for the fiscal year ending next March.

The company slashed its target for operating profit to ¥50 billion from ¥130 billion as it cut its net profit target to ¥80 billion from ¥130 billion, but left its revenue target unchanged at ¥8.23 trillion.

Sony said on Tuesday that Welsh-born chief executive Howard Stringer and president Ryoji Chubachi would continue in their jobs to oversee the recall of millions of the group's laptop computer batteries.

Sony said last week that as many as 9.6 million of its batteries could now be recalled at a cost of ¥51 billion owing to fears they might catch fire.

Sony said it believed microscopic metal particles, produced in the manufacturing processes, may cause short-circuiting and overheating in the affected batteries that were produced between August 2003 and last February.

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