Sony to contribute to Dell recall costs

Sony on Tuesday said it would pay towards the costs of a recall by Dell of millions of notebook computer batteries that have been known to burst into flames.

“Dell will pay some of the costs, Sony will pay some of the costs,” the Japanese consumer electronics group told the Financial Times.

But Sony declined to name other companies to which the batteries had been sold, saying the safety problem that sparked Dell’s recall could only occur in the US company’s computers.

However, the US Consumer Product Safety Commission, the US consumer safety watchdog, said on Tuesday that it would examine other products containing Sony batteries. “We are looking at the complete scope of the batteries made by Sony to ensure that no other consumers are in harm’s way,” a spokesman told Reuters.

Sony’s decision to share costs has a symbolic importance for Dell at a time when the US computer company is fighting broader perceptions of poor customer service amid slowing sales growth.

It is likely to take some of the responsibility off Dell’s shoulders, in the eyes of consumers.

The problem involves the batteries of about 4.1m Dell notebook computers, 2.7m of them in the US.

The voluntary recall, the biggest in Dell’s history, follows the revelation the lithium-ion batteries, made by Sony, are liable to overheat and, in rare cases, produce smoke or catch fire.

A small number of cases involving fire have been reported so far. Personal belongings have been damaged, though there have been no injuries.

The product withdrawal comes at a time of heightened concerns about the potential dangers of laptop computers powered by unstable battery packs.

A number of cases of fires caused by laptops bursting into flames have circulated on the internet, drawing concerns from aircraft regulators. Sony said: “Under certain conditions there is an elevated risk that batteries may overheat or catch fire. The potential for this to occur is very rare.”

The batteries covered by the recall were produced by Sony over the past two years.

They are also used by other computer makers, including Apple Computer, which said it was looking into the issue. Hewlett-Packard said its notebooks were not affected by the recall.

The problem also comes at a sensitive time for Sony, which is struggling to increase profits through restructuring. Last month the company revealed a rise in first-quarter profits for the first time in four years.

Some analysts believe that despite the reputational damage, financial costs are likely to be quite low for both companies, as it is unlikely hundreds of thousands of consumers will opt to recall.

However, Benjamin Reitzes, a UBS analyst, estimated the recall could cost $400m.

Dell shares rose 3.95 per cent to close at $22.08 in New York.