More than 7 million Sony batteries have now been recalled since the middle of August when Dell made its big 4.1 million battery recall announcement, a figure which has risen to 4.2 million over the weekend interestingly enough. Toshiba has now joined the feeding frenzy by recalling 830,000 laptop batteries; Fujitsu is also doing the recall thing but refuse to comment on numbers. This following the earlier announcement from IBM/Lenovo that it was recalling over half a million Sony batteries, and let’s not forget that Apple has been busy doing the same.
So where does this leave Sony?
The perhaps predictable answer is on the slide. Certainly, that’s what has happened to the Sony share price, which has dropped by 8.6% since the Dell recall, in contrast to the Nikkei itself having gained 1.7% in the same period. Apart from the adverse impact upon the brand image because of the admittedly rare problem of short circuits within the batteries concerned, there is also the raw financial cost of bearing the brunt of funding all the recalls. From what I can gather, it is Sony that will be paying for these.
The true cost of recalling 7 million batteries is not being revealed, although Sony has previously stated that the Apple and Dell recalls would cost anywhere between $175 to $250 million. Or put another way, anything up to 25% of the entire net profit for the current Sony business year. However, analysts are predicting the long-term effect will be negligible for Sony, which will most likely remain a major player in the battery supply market. Indeed, nobody has stated that they are to stop using Sony batteries as a result of the recalls…