Dell Buyers Flock To Replace Batteries

Record-Setting Recall Of 4.1 Million Computers That Can Catch Fire

(CBS/AP)  Still, there have been previous reports of problems with lithium-ion batteries. Last year, Apple recalled batteries made by South Korea's LG Chem Ltd.

And in 2004, the Federal Aviation Administration banned shipments of lithium batteries from the cargo holds of passenger planes because of a potential fire hazard, when they're shipped in bulk. Passengers, however, are still allowed to carry laptops or cell phones on planes.

FAA spokeswoman Tammy Jones said the agency is continuing to review the possible hazard.

Sony provides battery components for other computer makers, including Lenovo Group Ltd., which said it gets a "handful" of reports each year of overheated batteries but does not plan a recall. Spokesman Bob Page said Lenovo's machines have other features, including software that disables the machine if it detects unsafe conditions.

Dell has been using Sony battery parts longer than other manufacturers, and Lenovo and others may eventually develop similar problems, Kay said.

Apple, which analysts say also uses Sony battery cells, said it was investigating the situation. Hewlett-Packard said it does not use Sony batteries and was not affected by the recall. Fujitsu said it builds its own batteries.

Dell has not given an estimate for the recall's cost but said it won't materially affect the company's financial results, which suggested that Sony would bear most of the cost. Analysts' estimated the recall could run $200 million to $400 million.

Investors brushed aside the news, pushing up shares of both Dell and Sony in Tuesday trading.

Dell shares rose 84 cents or 5 percent, to close at $22.08 on the Nasdaq Stock Market, and Sony shares gained 62 cents to close at $45.43 on the New York Stock Exchange.

The bigger issue, analysts said, is the possible effect on Dell's and Sony's reputations.

Cindy Shaw, an analyst with Moors & Cabot, said the recall could steer consumers away from Dell at back-to-school time. She also said business customers might not be forgiving.

At lunchtime Tuesday, a handful of customers browsed through Dell's first store, in an upscale Dallas mall. Dale Topham, a Dallas resident who was picking up a repaired computer, said the recall wouldn't make him less likely to buy another Dell.

"I don't worry because they're trying to take care of it," he said.

Dell and Sony both ranked among the most trusted consumer technology companies, according to a 2005 survey by Forrester Research.

But Forrester analyst Ted Schadler said the recall could depress notebook sales to businesses if the fire hazard causes regulators to ban the machines from planes.