Sony Profits Plummet 94 Percent

Massive Battery Recall Slams Japanese Technology Icon's Earnings

(AP)  Sony's profit nose-dived 94 percent for the July-September quarter as a global battery recall and red ink in its video-game business battered the Japanese electronics and entertainment company.

Sony Corp.'s group net profit for the fiscal second quarter totaled $14 million, dwindling from $239 million over the same period the previous year, the Tokyo-based manufacturer said Thursday.

An extra cost of $429 million related to a global recall of 9.6 million Sony laptop batteries was a major factor behind the sharp drop in profit.

Almost every major laptop maker in the world, including Dell Inc., Apple Computer Inc. and Lenovo, has announced recalls of Sony lithium-ion batteries that could overheat and burst into flames.

The recall — which has tarnished Sony's brand image as a longtime maker of icon products such as the Walkman portable player and PlayStation video game machine — offset the lift Sony's books got from an 8 percent rise in July-September sales to 1.85 trillion yen ($15.6 billion) from 1.7 trillion yen a year earlier.

Sony executives apologized Tuesday for inconvenience caused by the massive recall, but said the problems were now fixed and that none of the company's top leaders would resign over the recall.

Sony has been struggling to turn around its core electronics business.

John Yang, equity analyst with Standard & Poor's in Tokyo, said before the quarterly results were made public that the recall problem was unlikely to devastate Sony's battery operations because only a handful of major companies compete in that business.

"It's definitely making a dent in Sony's image," he said.

"But if Sony does well with games and LCD TVs, Sony still has a chance to come back as one of the major players."

Sony Corp. said improvements in production, design and inspection have been made to prevent a recurrence of any laptop overheating problems.

Company officials said the problems were caused by microscopic metal particles that mistakenly got inside the battery, causing short-circuiting.