The embarrassing spate of battery recalls that is threatening to tarnish the once impeccable Sony brand power is coming at a time when Sony has been struggling to turn around its core electronics business.
It could hurt the Japanese electronics and entertainment company's sales during the critical year-end shopping season. For some, Sony's woes have shaken this nation's confidence in its long prized manufacturing prowess.
Sony slashed its profit forecasts last week, citing the battery recall as well as price cuts in Japan for the next-generation PlayStation 3 video game console. Sony expects an $673 million profit for the fiscal year through March 2007, down 38 percent from its projection in July.
John Yang, equity analyst with Standard & Poor's in Tokyo, said the recall problem is 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.
Sony said last week that about 9.6 million lithium-ion batteries, manufactured between August 2003 through February this year, are being recalled worldwide after reports of some computers using the Sony battery packs overheating and bursting into flames.
Top management, including Chief Executive Howard Stringer and President Ryoji Chubachi, would stay on at the company and make the successful completion of the recall a priority, Sony officials said.
"We would like to take this opportunity to apologize for the worries," Sony Corporate Executive Officer Yutaka Nakagawa said, bowing slightly with two other executives at a news conference at a Tokyo hotel.
There would be no move to drop or curtail the company's laptop battery production, the company said.