Battery Woes Hurt Sony Outlook

By Colleen Taylor -- Electronic News, 10/19/2006

Brought down by its recent battery recall woes, Sony Corp. has revised its financial forecast for the fiscal year ending March 31, 2007 from its prior outlook announced in July.

Sony's operating profits is now estimated to be $422 million (50 billion Japanese yen), down 62 percent from its July forecast. The company's net income outlook was also lowered, down 38 percent from its July forecast to $67 billion (80 billion Japanese yen). However, Sony's initial sales forecast of about $69.4 billion ( 8.23 trillion Japanese yen) has not changed.

Additionally, Sony said it plans to record a provision of about $431 million (51 billion Japanese yen) within its electronics segment to cover the recalls of its lithium-ion battery packs used in notebook PCs made by Dell, Apple, Lenovo, and others. Rumors have swirled recently that some companies may be set to ask Sony for compensation for damages incurred due to the recalls.

Battery woes are not the only technical problems holding back Sony's performance. In September, the company pushed back the launch date of its Playstation 3 entertainment system in Europe, Russia, the Middle East, Africa and Australia from the previously announced November date to March 2007, due to a delay in the mass production schedule of the blue laser diode that will be used to include next-generation Blu-ray capabilities in the consoles. The delay will cause the PS3 to miss out the critical holiday season in those markets; however, PS3 launch dates for Japan and North America remain in line at November 11 and November 17, respectively.