Batteries recall hits Sony profits

Sluggish PSP and slowing PS2 sales add to second quarter financial blow

Written by Martin Lynch

As expected, Sony’s second quarter financial results have taken a hammering because of the global battery recall.

The company recorded an operating loss for Q2 of 20.8bn yen (£93m), down from an operating profit of 74.6bn yen (£333m) for the same period in 2005.

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The results included a massive charge of 51.2bn yen (£229m) to cope with the cost of having to deal with the recall of 9.6m potentially dangerous batteries.

Dell, Apple, Acer, Lenovo and many other leading notebook suppliers demanded that Sony bear the brunt of the cost of the global recalls they undertook after reports of laptops using Sony batteries bursting into flame emerged in recent months.

At a Tokyo press conference, Sony's chief financial officer, Nobuyuki Oneda, said: “While sales hit an all-time high in the second quarter, thanks to brisk sales of electronics products such as Bravia LCD TVs and increased revenue from movies, our operating performance tumbled into the red, largely because of one-off costs related to the global recall of our lithium-ion batteries."

Sony also suffered on the games front. Its games division reported a 43.5bn yen (£194m) loss thanks to weakening sales of the PS2 and its titles as well as lacklustre PSP sales.

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