Toshiba May Ask for More Sony Recall Damages

Posted 16 October 2006 @ 12:19 pm EET     Print     Reprint     E-Mail     Comments

TOKYO (Reuters) - Toshiba Corp. said on Monday it may seek compensation from Sony Corp. for possible damage to its brand image and loss of potential sales due to a recall of Sony-made PC batteries, in the latest blow to the electronics conglomerate.

Toshiba has joined other PC makers such as Apple Computer Inc., Dell Inc., Lenovo, IBM and Hitachi Ltd. in recalling Sony batteries, which Sony has said can on rare occasions overheat and catch fire.

Sony has said it would pay for the recall costs, but Toshiba was considering seeking more money.

"Besides direct recall costs, we are looking into additional impacts" such as damages to its product and brand images and potential loss of sale opportunities, Toshiba spokesman Keisuke Ohmori said.

"Nothing has been decided. But we don't deny the possibility that we will ask them to cover those damages." Toshiba is the world's third-largest notebook PC maker behind Dell and Hewlett-Packard Co.

Sony shares, which are on a rebound from a recent downtrend caused by the recalls, were up 2.9 percent at 4,900 yen by midday, outperforming the Tokyo stock market's electrical machinery index IELEC, which gained 1.43 percent.

Last Friday, Fujitsu Ltd. and Sharp Corp. said they would recall a total 79,000 notebook PC batteries made by Sony, bringing the number of Sony batteries recalled to about 8 million.

Sony said in August that recalls by Dell and Apple would cost it between 20 billion yen and 30 billion yen, or between $170 million to $250 million. But Sony is now expected to face an even heavier financial burden with the additional recalls.

The series of recalls, along with a delay in the European launch of Sony's PlayStation 3 game console due to a production glitch, raised concerns over its technological competitiveness and hurt its reputation as a top-class manufacturer.

However, in a sign that Toshiba's comments might not trigger a wave of claims from other PC makers for compensation for indirect recall-related damages, Fujitsu said it has no plan at the moment to ask Sony for such compensation.

"If volume retailers started taking our products off their shelves, that would be a different matter. But nothing like that has happened," Fujitsu spokesman Toshiaki Koike said.

"We have not seen any clear evidence that we suffered from loss of potential sales or damage to our products' image," he said.