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Recalling 9.6 million batteries could have that effect on a company's bottom line

Those who have been following the news know that Sony has seen better days. Sony revealed to investors that net income for the year will decline 35 percent to 80 billion yen (US$675 million) from a year earlier, great short of the July forecast of 130 billion yen. Operating profit will fall 62 percent to 50 billion yen (US$420.6 million) this fiscal year, while the sales forecast was kept at 8.23 trillion yen (US$69.2 billion).

Reasons cited for the dive in profits are fairly obvious. Sony CFO Nobuyuki Oneda said in this mini report that a total of 9.6 million Sony-made PC batteries which were found in Dell, Lenovo, Apple, Toshiba, Matsushita/Panasonic, Fujitsu, Sharp and Sony's own notebooks could be subject to the company's global recall. Oneda said replacing the cells will cost 51 billion yen (US$429 million).

"The cost of the recall is our best estimate," Nobuyuki Oneda told reporters. "It may rise or fall."

Other reasons behind Sony's big financial revisions came from PlayStation 3. Sony announced at the Tokyo Game Show that the 20GB variant of the PlayStation 3 would receive a 20 percent price cut even before it hit stores and that it would include an HDMI connection that was previously reserved for the more expensive 60GB version. While this was good news for consumers, to investors it meant a more costly machine to produce. PlayStation 3 sales projections were also cutback due to the delay of the European launch.

Read more about it in this Reuters article.



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RE: Screwing your customers
By TomZ on 10/19/2006 3:04:03 PM , Rating: 2
While it is a fact that GM and Ford have generally had lower quality than their Japanese counterparts, I would hardly characterize that as "screwing their customers." It is more accurate to say that Toyota and Honda generally make better products, and as such should be priced higher in the marketplace (as they are). And this causes a financial problem for GM and Ford since their cost structures are out of whack, mainly due to the burdens associated with unionized labor and their internal inefficiencies.

Also, you are actually wrong twice, since you presume that Ford and GM have figured out a strategy to recover from their current problems. This is actually not the case.


RE: Screwing your customers
By robber98 on 10/19/2006 4:51:43 PM , Rating: 2
Remember Ford attempted to cover-up their mistake few years ago? That's how they treat their customer...


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