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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: Of course they leave out...
By Trisped on 10/23/2006 4:09:18 PM , Rating: 2
Serious trouble to me means that it is not something that will go away on its own or after a while. Yes, GM and even more so, Ford are in serious trouble. But GM is and has been working on a way out of it, so to them it is just a speed bump that they will have to slow down.

Sony is on the path to ruin. While they still command a zealous following, they don't have the quality or prices to warrant it. They cut corners, endangering people's lives and property, shipping products that don't hold up, force people who use their products into proprietary formats that cost 2-5x as much as the commonly used versions, and have poor customer service. And what is more, they don't think that is a problem.

So, you have a company, it is not doing well. It is continuing to make bad choices and lower its over all value. If things don't change, Sony is going to be going through the same thing GM and Ford are.

PS if you reply to this please take the time to not sound like a Sony PR rep. It will add credibility to your post.

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer

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