- The Washington Times - Tuesday, August 15, 2006

From combined dispatches

DALLAS — Dell Inc.’s record-setting recall of 4.1 million notebook computer batteries raised safety concerns about the power source of countless electronic devices, but analysts said the laptop problem appears to stem from flaws in the production of the batteries, not the underlying technology.

Customers began calling the company and surfing to a special Web site yesterday to order replacements for the lithium-ion batteries that could cause their machines to overheat and even catch fire. The batteries were supplied to Dell by Japan’s Sony Corp.

Lithium-ion batteries are not only used to power laptops but also digital cameras, music players, cell phones and other gadgets.

Dell, the world’s largest personal-computer maker, announced the recall Monday night to the Consumer Product Safety Commission. It was the largest electronics-related recall involving the federal agency.

The recalled batteries were shipped in notebooks sold between April 1, 2004, and July 18 of this year. They were included in some models of Dell’s Latitude, Inspiron, XPS and Precision mobile workstation notebooks.

Replacement orders would be filled on a first-come, first-served basis, said Dell spokesman Ira Williams. He said he couldn’t estimate how long customers would have to wait for new batteries, adding that it could vary by model.

Dell has not given an estimate for the recall’s cost but said it won’t materially affect the Round Rock, Texas, company’s financial results, a statement that suggested that Sony would bear most of the cost.

The recall will boost production, shipping and marketing expenses by $200 million, estimated Roger Kay, an analyst at Endpoint Technologies Associates in Wayland, Mass.

“They need to turn their shipping operation into a massive relief operation,” Mr. Kay said. “It’s almost like going to war.”

UBS AG analyst Benjamin Reitzes and Cindy Shaw at Moors & Cabot predict that the cost could rise to $400 million. The replacement batteries are coming from Sony and a handful of other battery manufacturers.

Rick Clancy, a Sony spokesman, said the company has “taken steps to address the situation … to Dell’s satisfaction,” but wouldn’t describe the steps more fully.

Mr. Kay called the situation “a nightmare for Sony” but said the recall wasn’t likely to scare manufacturers away from using lithium-ion batteries.

“Well-made lithium-ion batteries are perfectly safe,” he said. “This is a manufacturing problem and not an indictment of lithium-ion technology.”

Shares of Dell rose 84 cents to close at $22.08 yesterday on the Nasdaq Stock Market.

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