Bloomberg News

Sony Recalls 1.6 Million Bravia TV Sets Because of Fire Risk

October 12, 2011

(Updates with share price in eighth paragraph.)

Oct. 13 (Bloomberg) -- Sony Corp. recalled 1.6 million Bravia flat-panel TVs sold worldwide since 2007 because a faulty component may cause them to melt or catch fire.

Sony recalled the liquid-crystal display TVs after a September incident in which a customer noticed a small fire and smoke, said Yuki Shima, a Tokyo-based spokeswoman for the world’s third-largest maker of televisions. Eleven incidents have been reported in Japan since 2008, according to a company statement, and no injuries have been reported.

A faulty component in the backlight systems may be the source of overheating that can melt the top of the TV set, Shima said. It’s the second recall involving Sony products in a month, with KDDI Corp., Japan’s second-largest mobile-phone operator, saying it would replace Sony-made batteries in as many as 2 million handsets because they may overheat and melt.

“Sony-related recalls are following one another, and that may ruin the company’s brand image,” said Keita Wakabayashi, an analyst at Mito Securities Co. with a “neutral plus” rating on the stock. “Considering Sony’s overall business size, the TV recalls won’t shake the company’s grounding.”

The same transformer is used in the five Bravia models in Japan being recalled, according to a Sony statement.

The recalled sets, 40-inch models sold in regions including China, the Americas, the Middle East and Europe, will be repaired if faulty parts are found. Sony will dispatch a service crew to inspect sets, Shima said. The company won’t offer refunds or replacement TVs, she said.

U.S., Europe Announcements

There haven’t been any reports of overheating incidents outside Japan, the statement said. The recalls are carried out globally.

Sony rose 3 percent to 1,562 yen as of 9:51 a.m. in Tokyo trading, narrowing its loss this year to 47 percent. Japan’s benchmark Nikkei 225 Stock Average gained 1.1 percent. The recall was announced yesterday after Tokyo markets closed.

“It could impact the stock negatively if the recall causes a significant amount of expense,” Wakabayashi said.

The repairs will have a negligible impact on Sony’s earnings, Shima said. The recall was voluntary, she said.

Sony shares declined to their lowest in 24 years earlier this month on speculation the yen’s strength and slumping demand for televisions will hurt earnings. The company, which forecast full-year operating profit of 200 billion yen ($2.6 billion) in July, loses about 6 billion yen of annual operating profit, or sales minus the cost of goods sold and administrative expenses, for every 1 yen decline against the euro.

Previous Recalls

This is the company’s first recall of flat-screen televisions, though not the first associated with the Bravia line. In April 2010, Sony offered to repair the stands attached to two models because the screws weren’t strong enough and the stands could collapse.

Later that month, the company recalled 535,000 Vaio personal computers because of possible overheating caused by a temperature-control defect.

Separately, the world’s second-largest maker of video-game machines said yesterday it temporarily suspended about 93,000 user accounts of its online gaming and entertainment services after finding they were hacked.

“A massive number” of unauthorized attempts by intruders were detected between Oct. 7 and Oct. 10, Sony spokesman Satoshi Fukuoka said. The efforts included usernames and passwords that matched 93,000 accounts, including at least 35,000 in the U.S. and 24,000 in Europe, he said.

Personal information, including home addresses, in some accounts may have been compromised, he said.

--With assistance from Go Onomitsu and Takashi Amano in Tokyo. Editors: Michael Tighe, Anand Krishnamoorthy.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net.

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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