Matsushita estimates Nokia-branded lithium-ion battery costs of up to $172M

By Suzanne Deffree, News Editor -- Electronic News, 8/24/2007

Matsushita Electric Industrial Co. Ltd. (MEI) expects to take an $86 million to $172 million (10 billion Japanese yen and 20 billion Japanese yen) hit for its recent lithium-ion battery blunders.

As announced earlier this month, an overheating threat forced a large-scale consumer recall of Nokia-branded BL-5C batteries manufactured by Matsushita Battery Industrial Co. Ltd., a MEI subsidiary, between December 2005 and November 2006 and used in a variety of Nokia's mobile phones.

Approximately 46 million Nokia-branded BL-5C lithium-ion battery pack units may cause overheating initiated by a short circuit while charging, which could cause the battery to dislodge from a mobile phone handset, Nokia said at that time.

On its end, Nokia is servicing customers through its Web site, which is providing serial numbers of effected cell phone batteries. Meanwhile, MEI has established a corporate lithium-ion battery customer support and management division, which it said will take steps to recover “the trust and confidence of its customers and society.” However, MEI did not state how consumers could contact the division or what specific directives the division would enact.

The up to $172 million in costs will be accrued in the first half of fiscal 2008. Despite this, MEI said it will not change its financial guidance for fiscal 2008, ending March 31, 2008, which forecasts a sales decrease of 5 percent year-over-year.

Unfortunately, Matsushita is not the only battery maker that has made a manufacturing mishap related to batteries as of late. For nearly a year now, Sony has been dealing with the fallout from a defective batch of lithium-ion batteries for notebook computers that are similarly subject to overheating. The fire hazard posed by the defective batteries has triggered large-scale recalls over the past year at PC makers including Dell Inc., Apple Inc., Lenovo Inc., Acer America Corp., and Toshiba Corp. Sony said in October that a total of 9.6 million battery packs could potentially be covered by its since enacted battery replacement program, which could set the company back as much as $431 million (51 billion Japanese yen).