Sony Recalls 1.6 Million Bravia TV Sets Because of Fire Risk

by Mariko Yasu and Takashi Amano - Oct 12, 2011 6:48 PM GMT+0700

Sony Corp. (6758) 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 No. 3 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. who rates the stock “neutral plus.” “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 will be repaired if a faulty part was found. Sony will dispatch a service crew to inspect the set and may offer a rental TV while repairs are being made, Shima said. Sony 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 also will be announced today in the U.S. and Europe, Shima said.

The recall was announced after Tokyo markets closed. Sony rose 1.4 percent to close at 1,517 yen. The stock has plummeted 48 percent this year, compared with a 16 percent decline for the broader Topix index.

“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 from a temperature control defect.

Separately, the world’s second-largest maker of video-game machines said today 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.

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