JAPAN SONY
Koji Sasahara  /  AP
Laptop computers are on display at an electric and electronic store in Tokyo Monday, Oct. 16, 2006. Sony slashed its fiscal year profit forecasts Thursday because of costs from a massive global recall of laptop batteries and price cuts in Japan for the next-generation PlayStation 3 video game console. Sony Corp. now expects group net profit of 80 billion yen (US$673 million; euro536.5 million), down from the 130 billion yen (US$1.1 billion; euro880 million) it had forecast in July. (AP Photo/Koji Sasahara)
updated 10/20/2006 9:19:25 AM ET 2006-10-20T13:19:25

Sony on Friday delayed the rollout of a product promised for next week to do more tests, in its latest embarrassment, a day after lowering its earnings forecast because of a massive battery recall and manufacturing delays.

Japan's trade minister said he was worried about Sony Corp.'s technological capabilities, as Sony shares dipped in Tokyo trading, falling 0.8 percent to close at 4,750 yen ($40).  The shares have lost about half their value in the last five years as Sony lost out in competition against rivals.

The latest woes are hitting the Tokyo-based electronics and entertainment company as it tries to turn around its electronics sector, trimming jobs and wiping out unprofitable operations.

Sony, which has already delayed the PlayStation 3 next-generation video game console for the European market by four months, said it was delaying the sales date of LocationFree TV Box LF-Box1, which streams TV shows wirelessly to other gadgets.

In Japan, shipping was postponed from Oct. 27 to Nov. 17, the company said in a statement.

In the U.S., a new shipping date has not been set, but it had been promised for sometime in October, Sony spokeswoman Natsuki Eto said.  She said more tests were needed to adapt its remote controller to more models of DVD recorders and other machines the product will connect with.

When asked about risks to its reputation by delaying a product, Eto said Sony decided a delay was better if the product will be compatible with more of the latest models.

Last month, Sony delayed the Japanese release of its new digital Walkman portable player by a week until Sept. 23 because of a malfunction of an unspecified part.

Akira Amari, minister of economy, trade and industry, told reporters he hoped Sony would recover its brand image soon.  "What has become of the Sony known for its technology?" asked Amari, a former Sony employee.  "I hope it will solve its problems soon to quickly recover its brand image reputed for technological prowess," he said in remarks confirmed by a ministry official.

On Thursday, Sony revised its group net profit for the fiscal year through March 2007 to 80 billion yen ($673 million), down 38 percent from the 130 billion yen ($1.1 billion) it had projected in July. The lowered projection is down 35 percent from the 123.6 billion yen profit marked the previous fiscal year.

In recent weeks, almost every major laptop maker in the world, including Dell Inc., Apple Computer Inc. and Lenovo Group, has been recalling Sony batteries.

Sony said the number of battery packs being recalled worldwide would total 9.6 million, racking up an extra cost of 51 billion yen ($429 million).  Such costs may grow because that estimate doesn't account for damage compensation that companies may demand. Toshiba has said it may demand compensation.

The problem stems from lithium-ion batteries that can short-circuit, causing some computers to overheat or burst into flames.

Sony also pointed to sluggish results in its video game unit. Last month, Sony said it had run into production problems for its PlayStation 3 video game console, expected to go on sale in the U.S. and Japan in November.

Sony delayed its introduction in Europe until March next year because of the manufacturing problems.

Another factor expected to hurt earnings is the price cut Sony announced for the machine in Japan.

The battery recall and other problems are threatening Sony's brand power at a crucial time because its electronics profitability had been recovering under new management heading the revival effort.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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