Sanyo to share battery recall cost with Lenovo

By Mayumi Negishi and Sophie Taylor

TOKYO/ SHANGHAI (Reuters) - Troubled Japanese electronics maker Sanyo Electric Co. (6764.T: Quote, Profile, Research, Stock Buzz) said on Friday it would shoulder with China's Lenovo Group (0992.HK: Quote, Profile, Research, Stock Buzz) the cost of recalling 205,000 Sanyo-made laptop battery packs that can overheat.

The ThinkPad battery recall, which caused Sanyo shares to slip as much as 4.2 percent, comes during an investigation of loss-making Sanyo by Japan's securities watchdog the Securities Exchange and Surveillance Commission (SESC).

The news also invited comparison by analysts with a major recall of Sony Corp. (6758.T: Quote, Profile, Research, Stock Buzz) batteries last year, estimated to cost Sony 51 billion yen ($433 million).

The lithium-ion extended-life battery packs, jointly designed by Lenovo and Sanyo and tested by Lenovo, can overheat and spark if dropped hard on to the ground, the two companies said.

Sanyo, the world's biggest maker of lithium-ion batteries, and the world's No. 3 PC maker Lenovo have not yet decided how to split the recall cost, or what the final cost might be, Sanyo spokesman Akihiko Oiwa said.

The sum won't impact earnings, he said.

But the timing couldn't be worse for Sanyo's credibility, said Yoshihisa Okamoto, Senior Vice President at Fuji Investment Management.

"This hits the one bright spot in Sanyo's business, just when it tries to turn itself around," Okamoto said. "I'm more worried about the SESC investigation and about Sanyo's mobile phone business, but this recall certainly does not help Sanyo's image."