Matsushita faces significant expenses after mass battery recall

Matsushita Electric Industrial Co. Ltd., Osaka, Japan, potentially faces painful repercussions after a mass recall of batteries from Nokia phones, reports Forbes.com. Nokia has offered to replace 46 million lithium ion batteries, after it was learned that they could overheat. If that many batteries are returned, at an estimated unit cost of ¥ 3,000 ($26), Matsushita could be suffering a loss of up to ¥138 billion ($1.2 billion), according to calculations by Nikko Citigroup analyst Kota Ezawa.

That number is equal to 28 percent of Matsushita's 2008 operating profit forecast and nearly five times the yearly revenue of its entire battery business for the fiscal year that ended in March, Nikko Citigroup estimates. Matsushita shares have fallen since the announcement of the recall, hitting a year low this week, according to Forbes.com.

Nokia is replacing the batteries at no cost to customers, but Matsushita will shoulder a significant share of the expenses.