August 18, 2006 10:00 AM PDT

Week in review: Dell in the hot seat

Some of Dell's notebooks are really hot--so hot that the company has launched a massive recall to cool them off.

Dell and the U.S. Consumer Product Safety Commission announced plans to recall 4.1 million notebook batteries in what may be the largest battery recall in the history of the electronics industry. Dell battery packs The recall affects certain Inspiron, Latitude and Precision mobile workstations and XPS units shipped between April 2004 and July 18, 2006. Sony manufactured the batteries that are being recalled, a Dell representative said.

If consumers have one of the affected units, they are advised to eject the battery from the notebook after powering down and continue using the notebook with its AC power adapter, the CPSC said. Dell has so far received six reports of overheating units that caused property damage, but no injuries.

The recall could cost Sony from $85 million to $430 million, hurting the Japanese electronics maker's short-term earnings, analysts said.

As many CNET News.com readers expressed anger at Sony as did for Dell.

"What's Sony's problem?" one reader wrote to News.com's TalkBack forum. "Have they figured L-Ion batteries out in the past 11 years? Apparently not."

Nervous Dell owners around the world are scrutinizing their battery packs and wondering if their laptop is one step away from bursting into a high-tech inferno. Other laptop owners have to wonder if their systems might also be affected by faulty lithium ion batteries. CNET News.com has created a list of frequently asked questions to help owners determine if they have affected systems and what action they should take.

The recall is also putting the spotlight on alternative energy sources for notebooks. Zinc Matrix Power is one of a number of companies that has been toiling away at a problem that's no longer obscure due to Dell's massive laptop battery recall: Lithium ion batteries can, under the right conditions, explode into flames.

By contrast, Zinc Matrix says it has come up with a silver zinc-based battery that can't explode. The materials inside the battery--mostly zinc, zinc oxide and water--aren't flammable. Notebooks running on these batteries, which will go into low-volume production in early 2007, can last eight to 10 hours, the company said, longer than ones running on lithium ion batteries.

Amid the battery blowup, Dell announced that it is broadening its relationship with Advanced Micro Devices, shipping Dimension desktops and two-processor servers equipped with the Intel rival's chips by the end of the year.

As much as news of the AMD partnership might have pleased customers and investors Thursday, it couldn't overshadow second-quarter net income that, at $502 million, has fallen sharply since last year's $1 billion. Dell also announced an investigation by the U.S. Securities and Exchange Commission into its accounting practices, including revenue recognition and end-of-quarter policies.

CONTINUED: The feds and tech…
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