Dell in $400m recall of fire-prone laptops

Dell's attempts to rebuild its reputation with consumers appeared to have gone up in smoke, after the company admitted its laptops were prone to catching fire and it began the world's biggest electronic product recall.

It is asking consumers to return 4.1 million Sony batteries from laptops sold in the past two years. The cost of the recall to Dell and Sony could top $400m (£210m), analysts predict.

And yesterday, Wall Street began to fret about the possibility that consumers and company IT managers will switch to buying PCs from Dell's rivals, including the resurgent Hewlett-Packard.

Television news bulletins, internet blogs and newspapers have been reporting the damage caused by a string of fires.

Thomas Forqueran, from Arizona, posed with his burnt-out pick-up truck in which an overheating Dell laptop had ignited a glove compartment full of ammunition.

The affected batteries were used in Latitude, Inspiron and Dell Precision laptops sold from April 2004 until last month. Dell told the US Consumer Product Safety Commission of six cases since December in the US of notebooks, as they are known, overheating or bursting into flames.

Dell will ship new batteries to owners of affected computers, and it brandished its health and safety credentials yesterday, promising it was taking steps to protect the public. However, the recall could not come at a worse time. The company's growth has stalled in the US and it had gained a reputation for poor customer service, that it believed it would shake off after investment in call centres.

The impact on sales depends on whether the problem spreads to other manufacturers. Apple and Lenovo said they were examining the safety of their batteries but Hewlett-Packard said it was not affected.

Dell's founder and chairman, Michael Dell, said the recall would have no material impact on Dell's results. "We've been working very closely with Sony to find out what happened," he said. "We've confidence that they have taken the right counter-measures, and they will continue to be our global supplier for batteries."