Nokia battery case to cost Matsushita up to \2 mln

TOKYO, Aug 24 (Reuters) Japan's Matsushita Electric Industrial Co said on Friday that replacement of its batteries in Nokia mobile phones is likely to cost the company 10 billion to 20 billion yen (-2 million).

Nokia, the world's largest mobile phone maker, earlier this month warned consumers that 46 million batteries made by Matsushita and used in its cell phones could overheat and offered to replace them for free.

Panasonic-brand maker Matsushita, which expects operating profit of 477 billion yen for the year to March 2008 on sales of 8.78 trillion yen, said it did not plan to revise its earnings outlook.

Most Japan-based analysts had expected replacement costs of somewhere between 10 billion and 50 billion yen, but some had suggested the amount could reach as high as 138 billion yen, weighing on Matsushita shares.

Finland's Nokia said earlier in the day that Matsushita Battery Industrial Co, Matsushita's wholly owned battery subsidiary, would cover the direct costs of the replacement.

In Japan, about 160,000 battery packs will be affected by the replacement programme.

''On behalf of Nokia Japan, I would like to issue a public apology to Japanese customers for this inconvenience,'' Nokia Japan President Tyler McGee said after deeply bowing in front of reporters at a late evening Tokyo news conference.

McGee said customer safety and product quality are Nokia's top priorities.

But he also said he had not been informed of about 100 cases of the Matsushita battery overheating outside Japan until the day of Nokia's global announcement on the issue on Aug. 14, although he was aware of two cases in Japan, one of which was classified as a fire.

Before Matsushita's announcement on the financial impact of the replacement, its shares closed down 0.5 percent at 2,015 yen, while the Tokyo stock market's electrical machinery index was virtually unchanged.

Matsushita shares have lost 5 percent since the Aug. 14 announcement, underperforming the sub-index's 2.7 percent slide.

Matsushita is the latest Japanese electronics maker hit by lithium-ion battery overheating. Last year, Sony Corp was forced to recall 9.6 million laptop PC batteries, because they could overheat and catch fire in rare cases.

REUTERS SR BD2137