Oct. 19 (Bloomberg) -- Sony Corp., the world's second- biggest maker of consumer electronics, said second-quarter profit fell 93 percent after personal-computer makers recalled 9.6 million of its batteries because some were fire hazards.

Net income slid to 2 billion yen ($16.8 million) in the three months ended Sept. 30, from 28.5 billion yen a year earlier, the Tokyo-based company said in a preliminary earnings statement today. Sony also cut its annual profit forecast 39 percent.

The recall and delays for Sony's PlayStation 3 game console undermine Howard Stringer's plan to revive earnings after an unexpected loss in 2003 that led to his appointment last year as the company's first foreign-born chief executive officer.

``The reform process at Sony is not fully complete,'' said Pascal Masse, a director at the Japanese unit of Aberdeen Management Asia Ltd., which oversees about $2 billion of Japanese equities. ``The issues may have been deeper than they expected.''

Sony said it will incur 51 billion yen in the quarter for the battery recall, the largest in the consumer-electronics industry. Losses at the game division will be wider than expected because of a planned price cut for its PlayStation 3 and slower than anticipated sales of the PlayStation Portable, it said.

``It's not clear whether 51 billion yen will be sufficient to cover the battery recall cost,'' said Osamu Hirose, an analyst at Tokai Tokyo Securities Co.

Sony shares in Frankfurt fell to 31.25 euro, or 4,653 yen, down 137 yen from its Tokyo close. The announcement came after the Japan market close.

Annual Forecast

The company posted a second-quarter operating loss, or sales minus the cost of goods sold and administrative expenses, of 21 billion yen, compared with a 65.9 billion profit a year earlier. Sales rose 9 percent to 1.85 trillion yen.

For the full year, net income is projected to drop to 80 billion yen, compared with its previous forecast for 130 billion yen and 123.6 billion yen reported a year earlier, the company said. Operating profit will fall 62 percent to 50 billion yen.

The sales forecast was kept at 8.23 trillion yen.

To contact the reporter for this story: Dave McCombs in Tokyo at dmccombs@bloomberg.net.

Last Updated: October 19, 2006 03:49 EDT