I was ready to scream. This was one of those mornings I wanted to crawl back into bed, pull the covers over my head and tell the world to go away.
Everything started off as usual. The alarm went off, I got dressed and fired up a pot of coffee. Heck, I didn’t even spill any water on my shirt for a change.
From there, I opened the back door to let my dog out. She knows as soon as I get the coffee brewing, it’s her chance for some morning relief. As she was sniffing around for her “spot,” I saw a streak of blazing red fur come barreling through the trees. It was not the rising sun, but a healthy red fox sprinting through the backyard.
Before I knew it, my mutt of four breeds was on the fox’s trail. And I was on hers. I didn’t stand a chance.
The chase ended just as abruptly as it had started. The two varmints were long gone. I could hear them zigzagging and crashing through the woods hundreds of yards away.
I, well… my brief sprint ended when I felt something squishy under my bare feet. My right foot was toe-deep in my pooch’s “natural” fertilizer. I was far from happy about the situation.
At 5:59, I was sound asleep in the sanctuary of my Serta. By 6:02, I was dragging my foul-smelling foot through the wet grass, searching for my dog. All this, before my first cup of coffee. It can’t be good for the heart.
As bad as my day started, I can’t help but think somebody else’s is worse.
Today, the award goes to the top executives at Dell (DELL:NASDAQ) and Sony (SNE:NYSE). They are doing more than scraping dog excrement from their feet. They are desperately trying to stop the bleeding from a major recall, the largest electronics-related recall in history.
Dell announced that it is recalling more than four million lithium-ion batteries that were shipped with many of its popular laptops. It turns out, the batteries have a tendency to catch on fire. More than one not-so-lucky user has had a computer burst into flames while using it.
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So far, Dell has not released any estimates on what the recall will cost the company. But a smaller component recall cost the company over $335 million last year. Fortunately, Dell does not have to deal with the problem alone.
Sony, the maker of the battery, is helping to cover the costs of the recall. It could end up paying for the entire mess. After all, it did make the faulty batteries. Dell claims, thanks to Sony’s help, the recall will have no material impact on the company.
I tend to disagree. Sure, the balance sheet may go unaffected this quarter, but long-term revenues are bound to falter as word spreads about Dell’s “shoddy” products.
The recall comes at a time when Dell is desperately trying to grow, especially in Asia. Currently, the Texas-based company boasts a 12% share of the Asian market. Not a bad stake, but it could be better.
Unfortunately, Dell is fighting an uphill battle. Hewlett Packard’s (whose batteries are not affected) products are putting up a good fight and are gaining plenty of market share-stealing momentum. If Dell wants to win in the global market, it needs to clean up its act.
Today, Wall Street is actually applauding Dell for issuing the recall, with industry analysts calling it an “image and brand management” issue.
I don’t know how a company can admit four million of its latest products are defective and call it good for the brand, but shares of Dell are currently trading more than 2% higher than they were at yesterday’s close.
The rally won’t last. Bad news is bad news, no matter how you spice it up.
Enjoy your Tuesday.
Andrew Snyder
Executive Editor, Fear and Greed
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