Dell146;s exploding computer and other image problems

The burning laptop incident highlights the power of the Internet in turning such situations into a nightmare for the company

A Dell notebook computer that burst into flames last month in Osaka, Japan, has damaged more than just the conference table where it sat smoldering. The incident, publicized in photos on the Internet, has also hurt Dell8217;s recent attempts to improve its image.

The company said the incident got more publicity than such incidents usually do when they happen to other manufacturers.

In part, that is because Dell8217;s reputation for responsive customer service was already under attack after the company, the world8217;s largest PC manufacturer, started to cut costs at its call centers last year. Dell, reacting to the savaging it has received on blogs and websites over the cuts, recently responded with a program to spend more than 100 million to improve service.

Photos of the flaming and smoking notebook were posted on a technology news website site called the Inquirer on June 21. The story was passed around to other websites and blogs like

Consumerist.com. It was also the subject of a brief article carried later that day on the Dow Jones Newswires.

Two days later, Cindy Shaw, a securities analyst with Moors 038; Cabot, notified her clients about the publicity. Last Thursday, citing reports of a second smoking laptop, this one in Pennsylvania, she advised them that 8216;8216;should this story also hit the mainstream press, we believe there is headline risk and potentially negative demand ramifications for Dell.8217;8217;

Bob Pearson, vice president for corporate group communications at Dell, called Shaw8217;s reaction 8216;8216;somewhat irresponsible.8217;8217;

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Shaw said neither she nor her firm had made any financial bets that the company8217;s stock would fall. She does, however, recommend that clients sell the shares. So far, though, Dell8217;s stock price has been largely unaffected.

Dell said its engineers examined and tested what remained of the flaming notebook computer for several days to find the source of the problem. They concluded that the fire was caused by a faulty lithium ion battery cell, but that the problem was unrelated to a recall last year of notebook batteries by the company and several other computer makers.

8216;8216;It8217;s very, very rare to have a thermal incident,8217;8217; Pearson said. Dell said that it found no pattern of battery failure and that the Pennsylvania incident publicized by the Inquirer Web site was caused by a chip problem and not batteries.

For any company trying to repair its image, any bit of bad news hurts. Teresa Valdez Klein, who has commented on Dell8217;s customer care troubles before on the Blog Business Summit Web site, compared Dell8217;s public relations problems to those of Britney Spears.

DAMON DARLIN