APC Issues Voluntary Product Recall, Cites Potential Fire Hazard


Two models affected are aimed at SOHO market


Citing a potential fire hazard, American Power Conversion (APC) has announced a voluntary recall of two models in it Back-UPS CS UPS line, which is primarily sold into the SOHO market.

No injuries have been reported from the 2.1 million affected power supplies that are on the market, but APC has received eight reports worldwide of units overheating resulting in the melting of the unit's outer casing. Six of those incidents occurred in the United States where approximately 900,000 of the affected devices have been sold. Three of the reported incidents resulted in minor property damage.

The recall, which is being conducted in conjunction with the Consumer Product Safety Commission (CPSC), is the first in APC's 22-year history, said Joe Loberti, general manager of consumer networks at APC.

"We pride ourselves on legendary reliability so our first and foremost direction is to make sure the customer is protected," Loberti said. "We want to be as proactive as possible."

APC said the two models affected, which are priced from $70 to $130, are its Back-UPS CS 350 and the Back-UPS CS 500, in both 120-volt and 230-volt models.

"Those are mostly the units sold for PCs, not the server infrastructure, so it doesn't affect us," said Oli Thordarson, president of Alvaka Networks, a solution provider in Huntington Beach, Calif. "If we sold anything, it is trivial numbers. I'll bet that CDW [Computer Centers], CompUSA and other retailers probably sold the bulk of the units."

APC said it was unclear how many of the affected models were sold by solution providers, adding that the units were sold primarily through distributors, catalog and retail outlets worldwide.

APC is asking for the help of solution providers and distributors in replacing the affected devices in offices or homes with a free replacement unit. Solution providers looking for detailed information on the models affected can get it from APC's Web site at http://www.apc.com/rely/index.cfm or from a toll-free number for North American solution providers at (866) 272-7359.

Solution providers can identify the affected units by the model markings on the front of the unit and by the serial numbers located on the bottom of the unit. Only units with serial numbers having the first six characters in the following ranges are affected: AB0048 through AB0251, BB0104 through BB0251, and JB0125 through JB0251. Any units with an R at the end of the serial number are not part of the recall.

APC recommends that the solution provider or user immediately remove the UPS unit from service by turning off all connected equipment, turning the UPS unit off, and then unplugging the unit from the electrical outlet.

APC has already implemented design changes aimed at preventing the potential overheating, Loberti said. The company was never able to replicate the problem internally, he added.

APC said the affected units were manufactured between November 2000 and December 2002. Loberti said the bulk of the products were sold in the past 18 months.

APC is planning further "proactive communications" to its partners to facilitate the recall effort, he said.

APC plans on taking a special pre-tax charge in the range of $15 million to $25 million for the fourth quarter to cover the costs of the recall. At the same time, the company said it would report better-than-expected results for the quarter excluding the charge.

APC said it expects to report fourth-quarter earnings of 21 cents to 25 cents per share. The consensus estimate from analysts surveyed by Thomson Financial/First Call was 20 cents a share.

APC currently expects to post mid-single-digit year-over-year revenue growth in the fourth quarter vs. $338.6 million in the fourth quarter of 2001. The anticipated results mark the first year-over-year sales growth for APC since the first quarter two years ago.

APC shares closed up 6 percent, or 94 cents, to $16.79 Wednesday after brokerage firm Robert W. Baird & Co. upgraded its rating on the company from neutral to outperform.

APC said it plans to announce its fourth-quarter results after the market closes Feb. 4.