HD-DVD flop costs Toshiba more than 600 million euros
Japanese electronics giant Toshiba predicts that its HD-DVD withdrawal will cause losses of up to 100 billion yen (631 million euros) in the current business year of 2007, which ends 31. March. The vendor announced in mid February that it will no longer produce and market HD-DVD players and recorders. The reason for this decision is that the format was defeated by competitor Sony's Blu-ray format, which is backed by the major Hollywood studios and chain stores.
According to Japanese news agency Nikkei, Toshiba plans to enter all extraordinary expenses in connection with its withdrawal from the HD-DVD business in its books for 2007. The group estimates costs of around 50 billion yen for dismantling and refitting existing production lines. Toshiba co-developed the HD-DVD format with NEC and was left as the only relevant manufacturer of players after NEC started to co-operate with Sony.
Despite its losses caused by the HD disk war with Sony, Toshiba forecasts operating profits of 250 billion yen (1.58 billion euros) for 2007 - this is only marginally less than in 2006, when the vendor achieved operating profits of 258.3 billion yen. The company's net profits, however, will probably fall considerably short of the previously forecast 180 billion yen, as the flash memory division and the LCD division both had to face stiffer competition.