TOKYO - Toshiba lowered its earnings forecast for this fiscal year on Wednesday, blaming the reduction in part on 45 billion yen (US$460 million) in costs associated with pulling the plug on its HD DVD next-generation video business.
Toshiba also said it would rack up a 65 billion yen (US$666 million) operating loss in its HD DVD business.
Last month, Toshiba acknowledged defeat in the battle to establish an industry standard for high-definition video, handing victory to the competing Blu-ray disc format. Toshiba said it will no longer develop, make or market HD DVD players and recorders.
The Japanese electronics maker lowered its group profit forecast for the fiscal year ending March 31 to 125 billion yen ($1.26 billion), down from the initial forecast for 180 billion yen profit. Toshiba Corp. had earned a 137 billion yen profit the previous fiscal year.
Toshiba also lowered its sales projection for the fiscal year ending March 31 to 7.7 trillion yen ($78 billion) from the earlier 7.8 trillion yen.
A decline in prices for flash memory chips, devices for mobile phones, digital music players and other gadgets, also contributed to the sales drop, the company said.
The move to discontinue its HD DVD business ended the format war over high-definition disc formatting that began several years ago. Blu-ray - backed by Sony Corp., Matsushita Electric Industrial Co., which makes Panasonic brand products, and five major Hollywood movie studios - emerged the winner.
The decision by Warner Bros. Entertainment to release movie discs only in the Blu-ray format dealt the final blow, although Toshiba executives had repeatedly said they were confident of HD DVD as a technology.
Warner joined Sony Pictures, Walt Disney Co. and News Corp.'s Twentieth Century Fox in adopting Blu-ray as the standard.
Universal Studios, Paramount Pictures and DreamWorks Animation had signed on to make HD DVD movies.
Both HD DVD and Blu-ray deliver crisp, clear high-definition pictures and sound, which are more detailed and vivid than existing video technology. They are incompatible with each other, and neither plays on older DVD players. Both formats play on high-definition TVs.
HD DVD was touted as being cheaper because it was more similar to previous video technology, while Blu-ray boasts bigger recording capacity.
Only one video format was expected to emerge as the victor, much like VHS trumped Sony's Betamax in the video format battle of the 1980s.
Toshiba shares gained 3.3 per cent to 690 yen ($6.97) before the earnings revision was announced.
