Will Toshiba's Profit Drop Hurt HD DVD?

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News Analysis
Will Toshiba's Profit Drop Hurt HD DVD?
The company says profits fell 25 percent.
By Swanni

Washington, D.C. (January 29, 2008) -- Toshiba today said its operating profit fell 25 percent in the third quarter due largely to falling prices of flash memory chips.

However, the decline could put more pressure on the company to abandon its stake in the sagging HD DVD high-def disc format.

HD DVD is competing with the Sony-backed Blu-ray format for the new high-def disc audience. However, since Warner Bros. endorsed Blu-ray this month, HD DVD player and disc sales have badly trailed its rival.

There are now only two major studios -- Universal and Paramount -- releasing films in the HD DVD format, compared to five for Blu-ray.

Toshiba's stock has fallen 11.5 percent since the Warner endorsement, according to Reuters.

The stock drop -- combined with overall company losses -- could force Toshiba's top executives to revisit its investment in HD DVD.

The company this month announced a sharp cut in HD DVD player prices and said it will air a HD DVD commercial during this Sunday's Super Bowl.

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