Toshiba profits plummet 31pc in HD-DVD fallout


19 Mar 2008

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Japanese electronics giant Toshiba warned last night that its annual profits may drop 31pc due to falling prices for flash memory and the fallout from the battle for high-definition DVD.

After Time Warner last month decided to defect to the Blu-ray high-def DVD camp, Toshiba had to pull the plug on the HD-DVD standard that it was backing, handing a clear victory to another Japanese electronics giant, Sony.

Toshiba, Japan’s largest chipmaker, said it now expects a pre-tax profit of 250bn yen (US$2.5bn) for the year ending 31 March, down from a previous outlook of 350bn yen, after posting a 110bn yen pre-tax loss in its HD-DVD business.

The latest forecast falls short of a consensus of 315.5bn yen by analysts.

The company said it will book a 45bn yen charge to write down the value of its high-definition DVD assets.

This will force Toshiba to face its first annual profit drop in six years

Toshiba’s bread-and-butter semiconductor operations, which earn almost half its profit, are likely to post an 85bn yen operating profit, down from a previous forecast for a 150bn yen profit, it said.

After Samsung, Toshiba is the world’s second-largest maker of flash memory chips, widely used in digital cameras, mobile phones and portable music players, including the Apple iPod.

By John Kennedy