Toshiba profits plummet 31pc in HD-DVD fallout

19 Mar 2008

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