TOKYO--Investors cheered an impending end to a format war for next-generation DVDs on Monday, pushing up shares of both Toshiba, on the verge of abandoning its HD DVD discs, and Sony, the leader of the rival Blu-ray camp.
Toshiba shares jumped 5.1 percent as analysts praised its decision to cut its losses, while Sony, whose technology is set to become the industry standard for the next generation of high-definition home movie DVDs, rose 2.7 percent.
"It doesn't make sense for Toshiba to continue putting effort into this," said Koichi Ogawa, a chief portfolio manager at Daiwa SB Investments. "It needs to cut its losses and focus its resources on promising businesses."
A source at Toshiba told Reuters on Saturday that the electronics conglomerate was planning to give up on the HD DVD format after losing the support of key retailers and several movie studios including Warner Bros.
Toshiba, which led a consortium promoting HD DVD, would suffer losses of hundreds of millions of dollars to scrap production of its equipment and other steps to withdraw from the business, Japanese public broadcaster NHK reported.
But analysts gave high marks to Toshiba's seemingly quick decision to pull the plug on HD DVD because of the heavy costs involved in promoting the format.
Nikko Citigroup raised its rating on Toshiba to "buy/high risk" from "hold/high risk." JP Morgan maintained its "overweight" rating while predicting the elimination of sales promotion costs would add $280 million to Toshiba's operating profit in the next business year from April.
http://www.news.com/Investors-cheer-as-Toshiba-nears-HD-DVD-surrender/2100-1041_3-6230980.html?tag=n