Toshiba stands to lose $986 million from HD DVD pull down

Following the decision to stop the production of its HD DVD product line, Toshiba is about to declare a $986 million loss (100 billion yen). Declaring the said amount as loss will pull down the company’s full-year operating profit to $2.43 billion (250 billion yen) which is short of its projected profit for this year.

When Toshiba decided to pull the plug on its HD DVD production, the company was not expecting that it would be force to implement changes in its production line. Neither did the company expect that it would incur other charges that would multiply the $486 million (50 billion yen) that it previously expected to lose.

Despite this projected loss, Toshiba is still confident that it could earn an operating profit of $2.82 billion (290 billion yen) for this year until March of 2009. However, some company executives admitted that this might not be possible as the company may further be affected by falling prices of microchips and LCD’s.

Aside from losing substantial amount in its operating profit, Toshiba may also face some problems from HD DVD agreements that the company has entered into with companies such as Universal Studios, Paramount Pictures and Dreamworks Animation.

If Toshiba still wants to achieve its targeted operating profit, it must get up on its feet as early as now. The earlier decision is beginning to take its toll on the company as trading prices of its Shares are going down to as high as 1.5%.

Read [Reuters]