February 18, 2008

Toshiba Shares Jump 6% At HD DVD's Financial Market Funeral, As One Toshiba Employee Learns A Viral Marketing Lesson From The Hard Life Of HD DVD

We've been waiting on official word from Toshiba that HD DVD is deadpool and we haven't got it yet, but the source behind the rumor is apparently directly connected to Toshiba. The source said an official announcement regarding Toshiba's plans could come early this week and the company is planning to make an "exit from the next generation DVD business". The source said Toshiba doesn't consider HD DVD to be a total loss even though it will likely cost hundreds of millions to nix production of HD DVD products. "Marketing was a weak point for Toshiba. We learned a lot from HD DVD. Strengthening marketing will continue to be an issue for us going forward," the source said.

The unidentified source has put this marketing lesson to good use already. Even though the HD DVD rumor is not official, it's viral movement across big media and the world wide web over the past couple of days has sent Toshiba's stock price skyward. Trading in Tokyo today saw Toshiba shares up 6%, signaling that investor's are pleased Toshiba is considering putting its money to use somewhere other than the next-gen DVD business. Nikko CitiGroup analysts in Tokyo even raised their Toshiba stock rating from Neutral to Buy citing that the company's operating profit would increase 20% or about $280 million in the fiscal year beginning April if they did indeed nix HD DVD despite the high costs of eliminating the format. So what will Toshiba do with all of this extra cash?

Apparently Toshiba will focus on moving into the flash memory business, going ahead with plans to build two Japan-based manufacturing plants starting in March. So in a couple years, when digital downloading of movies kills off Blu-ray, you'll be storing your the newest movie format of choice on a Toshiba flash memory drive. Wouldn't that be ironic?

Image Credit: Yuriko Nakao