Toshiba Slashes U.S. Sales Target for HD DVD Players

TOKYO – Japan's Toshiba Corp. has slashed its sales target for high definition DVD players and recorders after disappointing sales in the U.S., putting a damper on prospects for one of its growth businesses.

"Sales in the U.S. have been slower than expected, and we are going to have to lower our U.S. sales forecast," said Yoshihide Fujii, head of Toshiba's digital consumer business.

The electronics group now expects to sell 1 million next-generation optical disc players in North America by the end of calendar 2007, down 44 percent from its previous estimate of 1.8 million unit sales, a Toshiba executive said on Tuesday.

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"Obviously, we are going to have to lower our previous global estimate (too)," said Fujii, but declined to give a new forecast.

Toshiba's HD DVD technology competes with Blu-ray Disc, promoted by Sony Corp. (SNE) and Matsushita Electric Industrial Co. (MC) in a high-stakes DVD format war that has split the electronics industry and made consumers hesitant about buying DVD players.

Fujii had previously said he expected Toshiba to sell 3 million HD DVD players and recorders worldwide by the end of the business year to March 2008, led by U.S. consumers' appetite for movies at home.

Sony equips its PlayStation 3 game consoles with Blu-ray drives, and Toshiba said last week it aimed to put disk drives for high-definition DVDs on all its laptop computers next year, but neither side has been able to land a knock-out blow yet.

"Consumers who are buying Playstation 3 are buying it as a game console. They're simply not buying it for watching as many high-definition movies as Sony said they would," said Ken Graffeo, executive vice president of Universal Studios Home Entertainment.

He spoke at a news conference announcing the release of Toshiba's Vardia-brand HD DVD players in Japan.

Over 60 percent of all next-generation DVD players sold in North America were for the HD DVD format as of the end of May, not including game consoles, Fujii said.

The battle over next generation DVDs is reminiscent of the format war between VHS and Betamax. Both sides are trying to gain an edge as demand grows on falling prices of high-definition televisions and DVD players.

Ahead of Fujii's comments, shares in Toshiba closed up 0.5 percent at 948 yen, outperforming the Tokyo stock market's electrical machinery index which slid 0.26 percent.