Market welcomes white flag in DVD format war

Investors on Monday welcomed Toshiba's signals that it may abandon the HD DVD format, surrendering to rival Sony's Blu-ray in the battle to set the next standard of high-definition DVDs.

Toshiba Corp. is reviewing its HD DVD business and "a complete withdrawal is one of the options it is considering," an industry source told AFP on condition of anonymity.

Blu-ray and HD DVD -- which are incompatible -- can provide cinematic-quality images and multimedia features but the players come at a much steeper price than current-generation DVDs.

But a growing number of Hollywood studios and retailers have decided to go exclusively with Blu-ray, which can store more data than HD DVD but was initially seen as more expensive to make. US giant Wal-Mart gave a decisive boost to Blu-ray last week.

Weekend news reports said losses for Toshiba could reach tens of billions of yen (several hundred million dollars) if it decides on the pullout.

But investors responded positively to the news on the belief that Toshiba, which has enjoyed healthy profits in recent years, was acting quickly to stem losses.

Toshiba shares shot up 50 yen or 6.38 percent to 834 yen in morning trade, easily outpacing the benchmark Nikkei-225 index which gained 1.28 percent.

Shares in Sony Corp. rose 120 yen or 2.47 percent to 4,970.