Looming end to DVD war cheers consumers

At the core of both formats are blue lasers, which have a shorter wavelength than red lasers used in current DVD equipment, enabling discs to hold up to five times as much data.

Toshiba had billed its format as less costly for the industry as it allowed some existing DVD-making equipment to be reused, but Blu-ray discs had space for more content to be packed in.

Hopes that ending the battle would boost disc sales sent shares in CMC Magnetics, a Taiwan firm that makes about a third of the world's DVDs, up nearly 7 percent on Monday. Other Taiwanese DVD makers also surged.

LOSSES NOW, PROFITS LATER

Toshiba will likely 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 move to pull the plug on HD DVD just two years after launching its first players. It took Sony more than a decade to quit Betamax.

Nikko Citigroup raised its rating on Toshiba to "buy/high risk" from "hold/high risk". JP Morgan maintained an "overweight" rating while predicting the elimination of sales promotion costs would add 30 billion yen ($280 million) to Toshiba's operating profit in the next business year from April.

Shares of Toshiba hit 829 yen, their highest close since before Warner Brothers defected but still down more than a quarter since the subprime crisis hit last year.

Sony shares have also fallen heavily over the same period, amid growing fears of a U.S. slowdown that would slow consumer spending.

While Toshiba was still officially silent on the fate of its technology, pundits and consumers were clear the war was over.

"Blu-ray won. It's fantastic and I trust Sony," said one customer, William, as he browsed DVD player aisles at the Best Buy Co Inc store on New York's Fifth Avenue.

($1=107.83 Yen)

(Additional reporting by Yoko Kubota and Elaine Lies in Tokyo; Steve James in New York and Lisa Baertlein in Los Angeles; Editing by Rodney Joyce)