Dolby Laboratories Inc. (NYSE: DLB), which develops audio and video technology broadcasting solutions, published a fourth quarter update last week. The business has been able to beat the predictions of Wall Street analysts amid the adverse effect of COVID-19.
In the fourth quarter, Dolby Laboratories’ revenue fell only 9 percent year-on-year to $244 million. Net profit went down by 39% to $27 million. As a consequence, $0.45 was the adjusted loss per share, which is about 30 percent lower year-on-year.
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The coronavirus pandemic was the key explanation for the fall in Dolby Laboratories’ sales and earnings. In particular, as the cinemas themselves were closed, the company received negligible revenues from the division selling solutions for cinemas, and producers postponed the premiers of promising films until better times.
As the sector looks forward to launching new game consoles by the end of this year, sales of games using Dolby Laboratories technology have bottomed out. Sales of mobile devices with Dolby technologies, which also experienced a decline, could not offset the decline in these segments. At the same time, the personal computers segment with multimedia solutions focused on Dolby grew revenue year-on-year by 26 percent.
Dolby Laboratories, however, expects revenues to rebound to $345 million with earnings per share of $0.78 in the first quarter of fiscal 2021. Achieving these targets would mean 18 percent growth in sales and 21 percent growth in profit. The management of the company expects, in particular, strong sales of the Apple iPhone 12 models of smartphones equipped with video recording capabilities with Dolby Vision image enhancement technology support.
In home theatre systems, this approach is also increasingly used. On several mid-range TVs, consumer electronics giants Sony and Panasonic also include support for Dolby Vision and Dolby Atmos. In other words, technology from Dolby Labs is becoming more popular and shifting away from the narrow market of luxury goods to the wider market. This opens up opportunities for the long-term growth of Dolby Laboratories, particularly as with their high-quality series and movies, they move away from cable TV and into streaming services. The COVID-19 vaccine news could also offer trust in the likely rapid recovery of the cinema industry and as a result, sales of equipment for them.
Marking a new 52-week high, Dolby Laboratories Inc. (NYSE: DLB) stock was worth $89.33 at close on Tuesday, November 17.