Dolby signs pact with Microsoft; results beat Street

Reuters News
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Posted: May 03, 2012 5:34 PM
Dolby signs pact with Microsoft; results beat Street

(Reuters) - Audio technology licensor Dolby Labs Inc signed an agreement with Microsoft for the use of its products in Windows 8 operating system, and posted a second-quarter profit above analysts' estimates.

Dolby's shares jumped 19 percent to $44.60 in aftermarket trade. The stock closed at $37.63 on Thursday on the New York Stock Exchange.

Microsoft will include Dolby Digital Plus 5.1-channel decoding and two-channel encoding in Windows 8 and original equipment manufacturers will pay a base royalty rate to Dolby for using its products, the company said in a statement.

However, Dolby does not expect this agreement to affect its fiscal 2012 outlook as Windows 8 is not expected to ship until Dolby's fiscal 2013.

Dolby raised its full-year earnings outlook to $2.38 to $2.62 per share from its earlier view of $2.31 to $2.61 per share. It, however, trimmed its full-year revenue expectations to between $910 million and $960 million from $910 million and $970 million.

Analysts were expecting full-year earnings of $2.57 per share, on revenue of $942.4 million, according to Thomson Reuters I/B/E/S.

Second-quarter net income attributable to the company rose to $88.1 million, or 81 cents per share, from $82.1 million, or 72 cents per share, a year ago.

Licensing revenue grew 5 percent in the quarter.

Excluding items, the company earned 91 cents per share.

Revenue for the quarter rose 4 percent to $260.3 million.

Analysts expected second-quarter adjusted earnings of 75 cents per share on revenue of $253.5 million.

(Reporting by Supantha Mukherjee in Bangalore; Editing by Maju Samuel)