Dolby Laboratories Inc.DLB

Morningstar Rating

Stock Research and Analysis

by Michael Holt

Dolby's dominant presence in movie theaters and home audio equipment has resulted in a steady stream of royalty income. However, as a new generation of audio and video standards evolves, Dolby must expand into new markets to maintain its dominance.

Dolby's Read more

Bulls Say

Dolby's extensive patent portfolio, brand, and long-term customer relationships form the basis of its economic moat.

Dolby's technologies continue to be included as new digital broadcasting standards are rolled out internationally.

Consumers have purchased millions of DVDs with Dolby Digital encoding, ensuring demand for compatible players even as new technologies emerge. Read more

Bears Say

Blu-ray's emergence has been slow, and today's consumers have multiple options to bring HD content into the home.

Some of Dolby's patents begin expiring in the next few years, which could reduce revenue from older technologies.

The electronics using Dolby's technology are mostly discretionary products. An economic downturn could dramatically affect demand.

Dolby struggles to enforce its intellectual property in China. As emerging markets continue to play a bigger role, the firm will have to devote more resources on royalty collection. Read more

Strategy

Dolby's core strategy is to establish its technology as audio standards. Once a standard is established, Dolby captures royalties on every device that is built to deliver audio, from the theater to the Read more

Management

Chairman Ray Dolby founded Dolby Laboratories in 1965 and holds 65% of the common stock. He is assisted by president and CEO Bill Jasper, who joined the company in 1979 and was named president in 1983. The board appears to contain a few seasoned executives Read more

Profile

Dolby Laboratories develops audio and surround sound for cinema, broadcast, home audio systems, in-car entertainment systems, DVD players, games, televisions, and personal Read more

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