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Here's How Dolby Laboratories Performed In Q1 FY 2015

Jan. 26, 2015 1:37 AM ETDolby Laboratories, Inc. (DLB)
William Bias profile picture
William Bias


  • Dolby Laboratories’ revenue barely moved in the most recent quarter.
  • Dolby Laboratories’ balance sheet serves as a bright spot.
  • Dolby started paying a regular dividend to entice investors to wait for better times.

On Jan. 21, audio, video, and voice technologies company Dolby Laboratories (NYSE: NYSE:DLB) came out with its Q1 FY 2015 earnings announcement. In my opinion, the company didn't do so well in its most recent quarter on a fundamental basis. Let's take a look to see what's going on with the company.

Revenue increased

In the most recent quarter, Dolby Laboratories saw its revenue increase 1.3% year-over-year. Its licensing segment contributed to all of Dolby Laboratories' overall revenue increase. The company is also fighting to keep up with changing times as people move away from DVDs and PCs and onto online platforms and mobile.

Net income declined

On that note, Dolby Laboratories saw its net income decline 7.1% year-over-year as operating expenses such as research and development and sales and marketing outpaced the increase in revenue. Dolby Laboratories' operating income declined 11% year-over-year in the most recent quarter. Hopefully, the company can come up with some new technologies to help it gain market share.

Free cash flow negative

Dolby Laboratories was free cash flow negative in the most recent quarter. It swung to a negative $18.2 million vs. a positive $68.3 million during the same time last year. An unfavorable change in operating assets and liabilities due to the timing of payments from customers and to vendors accounted largely for this swing. Company management expects this to be a one-time deal that will normalize throughout the year.

Balance sheet excellent

Dolby Laboratories sports an excellent balance sheet. Its $939 million in cash and short term investments represents a whopping 53.6% of stockholder's equity giving it plenty of cash to fund operations, acquisitions and product innovation. Moreover, the company sports no long-term debt which is a good thing because long-term creates interest which chokes out profitability and cash flow. I like to see companies with long-term debt amounting

This article was written by

William Bias profile picture
I have been analyzing stocks since 1992 and a freelance writer since 2012.

Analyst’s Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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