Dolby 1Q profit falls 11 percent on higher costs, year-ago gain, offsetting revenue increase

Dolby 1Q profit falls 11 percent on higher costs

SAN FRANCISCO — Dolby Laboratories Inc. on Thursday said first-quarter earnings fell 11 percent, as higher costs and a gain from the prior year’s quarter more than offset an increase in revenue.

The licensor of audio technologies, which also sells products that enable surround-sound, 3-D and digital cinema in theaters, earned $69.1 million, or 59 cents per share, compared with $78.1 million, or 68 cents per share, in the same period a year earlier.

Dolby said a change in accounting rules over how it recognizes revenue boosted earnings by $4.4 million, or 4 cents per share, in the quarter. Last year’s first quarter had a $20 million gain related to a patent licensing deal.

Dolby said excluding certain items, it would have earned $74.3 million, or 64 cents per share, in the quarter, up from $70.3 million, or 61 cents per share, in the prior year.

Items excluded are stock-based compensation charges, amortization of assets, restructuring costs, a gain related to a patent licensing agreement and the tax impact of these items.

Revenue rose by 23 percent to $221.2 million, up from $180.3 million. The accounting rule change added $17.6 million to the 2010 quarter.

Dolby’s first-quarter earnings and revenue topped the forecasts of analysts, who on average expected revenue of $181.1 million and profit of 49 cents per share, according to Thomson Reuters.

Analysts’ earnings and revenue forecasts did not include the boost from the change in accounting rules, Dolby said. Backing out the effect of the accounting change, the company still would have comfortably beat Wall Street’s expectations.

Looking ahead, Dolby said it expects to report revenue of $780 million to $810 million for 2010. That’s higher than the $747.3 million analysts were expecting.

The company said earnings, excluding one-time items, should range from $2.21 per share to $2.31 per share for the year. Net income including all items should be $1.96 per share to $2.08 per share for 2010. Analysts were forecasting $1.99 per share.

Shares of Dolby, based in San Francisco, rose 90 cents, or 1.8 percent, to $50.93 on Thursday.