Dolby Labs IPO Coming This Week
Dolby Laboratories Inc. is readying its initial public offering this week and industry is poised for a big show. Dolby Labs is a San Francisco company whose logo and name are recognized in both the home theater consumer marketplace as well as to theater goers everywhere. The company plans to sell 27.5 million shares for between $13.50 and $15.50 each.
Founded by Cambridge-trained scientist Ray Dolby 39 years ago, the company started out manufacturing noise-reduction equipment for the music industry that eliminated the background "hiss" on recordings, and has since expanded to encompass everything from digital audio systems to their consumer electronics and theatrical digital surround sound formats.
The company's IPO, which is lead-managed by underwriters Morgan Stanley and Goldman Sachs Group Inc., is expected to do well not only because of its brand recognition, but also because of its strong financials.
Its net income rose 29 percent in the last fiscal year and their revenue has grown more than 30 percent per year since 2002. During that year, its gross margin was 68 percent, and its after-tax margin was 20 percent.
"It's what everyone wants, with a protected, branded growing position and a high after-tax margin," said Francis Gaskins, president of IPODesktop.com. "It's the most interesting one we've seen in a long time."
The future will be interesting to watch for the company as technology moves towards high definition DVD technologies to which Dolby also plans to license high definition surround sound formats. The company is aiming at developing increased licensing revenue from other sources, including digital broadcasting, HDTV, and broadband Internet.
For more information, please visit www.dolby.com .