Dolby Could Face 'Headwinds' From Drop in PC, TV Demand, Says Analyst

Dolby could face headwinds from “tough comparisons” for PCs and TVs that a year ago were still benefiting from COVID-19 stay-at-home trends, Rosenblatt Securities analyst Steven Frankel wrote investors Sunday. He cited reports of Samsung halting purchases of LCD panels in early July (see 2207120002) and said the company now plans to procure 40 million flat panels this year, down from 50 million last year and a prior forecast of 44 million. Dolby's full-year forecast anticipated a decline in TV shipments, especially in North America and Europe, “so some of this decline may already be reflected in the company's guidance,” Frankel said. “Material increases” in average selling price from the addition of Atmos and Vision help offset weakness in unit shipments, he said. Among Dolby highlights in the quarter, which ends in July, were French TV service Canal+ broadcasting the UEFA championship game in 4K with Dolby Vision and Atmos; Amazon's Wondery launching multiple Atmos-enabled podcasts for premium subscribers and Xiaomi announcing the $399 12 Lite and $900 12S smartphones with Vision and Atmos. Frankel noted Sky will be the first broadcaster in Germany to offer sports in Atmos during the 2022-2023 Bundesliga game of the week. Tencent is the first music service in China to offer Atmos-enabled tracks, and Apple Music is kicking off a series of live artist performances in Atmos, he said. Dolby is to report fiscal Q3 results in early August; Frankel expects revenue to be in line with guidance of $285 million-$310 million.