DLB - Dolby Laboratories: Patents Are Not Enough To Protect The Business
Dolby’s growth story relies on two new technologies, Dolby Atmos and Dolby Vision. The company has seen some momentum in their business by the increasing adoption of both technologies with new partners, for which they earn licensing fees and royalties.
Dolby’s business is protected by patents, which should provide the company with some barriers to entry. However, we find that over the last 10 years, Dolby’s return on investment and profitability has been weakening. Their annual report signals to us, that Dolby lacks any competitive advantages.
We estimate their intrinsic value per share at $29