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Dolby Laboratories, Inc.

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Year to date, Dolby has underperformed the Zacks categorized Audio/Video Home Products industry average. Stiff competition, price-sensitive nature of the entertainment industry and fluctuations of cinema product sales pose as significant headwinds to the company’s margins.  Also, fluctuations in cinema product sales and maturity of the digital cinema market might hurt the company’s profitability. Moreover, unfavorable recovery in the broadcast business remains a threat. Heavy dependence of the company on OEMs and a handful of major customers also make the company vulnerable to unanticipated losses. In addition, intense competition and the price-sensitive nature of the entertainment industry add to the company’s woes. However, the company is seeing strong market traction of offerings under three of its new businesses—Dolby Voice, Dolby Vision and Dolby Cinema, which will boost growth. 

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