Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratories conference call discussing fourth -- I'm sorry, first quarter fiscal year 2012 financial results. (Operator Instructions). As a reminder, this call is being recorded Tuesday, January 31, 2012. I would now like to turn the conference over to Mr. Alex Hughes, Senior Director of Investor Relations for Dolby Laboratories. Please go ahead, Mr. Hughes.

Thank you, [Tom]. Good afternoon and welcome to Dolby Laboratories first quarter fiscal 2012 earnings conference call. Joining me today are Kevin Yeaman, Dolby Laboratories President and Chief Executive Officer; Murray Demo, Executive Vice President and Chief Financial Officer; and Ramsey Heidemann, Executive Vice President of Sales and Marketing. On this conference call we will be making forward-looking statements that include projections of future operating results for our fiscal year ending September 28, 2012; market trends and developments for the industries in which we compete, and our expectations and beliefs concerning how these trends and developments will affect our operating results; the capabilities and market acceptance of our products and technologies; and our strategic and operational plans and objectives. These statements are based on management's current expectations and assumptions that are subject to risks and uncertainties. Actual results may differ materially from those set forth in such statements. Important factors such as general economy, PC, broadcast, consumer electronics or cinema market conditions could cause actual results to differ materially from those set forth in our forward-looking statements. These factors are addressed in the earnings press release that we issued today under the section captioned Risk Factors and elsewhere in our most recent annual report on Form 10-K available at www.sec.gov or on our website at www.dolby.com under the Investor Relations section. Dolby disclaims any obligation to update information containing these forward-looking statements whether as a result of new information, future events or otherwise. During this call we will discuss GAAP and non-GAAP financial measures. A reconciliation between the two is available on our earnings release and the Dolby Laboratories investor relations data sheet on our Investor Relations section of our website. Call participants are advised that the audio of this conference call is being broadcast live over the Internet. It is also being recorded for playback purposes. An archive of the call will be made available on our website for approximately one year and is the property of Dolby. As for the structure of this call, Murray will begin with a recap of Dolby's financial results and provide our fiscal 2012 outlook. Kevin will finish with a discussion of the business. So with that introduction behind us, I will now turn the call over to Murray.

Thanks, Alex. Good afternoon and thank you for joining the call. I'd like to discuss Dolby's fiscal Q1 financial performance and our outlook for fiscal 2012. Total revenue for the first quarter was $233.4 million, down 4% year over year and sequentially. Licensing revenue for the first quarter was $199.6 million, up 6% year over year and down 3% sequentially. The year-over-year increase was driven by our Broadcast market and our Other Markets category. The sequential decline was driven by our Other Markets category and Broadcast. Looking at licensing revenue by market. First quarter PC revenue was flat year over year as growth from Windows 7 and other PC-related revenue offset a decline from ISV. Sequentially, PC revenue increased 4%, primarily on growth from Windows 7. First quarter Broadcast revenue grew 20% year over year and declined 7% sequential. The year-over-year increase was driven primarily by higher revenue from set-top box and TV. The sequential decline was driven primarily from lower revenue from TV and set-top box. First quarter revenue from our Consumer Electronics market declined 15% year over year, primarily from lower DVD revenue. Sequentially, revenue increased 13%, driven by a number of Consumer Electronics categories. First quarter revenue from our Other Markets category, which includes Mobile, Gaming, Automotive and Via increased 26% year over year and declined 18% sequentially. The year-over-year increase was led by growth in Mobile. The sequential decline resulted from the Q4 fiscal 2011 settlement with Research In Motion discussed last quarter. First quarter product revenues were $26.4 million, down 43% year over year and 14% sequentially. The year-over-year and sequential declines were driven primarily by lower shipments of our 3D and Digital Cinema systems. First quarter Services revenue was $7.4 million, down 14% year over year and up 2% sequentially. Turning to margins, GAAP…

Thank you, Murray. Good afternoon. Last quarter I talked about the changes taking place at our industry and the opportunities that they present. In particular, we have moved to a world of billions of devices shipped annually that play back and often capture entertainment content. Consumers have more means than ever before to access and experience content including digital broadcast, online and mobile distribution. This larger universe of playback devices is growing our addressable market. As people increasingly consume content on a variety of portable devices, content creators and service providers are seeking to differentiate by offering the best quality audio experience consistently across many devices. Dolby's role has always been to provide the products, services, tools and technologies that capture, deliver and render the highest quality experience possible for the artist and the consumer. Given the industry changes taking place, we see a greater need for our role than ever and an opportunity to significantly improve the entertainment experience. We are focused on providing content creators the infrastructure that captures their vision, the tools and solutions to content distributors that allows them to deliver the vision as the artist intended across today's wider range of platforms and devices, and the technologies to device makers that ensure an optimum playback experience for consumers. Working with content creators, distributors and device makers has always been at the heart of our strategy. It has allowed us to be a partner with the entertainment industry, becoming the de facto audio standard in cinema, optical disk, much of broadcast, and increasingly in online content. Today I would like to highlight the progress we continue to make across these groups. Starting with content creators, we continue to see studios around the world releasing new content in Dolby 7.1, which allows artists to create a more…

Thank you. (Operator Instructions). We'll take our first question from Steve Frankel with Dougherty. Steve Frankel – Dougherty & Co.: Good afternoon. Kevin, I wonder if you might start by telling us what you think your attach rate in China is today, and where you think that might go over the next 12 months.

So, as I said earlier, we've now signed agreements with four of the six top manufacturers. They are just preparing for the compliance with the new digital standards. I think most of the 23 channels we have on air today were done advanced of the finalization of that standard and are being implemented through the set-top box. So we're still early days in terms of the attach rate to the local OEM televisions with broadcast tuners, but we expect that to start rolling out now that we've finalized the licensing agreements and digital broadcast is adopted more broadly. I think we're probably around -- we're still under 20% attach. Steve Frankel – Dougherty & Co.: Okay. And traditionally there's been worries about piracy in China. Given that you've already got four of the top six, are you less concerned of that taking a material bite out of your revenue potential in China?

Look, our strategy has been to work locally with these OEMs, show them the value of working with us. I think we started demonstrating that value by getting the 23 channels on air. And I think the fact that they've entered into these agreements with us show that we're partnering together to bring this value proposition to the market in China. In addition, a common theme with each of these companies is that they do have global aspirations and they recognize the importance of the solution we offer if you're going to be shipping this globally. Steve Frankel – Dougherty & Co.: Great. Thank you.

We'll take our next question from Ralph Schackart with William Blair. Ralph Schackart – William Blair & Co.: Good afternoon. Kevin, we’ve started on Snapdragon. Is that only Dolby Digital Plus or does that also include post-processing? And when you sort of previously, I think initially gave a 4% mobile penetration rate now are talking about low to mid teens, how much of a factor is Snapdragon in that ramp to mobile?

Well, the inclusion in Snapdragon is a significant development in the sense that it makes it easier for those OEMs that want to work with us to choose to implement our technologies by having it at the chipset level; it just reduces the amount of work to port and incorporate our technologies. And so we remain on track for low to mid teens for this year in terms of Dolby Digital Plus adoption in smartphones. You’ll remember that in 2010 we weren't really on the board yet with Dolby Digital Plus, so going to low to mid teens is significant progress, and I think Qualcomm support is just more evidence of the value that's being recognized in the marketplace for this proposition. Ralph Schackart – William Blair & Co.: Great. And then just in terms of the cash and the balance sheet and the fact that you bought 26 million back in stock in the quarter, has anything materially changed in sort of capital allocation strategy?

No, there's been no change. We continue to execute on our buy back plan as it relates to offsetting stock-based compensation dilution and in the meantime we haven't made any changes to our plan and we’ll continue to revisit it on a regular basis. Ralph Schackart – William Blair & Co.: Thank you.

We’ll go next to Paul Coster with J.P. Morgan. Paul Coster – J.P. Morgan: Yes, thank you. Kevin, I wonder if you can just provide us a little bit of color on the transition to post-optical disc and post-Windows 7 world on the PC front. I came away from CES with the impression that the solutions orientation might be gaining some traction with OEMs in particular, but it sounds like even ISPs are going to stay with you. What’s the latest on Windows 8? And can you talk about how well this strategy is being received?

Sure. So I don’t have any updates to give today on the Microsoft Windows 8 relationship, but certainly we continue to be very focused on bringing this value proposition directly to OEMs. And we continue to believe that while over time it will move away from optical discs, we’re at something like over 70% of consumer laptops today have optical discs, and while that will decline, it’s not going away any time soon. And we think the PC ecosystem wants to ensure that the consumer does not have a broken experience. But over and beyond that, we’re focused on demonstrating the value proposition for every way in which these PCs get their content, just as we’re doing with smartphones, with tablets, the device through which you’re receiving your entertainment content, we think we’re the ones that can help you ensure the integrity of that audio experience all the way through from artist to consumer. And so, like smartphone, like tablets, we’re focused on the PC in the same regard, and we’re really focused on bringing that to the world in the Windows 8 cycle by focusing our discussions with the OEMS. Paul Coster – J.P. Morgan: And is there an SG&A expense associated with this effort to present a new value proposition, the marketing expense in particular that we should anticipate?

Well, I wouldn’t point to any kind of one-time or non-recurring expenses, it’s just that clearly there are people working on it both in sales and marketing and technical and it’s part of that number. But there’s nothing I’d call out specifically as unusual. Paul Coster – J.P. Morgan: Okay. Thank you.

And we’ll go next to John Vinh with Collins Stewart. John Vinh – Collins Stewart: Hi. Thanks for taking my question. Just a follow-up on PCs. If you look at some of the most recent PCs trends, it seems to be tracking -- shipments seem to be tracking at the lower end of your guidance and some of the licensing shipments seem to be lagging down a little bit. If you look at your full-year guidance, you haven’t changed that. Should we be thinking about maybe modeling at the lower end of your guidance, or are there some offsets that are maybe doing better than your PC segments that’s offsetting that?

So, John, in terms of our PC TAM guidance, so we’ve given a broader range this year than we have in past years. We have plus 3% to minus 3% because of the uncertainty around the hard disk drive and the flooding in Thailand. If you look at the most recent information that we’ve seen from some of the major third parties, they’re coming out around zero percent, which is right in the midpoint of our range. So we continue to think that the plus 3% to minus 3% range is appropriate, broader than the past given the uncertainty, but we think it’s the appropriate range, and that’s factored into our revenue targets for the year.

The other point, John, we do, as you know, operate in many markets, PC as well as many other markets. And each of those markets we have a range of variables which factors into our guidance. And when we put it all together, we still think this is the right range. John Vinh – Collins Stewart: Great. Thank you. And my follow-up is, if you look at your broadcast outlook for this year, you talked about an increase of four to five in attach points this year. Where geographically would we expect most of that growth to occur? Is it India, China, or other regions?

Most of it is Asia-Pacific region, and that’s mostly being driven by China and India. And that’s reflecting really the early stages of the adoption in China and India. John Vinh – Collins Stewart: Great. Thank you.

And we’ll go next to Andy Hargreaves with Pacific Crest. Andy Hargreaves – Pacific Crest Securities: Hi. Just wanting to see if you could [give] the detail a little bit more of the optical revs [in the K]. Can you give us any updates on what optical revs were in the quarter? And then maybe even more specifically, with DVD declining, any sense for how big DVD is in the CE segment?

In terms of the non-optical to optical relationship, we did provide some color on that in our last call. We can provide some information this quarter that we continue to see it progressing towards the non-optical. It will bounce around from quarter to quarter, but in the most recent quarter, it continued to progress in the direction of non-optical. Andy Hargreaves – Pacific Crest Securities: Okay. And then, can you give us any sense for what kind of growth you guys are expecting out of Via? It seems like they’re covering some license bases that should be growing pretty good at this point.

We’re not providing specific guidance. Our portion of the -- the administrative fees that Via earns are included in our other markets. Our portion of the royalties are included in the markets that they relate to, be that mobile, broadcast, et cetera. Yes, you're right, HAAC continues to enjoy broad adoption in the market both in broadcast and in mobile. And so they’ve been contributing to the growth in that Other Markets category. Andy Hargreaves – Pacific Crest Securities: Okay. Thank you.

And we’ll take our next question from Daniel Ernst with Hudson Square Research. Daniel Ernst – Hudson Square Research: Yes, Kevin, thanks for taking the call. More to drill down a bit on the mobile. Mobile and Other has been a growth area for a while, quite strong growth this quarter. Are we getting to the point where mobile by itself is a reportable category? Can you give us some sort a scale of what portion mobile contributes to that Other category today? And then as we look at the forecast of the 14% to 15% I think you said attach on smartphones for Dolby Digital Plus, what are the kind of the puts and takes in that? Is that dependent on how well the models that you're in do in terms of market share and growth, or is it also that you have some wins you're expecting that are baked into that guidance? If you could sort of frame what are the drivers for whether you achieve, beat or miss that target. Thanks.

Sure. So, on your first question, Other Markets has done well. Mobile has been the fastest-growing category. We typically break these categories out when they become 10% of revenue. So we're still a little shy of that. But we of course believe that mobile has every potential to be broken out as a separate category in the future, and step one is to get that low to mid-teens attach rate this year. In terms of what it takes to get that done, we gave that guidance based on the wins we know we have in the pipeline and in the market. So we feel good about that. There's always an element of how well particular SKUs or lines do. Our focus really is on getting broader adoption within each of the providers we have. From the script you might have recognized that we have relationships now with four of the top five handset manufacturers. And so the focus is on getting broader within their line of handsets and also broadening the value proposition to the fullest experience.

Just to add some color to that, today we're approximately about 150 handset SKUs worldwide now shipping with Dolby technologies. Over 30 of these deployed Dolby Digital Plus. In terms of highlight, we have products like the LG Spectrum, which is a video-centric device which launched with Verizon at CES. Pantech launched their five-inch tablet which we consider as part of the mobile initiative in Korea with Dolby Digital Plus. And China Motorola RAZR launched also with Dolby Digital Plus. As Kevin said, not all SKUs are equal. So at some point, the numbers of SKUs as they grow become less relevant as the few SKUS that tend to be very strategic and broadly adopted by critical companies. We tend to focus on the important strategic SKUs. And we're also focusing on connecting the dots between content providers and handset manufacturers to make sure that ecosystem grows with the Dolby content over time. Daniel Ernst – Hudson Square Research: Great. Great color. And then just to follow up on the PC segment, on your initiatives to enter those sort of non-optical or post-Windows 7 devices. Do you have -- if you look at sort of the Ultrabook lineup from CES, are -- the ones without optical, are you positioned inside of those, outside of the Win 7 royalty (inaudible) anyhow?

We are focusing on the Ultrabook as much as we're focusing on the traditional portable computers. In Q1, HP rolled out the Folio 13 notebook which features Dolby Advanced Audio. This is the first enterprise-focused Ultrabook with Dolby entertainment technologies to ship to market. This is just one example of what's yet to come, because we do believe that the same use case which Kevin outlined for the disk capable notebooks applies also to Ultrabooks. And that is there's multiple use case that exists in the marketplace whether it be side-loaded, downloaded, streamed or externally drive attached, that all speak to consumers wanting to play back high-quality content. So we believe the high-quality media experience applies equally to Ultrabooks as well as to disk-capable notebooks, and therefore it continues to be our primary focus this year. Daniel Ernst – Hudson Square Research: Understood. Thank you.

(Operator Instructions). We'll go next to Jim Goss with Barrington Research. Jim Goss – Barrington Research: Thanks. As you've talked about the smartphone issue, if you're on four of the top five manufacturers and it's a matter of increasing the penetration within those, does that presume then it's very new product introduction driven in that it's -- as they roll over the SKUs to items that can either be used to either view the videos or as a conduit for other usage, that's really what would need to take place? And how long do you think that process would tend to take? Would that be a couple of years, three to five years, longer than that?

I think part of what you said is indeed the case, about penetrating deeper into these accounts. And that's going to be driven mostly by content creation in two parts. First, you have consumer-created content. As you know, a lot of these phones are now capable of capturing content. Laptops are capturing content. And we do believe that consumer-type created content that comes in the form of [AVGHD] or side-loaded content will want to -- consumers are going to want to play back this content on these handsets, as evidenced by some of the behavior we've seen. The other set of drivers is going to be content that comes through content providers globally. We do see initiatives by companies such as the ones that are online today, whether they're from Netflix to Voodoo, Amazon, Apple, Best Buy, HBO Go, [8-Tracks]. These are companies that are not just going to be restricted to the home theater anymore. The starting place is the home theater, but as consumers start to enjoy this high-quality experience, and if you take a look at where some of these companies are going in their strategies, clearly they want to go into laptops, mobile handsets and tablets. And we're going to be working with them, both the content providers as well as the handset manufacturers to make sure that these dots are connected. Whether it takes one, two, three or four years, it's really up to the industry, and we're going to be doing our best to make sure it's supported every step of the way. So that's really where we're focused today. Jim Goss – Barrington Research: Okay.

You also referenced some timeframes in your question. I just want to be clear. We're focused on getting this value into the market now. We had -- we were paid on something like 4% of smartphone shipments for Dolby Digital Plus last year. We didn't have any the year before that. And we're looking at low to mid teens this year. And we think this is the time where there's an opportunity to really differentiate with the quality of the experience. We don't think that the world is going to settle for good enough or the lowest common denominator. We think the world migrates to quality. I think if you look at what's going on in the content that is available today, the world has been very much focused on the quantity of content and getting it available to people, and consumers have been focused on convenience. People have been focused on the business models and how they're going to make money from this. As each of those things matures, the focus is turning to how you draw attention -- or as an artist, how you draw attention to your content. Personalization, social media are really big tools to be able to approach that. Quality and immersiveness of the experience is an important tool to be able to do that. And so we think the time for addressing this and standing out is now. Jim Goss – Barrington Research: Okay. And the other area I wondered about was tablets. It seems like you're getting on an increasing number. But the one that really matters so far has been the iPad, and I think you said it was HAACs here, your royalty is a lot smaller in that area. Is there any possibility of changing that? And do you really see that market evolving to where it's less iPad-centric than it has been for the most part? KY Well, as we said, we have our technologies on about 40 tablets, 20 of which include Dolby Digital Plus. So we think that demonstrates the value we can provide to tablets. Now obviously we want to be broadly adopted across a wide range of tablets. The iPad is clearly the leader. Apple is a good customer of ours on the PC side. We continue to work with them to show value on all fronts, and we're going to continue to work with them. In the meantime, we did announce the CineXPlayer which gives consumer the ability to get the Dolby Digital Plus functionality through the CineXPlayer app. And we're going to continue to work broadly with all the tablets in the market. Jim Goss – Barrington Research: All right. Well thanks very much.

And that is the final question we have in our queue today. Mr. Yeaman, I`m going to turn the call back to you for any closing remarks.

Well, thank you for joining us today, and we look forward to keeping you apprised of our progress.

Ladies and gentlemen, this does conclude today's conference. We appreciate your participation. You may disconnect at this time.