Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratories' conference call discussing fiscal second quarter results. [Operator Instructions] As a reminder, this call is being recorded, Thursday, April 25, 2013. I would now like to turn the conference call over to Alex Hughes, Senior Director of Investor Relations for Dolby Laboratories. Please go ahead, Mr. Hughes.

Thank you. Good afternoon. Welcome to Dolby Laboratories' Second Quarter Fiscal 2013 Earnings Conference Call. Joining today are Kevin Yeaman, Dolby Laboratories President and CEO; and Lewis Chew, Executive Vice President and Chief Financial Officer. On this conference call, we will be making forward-looking statements that include projections of future operating results for our fiscal year ending September 27, 2013; market trends and developments for the industries in which we compete and in the PC, online and portable industries in particular, and our expectations and beliefs concerning how those trends and developments will affect our operating results; the capabilities and market acceptance of our products and technologies; expectations relating to licensing arrangements; 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 economic, PC, broadcast, consumer electronic or cinema market conditions could cause actual results to differ materially from those in forward-looking statements. These factors are addressed in the earnings press release that we issued today under the section captioned Risk Factors and elsewhere at our most recent quarterly report on Form 10-Q available at www.sec.gov or on our website at dolby.com, under the Investor Relations section. Dolby disclaims any obligation to update information contained in 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 2 is available in our earnings release and in the Dolby Laboratories Investor Relations Data Sheet on our IR website. As for the structure of the call, Lewis will begin with a recap of Dolby's financial results and provide our fiscal 2013 outlook. Kevin will finish with a discussion of the business. So with that introduction behind us, I will now turn the call over to Lewis.

Thanks, Alex, and good afternoon, everyone. I'll focus my comments on 3 main topics today before turning the call over to Kevin. First, I will discuss revenue in the second quarter along with details about the end markets that we serve. Then I'll take you through gross margins, operating results and net results. And then I'll finish with an outlook for the third quarter and for the full fiscal year. So let's cover the revenue trend. Total revenue in the second quarter was $249.3 million, of which licensing comprised $226.5 million, while product and services comprised $22.8 million. Our Q2 licensing revenue was up sequentially over Q1 by $21.6 million or about 10% and down $1.4 million, about 1% from Q2 of last year. In general, our second fiscal quarter benefits from seasonally higher sales activity. And this year, the sequential increase we achieved in Q2 was driven primarily by broadcast, gaming and mobile, offset partially by declines in consumer electronics and PC. So here's a breakdown of our Q2 licensing revenues by end market. Broadcast represented about 38% of total licensing in the second quarter. Revenues in this category were up about 27% sequentially and about 8% over last year's second quarter. We benefited from higher amounts collected for back payments, which helped both the sequential and the year-over-year revenue comparisons. And the sequential increase was also helped by seasonally higher unit volume of TVs, as well as higher attach rates in set-top boxes. PC revenues comprised about 26% of total licensing in Q2. They were down about 2% sequentially, and about 4% compared to last year's second quarter. Although a number of different factors affect our trends in PC both plus and minus, the primary factor behind our lower revenues in this area was the decreasing unit trend…

Thank you, Lewis. Good afternoon, everyone. With 2 quarters behind us, the year is playing out about as we expected with weak PC and consumer electronics markets, being offset by strength coming from broadcast and mobile. Overall, we continue to diversify our revenue base by extending our presence in broadcast and mobile, and we made progress bringing new technologies to market, such as Dolby Voice, Dolby Atmos and consumer 3D without glasses. Let me turn to discussing each of these areas. In broadcast, we are building on our position as the mandated standard in North American digital television and the adopted standard for high-definition content throughout much of Europe. The team's focus is now on extending our technologies to the emerging markets. In China, the country's second largest content aggregator for the cable TV industry, SiTV, recently launched 4 high-definition channels in Dolby. We estimate that Dolby technologies are deployed in over half of the high-definition channels on air in China, and our technologies are included as an option in the country's digital TV standard. In the EMEA region, our technologies were mandated in the digital TV standards of Austria, Greece, Ghana and Turkey, while also going on air with Abu Dhabi Media. We also continue to grow the use of our technologies and over-the-top services around the world. Dolby technologies are already deployed in leading services such as iTunes, Netflix, Amazon, HBO Go, VUDU and CinemaNow. In the second quarter, we continue to bring new OTT services into the fold. In Europe, the leading electronics retailer, Dixons Retail, and the video-on-demand service, Acetrax, both deployed Dolby technologies. And in Asia, we added 2 large over-the-top service providers in China and another in Korea. Turning to mobile. We continue to achieve new wins as the industry looks to enable a…

[Operator Instructions] Our first question today is from Steven Frankel, Dougherty. Steven B. Frankel - Dougherty & Company LLC, Research Division: Kevin, let's talk about Atmos for a minute. You do seem to have some pretty impressive traction. What's that business model going to be -- look like? Is this is a product sale or is this some kind of royalty business?

So, yes, we do have great traction with Dolby Atmos. Demand throughout both the film titles, as well as in screen from exhibitors. That product, Steve, I think as you know, just went generally available this quarter, so it will begin contributing to revenue in the second half of this year. The primary model will be the product sales model, although we do continue to work with exhibitors and explore models that might be things that meet their needs. But I would plan on it primarily being a product sales model for now. Steven B. Frankel - Dougherty & Company LLC, Research Division: Okay. And what kind of unit shrinkage assumption are you making for the PC business for the year?

Steve, this is Lewis Chew. That seems to be a moving target. We came into the quarter at -- on last quarter's call, we were using market data that said units will be down somewhere in the 4% range for the year, and now that number is pushing up closer to 10%. I think there's a varying degree of estimates out there, so we've tried to bake in that more pessimistic outlook into our numbers. So we are now baking in a unit decline for the year closer to 10% than to the 4% we had last quarter.

[Operator Instructions] Up next is Perry Huang, Goldman Sachs.

I also wanted to ask a question about the PC segment. I think, Lewis, you mentioned the year-over-year decline for revenue was down 4%, which outperformed the 8% decline in PC units for December. Are there any key drivers that are causing this out-performance, which is actually wide in the past couple of quarters?

Well, the first thing I'd say, Perry, is that there always are a number of different factors that affect our PC numbers like everyone else, right? You've mix of product and things like that, ASPs. But the other thing, too, is that the tolerances you're dealing with are pretty tight. I think, in general, we are affected by the unit trends versus the market. If anything, the one thing we did see this quarter was an encouraging sign about the mix of our revenue that still has the higher pricing because of optical disc attachment, if you will. But otherwise, I would say, we're driven by the market there. There's no real big obvious things I can point out. We're a little bit lagged, so it's not always a perfect timing. I know that you can say, well, December should show up in your March numbers, yes, in general they do. But overall, I think we anticipate that the unit trends will affect us, but that we are seeing slightly positive numbers in terms of the mix of optical versus non-optical.

Got you. That's very helpful. And then just a quick follow-up on the full year revenue guidance. I think Lewis had provided a high-level look at sort of the puts and takes at the changing guidance. I guess, gnawing in on the license range, in the midpoint, it looks like it's a bit higher than the previous range that you've provided. Is there any additional color that you could provide there for the puts and takes? For example, with the decline in contribution from PCs, is that largely offset by mobile or broadcast or both?

Yes, both. I think what you're seeing is, if you think about it, the first 2 quarters of this year, Perry, were very much on track, which is why, in Kevin's opening comment, the year so far is playing out very similar to what we thought, right? We gave guidance in Q1, we gave guidance in Q2. And in both quarters, we've met our expectation on licensing. For the full year, as I mentioned in my comments, at a high level, we are softening our outlook on product, mainly because it's hard to predict for a number that isn't that big to begin with. And two, we have to factor in that there's going to be some softening in the PC. But so far this year, we're actually running a little ahead in broadcast. And mobile continues to be a growth area for us. So yes, there's a lot of different things going on there, so -- I don't know if that addresses your question or not.

No, it does.

[Operator Instructions] Next we'll hear from James Goss, Barrington Research.

I have a couple of questions. First, regarding Atmos. One of the concerns that seems to be voiced is that even if Atmos is as terrific as it might be, that the ROI from the cinema chain partner might not be very evident because it would be tough to add to the ticket price for the sound quality and -- which might push it into maybe a replacement cycle or an upgrade cycle. Now I'm just wondering how you are looking at that in this stage of roll out, and if there's anything that could be done -- you say there are options you have considered, what sort of options might this be?

Well, the stage we're at right now is really focused on the top tier screens. And that's about, specifically, in less than a year we're now included in 5 out of top 10 grossing screens. In just under a year, 1/3 of the top grossing U.S. films have been released in Dolby Atmos. And so really good traction. And I think that there's a real focus in the industry, as you know, on making sure that attendance is strong and that top quality experience is a very important part of that. So we're seeing that demand in the high-end screen, so that's where the focus is. And I believe that the demand we have shows that they do see the payback in that. We do have examples of some exhibitors that have been charging additional price, many have not, and are focused more on attendance. I think as you start looking forward, whenever something has as fast of a roll out into the high end, as we've seen with Dolby Atmos, people start looking beyond that. And we're already working with exhibitors to look at how, over time, the total cost of ownership is affected as you continue to move this broader into the industry, which really is the case with any new technology that we've introduced in the past, and we're working with the industry to do that. And we think that it ultimately has very broad applications throughout the industry.

So right now it's in the largest -- premium large-format hedge screens, the specialty ones, non-IMAX. And that over the next couple of years, you might feel the presence and that it might become more meaningful, that's basically how we should look at it?

Yes. I don't want to overly generalize, but most of the installations so far are in the premium format screens, the largest screens in the house. But we absolutely do see demand beyond that, and we look at this as a broad application to the industry.

All right. And the other area I was wondering about was your 3D effort. That sounds like a pretty good breakthrough. I'm wondering what are the requirements. Where do you fit in? Is that the encoding side or is that the projection side or a little of both? And what are the requirements in your stage of involvement and how will you be paid on that particular project?

So this is our Dolby consumer 3D format, and it is a delivery format, so it's the encoding, the decoding. It would be incremented on the silicon in partnership with OEMs.

Okay. And it will be on a royalty fee, that sort of business model?

I would see that being a model that's consistent with our traditional business model, yes.

And next from Avondale Partners is John Bright.

Kevin, same question on Dolby Voice regarding the business model.

One of the things that's exciting about Dolby Voice is that it is a very new market for us. It's gotten a very strong reception, we have a great partnership with BT, we're very excited about it. And together, we're in sales cycles now introducing this technology, which will become generally available in the summer. That is an application that is integrated into their infrastructure for providing the service, it's also integrated into the client. And that's going to be a usage-based model, based on the scale of the deployment and based on the minutes usage of the Dolby Voice service.

And this is in HD Voice, or -- how would you characterize the service?

Well, it's really -- having a conference call on a Dolby Voice-enabled service is like being in the conference room of the people that you're having the experience with. It's a very natural experience, it spatializes the experience, it makes it easier to understand, easier to participate and overall, just a much more productive experience.

Final question. The percentage of total revenues, Lewis, did that come from optical today?

Yes. So this quarter, that's roughly 35-65 split. 35 optical, 65 non-optical.

[Operator Instructions] And there appear to be no further questions today. I'd like to turn the conference back to our speakers for any additional or closing remarks.

Okay. Thank you for joining us today. We look forward to continue to keep you updated on our progress. Thank you.

And ladies and gentlemen, that does conclude today's conference. We would like to thank you all for your participation today.