While it might be able to titillate our ears, excite our senses, and arouse our passions, advanced sound technology leader Dolby Labs (NYSE:DLB) is no house of ill repute. The digital entertainment specialist continues to show that despite the views of some streetwalkers -- no, not the Wall Street kind -- it still has the ability to get its value up.

Revenues in all segments improved, bringing the total to $129 million, a 23% increase over last year. Licensing its technology to others remains the Motley Fool Stock Advisor recommendation's primary source of revenue, accounting for 83% of the total. It alone jumped 28% to $106.6 million as sales of personal computers, game consoles, and even TV tuners contributed. Profits rose 40% to $39 million, or $0.34 per share, handily beating analyst forecasts of $0.27 per share.

The area that got a big rise out of Dolby was once again PC sales, primarily notebook computers which typically include DVD players as part of the package. While there has been some concern that, with manufacturers facing a pricing squeeze, they might opt out of including such advanced technology as Dolby offers, it looks like such fears were overblown.

Microsoft's (NASDAQ:MSFT) new operating system also has the potential for future revenues for the sound maven. Dolby's technology is included in two versions of the software and as adoption increases so will Dolby's licensing revenues. It did note that $7.7 million in revenues come from deferred recognition of PC sales in prior quarters but still expects year-over-year growth for the rest of 2007.

Digital cinema -- the systems that improve the movie-going experience -- is starting to gain traction worldwide. While there are currently more than 300 such systems installed, privately-held Technicolor has recently ordered 190 new systems for installation. It will be competing against Access Integrated Technologies (NASDAQ:AIXD), which is striving to bring its digital cinema content delivery systems to thousands of theaters. Meanwhile, at least one competitor, DTS (NASDAQ:DTSI), has decided to exit digital cinema altogether. The outlook for the rest of the year, though, is flat.

Perhaps one of the areas with the promise for making Dolby's value more alluring is the advent of digital TV signals that, as of March 1, manufacturers were required to have adopted. As TV makers pushed to meet the deadline to incorporate next-generation tuners in their sets, Dolby enjoyed strong year-over-year sales, though it did not break out the figures. We'll have to wait for the quarterly filing to see just how much.

The numbers once again showed that Dolby can still turn heads. It raised and narrowed its guidance for the full year, expecting profits of as much as $1.00 per share on revenues as high as $450 million. On a price-to-earnings and price-to-sales basis, Dolby looks more expensive than either DTS or SRS Labs (NASDAQ:SRSL), but when you view the sound tech's enterprise value-to-free cash multiple, it is cheaper by about half. Add in the company's growth prospects, and any gentleman or madam who suggests its value has peaked is simply walking on the wrong side of the street.

Dolby is a three-time recommendation of Motley Fool Stock Advisor. A 30-day trial subscription lets you sample the sweet sounds of the investing service that is beating the market by 40 percentage points. Microsoft is a recommendation ofMotley Fool Inside Value.

Fool contributor Rich Duprey owns shares of Dolby but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.