And so it seems that not even Dolby Labs (NYSE:DLB) is immune to the effects of a consumer-led recession.

As is its wont, Dolby reported better numbers than almost anyone expected yesterday. Revenue in the fourth and final quarter of fiscal 2008 surged 26% from last year's Q4. Profits eked out just an 8% gain, coming in at $0.42 per share -- but in each case, these numbers utterly crushed Wall Street's estimates. The sales growth exceeded expectations by almost double, and lest you snicker at the single-digit earnings growth ... I was actually expecting profits to decline.

Pause for applause?
Sure. Why not? Just as it's done for three years running, Dolby trounced the Street's predictions, and the stock's enjoying a well-deserved bounce in response. As CEO Bill Jasper correctly observed: "Fiscal 2008 was a strong year" for Dolby. But therein lies a reason to worry about Dolby's future.

Consider: For fiscal 2008 as a whole, Dolby achieved a 44.8% operating margin. But in just the fourth quarter, the company managed only a 40.9% margin.

That's still better than anybody Dolby competes with -- by a long shot. DTS (NASDAQ:DTSI) gets by on margins half as plump, while Kodak (NYSE:EK), Philips (NYSE:PHG), and SRS Labs all eke out a living on single-digit margins. And Dolby's margin strength speaks to the strength of the Dolby brand, and its value to customers that use its tech, like Sony (NYSE:SNE) in DVD players, Microsoft (NASDAQ:MSFT) in PCs, and, of course, Regal Entertainment (NYSE:RGC) in movie theaters.

But the decline in profitability per revenue dollar has to worry investors. The more so because, according to Jasper, there are more such declines to come. Next year, management tells us to expect both slowing sales -- 8% growth at the midpoint of estimates -- and a probable 2% to 4% drop in per-share profits. Hardly the stuff of investor dreams.

Foolish takeaway
I believe that Dolby's pre-earnings price drop left us with a decent margin of safety despite this year's gloomy forecast. The stock was selling for 18 times earnings, with plenty of cash on hand and significant free cash flow. This seems a reasonable price to pay for a company that most analysts expect to resume growing eventually, and to increase its profits at about 14% per year over the long term.

But after today's jump of 10% (so far), if you decide to hold off on buying, and wait for proof that this growth will in fact materialize, I couldn't blame you a bit.

For more on Dolby, read:

Microsoft is a Motley Fool Inside Value recommendation. Dolby Laboratories is a Motley Fool Stock Advisor selection.

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool's disclosure policy can't get Barry Manilow's "Copacabana" out of its head. (You're welcome.)