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What: Shares of audio specialist DTS
So what: After yesterday's close, DTS drew back the curtain on its fourth-quarter numbers, to resounding investor applause. Revenue for the quarter increased 27% year over year to $26.9 million, easily topping Wall Street's $24.5 million expectations. Earnings per share similarly topped estimates, clocking in at $0.34 versus the expected $0.31. Overall, it was a very successful 2010 for DTS as the company notched total revenue growth -- excluding royalty payments -- of 38% and managed to expand its non-GAAP operating margin from 33% to 38%.
Now what: Blu-ray is a key theme for DTS, since the company's technology is mandated in all Blu-ray players. With that tailwind, along with a growing number of other devices that can use DTS's technology, the company is expecting a strong 2011. Management projects revenue in a range of $100 million to $105 million, continued margin expansion, and EPS of $1.40 to $1.49. If the company can hit those targets, it could crush Wall Street's estimates of $102 million in revenue and $1.15 in EPS.
For investors, DTS has the draw of a smaller up-and-comer that could grow faster than its larger competitor Dolby
Dolby Laboratories is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
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