UPDATE 1-DTS posts higher Q2 profit, ups FY 2009 outlook

* Q2 EPS $0.21 from cont ops vs $0.07 yr-ago

* Q2 rev $24.2 mln vs $12.8 mln

* Raises FY '09 outlook

Aug 10 (Reuters) - DTS Inc (DTSI.O) posted a higher quarterly profit from continuing operations, helped by improvement in market segments related to Blu-ray products, and raised its full-year outlook citing market recovery and settlement of litigation matters. DTS, which earns royalties on every single Blu-ray device bolted with its mandated technology, said it is "highly optimistic" about future with falling retail prices, increasing content availability and the growing pipeline of Blu-ray products.

DTS raised its full-year profit outlook to 57 cents to 62 cents a share from its earlier view of 55 cents to 60 cents a share. The company now expects revenue of $76 million to $79 million, up from its previous forecast of $65 million to $69 million.

Analysts on average were expecting the company to earn 55 cents a share, before items, on revenue of $67.1 million, according to Reuters Estimates.

In June, the company said it had settled all its outstanding legal matters with Zoran Corp ZRAN.O, and entered into a new licensing agreement with Zoran. [ID:nWNBB0075]

For the second quarter, income from continuing operations was $3.6 million, or 21 cents a share, compared with $1.4 million, or 7 cents a share, a year ago.

Revenue rose 89 percent to $24.2 million.

Analysts were expecting earnings of 5 cents a share, before items on revenue of $13.8 million. Shares of the entertainment technology company closed at $27.56 Monday on Nasdaq.

For the alerts, double-click here. [ID:nWNBB3151] (Reporting by Deepti Govind in Bangalore; Editing by Pradeep Kurup)