UPDATE 2-Dolby Q1 results beat Street, ups 2010 outlook

* Raises 2010 view on strength in licensing revenue

* Shares rise 4 pct after mkt (Adds segment outlook from conference call)

By Saqib Iqbal Ahmed

BANGALORE, Feb 3 (Reuters) - Dolby Labs Inc's (DLB.N) quarterly results beat market estimates helped by a rise in product revenue, and the audio technology licensor raised its fiscal 2010 forecast, sending its shares up 4 percent.

For 2010, Dolby expects to earn $1.96 to $2.08 per share, higher than its prior forecast of earnings of $1.85 to $1.96 per share.

It forecast adjusted earnings of $2.21 to $2.32 per share for the year, and now expects revenue of $780 million to $810 million.

The company, whose technology is used in DVD players, Blu-ray devices, televisions and personal computers, had previously expected revenue of $720 million to $750 million.

The raised guidance is based primarily on increased expectations for the addressable market in PCs and digital TVs, Avondale Partners analyst Tom Kucera said.

"We experienced increased global adoption of our next-generation audio format, Dolby Digital Plus, experienced strong demand for our cinema 3D systems and, in January, saw a leading set-top-box manufacturer adopt Dolby Volume in certain models," Chief Executive Kevin Yeaman said.

The company also raised its 2010 licensing revenue view to a range of $630 million to $650 million, up from its prior view of $600 million to $620 million.

Dolby said it now sees mid-single-digit growth in worldwide TV unit growth in 2010, up from its prior view of growth in the low single-digits, and 9 percent growth in PC shipments. [ID:nWNAB2736]

The company expects European TV attach rates of about 80 percent in 2010 as manufacturers standardize Dolby technology.

STRONG Q1

For the first quarter ended Dec. 25, 2009, the company earned $69.1 million, or 59 cents a share, compared with $78.1 million, or 68 cents per share, a year ago. Excluding items, it earned 64 cents a share.

Total revenue rose 23 percent to $221.2 million. Product revenue increased by more than three-fold from last year, including a $17.6 million in incremental sales due to the adoption of a new accounting standard on revenue recognition.

Analysts on average had expected Dolby to post a profit of 49 cents a share, on revenue of $181.1 million, according to Thomson Reuters I/B/E/S.

Dolby shares were up 4 percent at $51.84 after the bell. They closed at $50.03 Wednesday on the New York Stock Exchange.

For alerts double click [ID:nWNAB2736] (Reporting by Deepti Govind and Saqib Iqbal Ahmed in Bangalore; Editing by Gopakumar Warrier, Anne Pallivathuckal)