I am amazed at the confusion on this subject with regards to this subject. It is around the subject of GAAP vs. Non-GAAP earnings. So, please allow me to provide some information to help clarify the subject.
Let's start with November, 2008 with Dolby providing EPS projections for 2009. The projected EPS( GAAP ) were $1.57 to $1.77 per share with a revenue projection of $660mm to $720mm. Looking at the results, final #'s are finally in and what happened? Dolby did $1.99 per share(GAAP) - $0.56(Q1); $0.60(Q2); $0.45(Q3); $0.38(Q4). This reflects beating their earnings projections at the start of the year by 19%( used $1.67 per share average ) and 4% higher revenue( used $690mm average ). In summary, this isn't a bad year particularly considering the economic climate. Now, let's look at 2010 and see what we see. Dolby raised their guidance to $1.85 to $1.96 per share. Now, one could look at this and say " hey those #'s are lower than $1.99 EPS in 2009. Hence, Dolby lowered their projected profits for the year. What you have to remember is that Dolby likes to beat estimates. They are a conservative group. Yes, these #'s are lower than the actual 2009 results. If you do some math using Dolby tendency to beat estimates, which was 19% above their target in 2009, you get these projected #'s: $2.20 to $2.33 per share. This gives you about a projected 13% EPS growth projection in 2010. It is slower than we have seen in the past. So, what does all this mean? It means that a good April to June 2010 target price for Dolby is $2.25 per share @ 19x to 22x earnings ratio or $42.75 to $49.50. I know that this GAAP vs. non-GAAP earnings thing is confusing. I see these $2.15 earnings projections on the MSN page. You need to remember that these are non-GAAP projections, so don't be fooled.