The DVD is dying, and Blu-ray sales have not fully replaced those lost DVD numbers. The result is that Dolby Labs, which licenses its surround sound and noise reduction technology for use in equipment such as Blu-ray players, is hurting. Q3 net earnings (in the period to June 30th), issued on August 2, were lower than anticipated at $51.5 million, and well down on the same period last year ($61.7m).

Overall revenues for the quarter were up 5 percent at $219 million ($207.9m same period last year). But these numbers disappointed analysts. The company said its reduced outlook for the full year (of about $900m-$920m in revenues) reflected the challenging global economy.

CFO Lewis Chew told analysts that licence sales on equipment such as DVD players had fallen by 19 per cent during the year, although there’s better news on licence fees for digital download services like Netflix.

Dolby’s share price fell back 14.5 per cent by $5.19 per share in late trading to $30.61.

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