DTS Partners DivX - Analyst Blog
April 09 2014 - 12:50PM
Zacks
A leading provider of
high-definition audio solutions, DTS Inc. (DTSI)
recently entered into a partnership with DivX. This partnership
will enable the integration of DTS-HD audio encoding and decoding
into the upcoming DivX10 software.
DivX products are used to compress lengthy video segments into
small sizes without compromising on the high visual quality. The
integration will enable users to enjoy studio-quality audio in
their DivX videos.
DivX10 would facilitate the creation and playback of DivX video in
High Efficiency Video Coding (HVEC), featuring DTS-HD audio on
Microsoft’s (MSFT) Windows as well as
Apple’s (AAPL) Mac.
We believe that the partnership will help in expanding DTS’s
customer base, leading to higher profitability, going forward.
DTS continues to gain market share driven by its strong product
portfolio, robust growth from the Blu-ray market and increasing
penetration into network-connected devices, such as
Internet-enabled television, smartphones, personal computers and
portable devices going forward.
Moreover, the company’s extended partnership programs with Samsung
to provide sound solutions for TV and inclusion of its technologies
in Qualcomm’s latest generation of processors are positives for the
company. This apart, partnerships with mobile and tablet makers
such as Huawei, Pantech, Lenovo and Panasonic are also
encouraging.
However, we believe that the strong growth of network-connected
devices will eventually cannibalize the sales of DVD and
Blu-ray-based products. This in turn will hurt DTS' growth over the
long term. Further, the company faces significant competition from
Dolby Laboratories Inc. (DLB), Sony Corp. and
privately-held THX Limited, which will impact its future
profitability.
Currently, DTS has a Zacks Rank #3 (Hold).
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