Dolby Laboratories' shares rose 35 percent in their stock market debut yesterday as investors pounced on their first opportunity to buy...
SAN FRANCISCO — Dolby Laboratories’ shares rose 35 percent in their stock market debut yesterday as investors pounced on their first opportunity to buy a stake in a 40-year-old company that has become synonymous with high-quality sound.
The San Francisco-based company’s shares gained $6.30 to close at $24.30 on the New York Stock Exchange. Dolby priced its initial public offering of stock at $18 per share, up from a projected range of $13.50 to $15.50 set shortly after the company filed its plans to go public under the ticker symbol “DLB.”
To commemorate Dolby’s coming out party, the New York Stock Exchange’s opening and closing bells rang out in surround sound — one of the many ways that the company has left its mark on the entertainment industry since its 1965 inception.
Most Read Stories
- UW study finds Seattle’s minimum wage is costing jobs
- Costco is testing a new burger in Seattle, and it might remind you of Shake Shack
- Check out the Pike Place Market’s $74M addition: See 360-degree views of the new MarketFront VIEW
- Trump travel ban partly reinstated; fall court arguments set VIEW
- Calling their bluff: A Seattle doctor pegs what the GOP health bill is really about | Danny Westneat
The IPO turned company founder Ray Dolby into a billionaire.
Dolby, 71, collected $306 million by selling 17 million of his shares in the IPO. He still owns another 68 million shares valued at $1.65 billion, based on yesterday’s closing price.
The company offered 10.5 million shares in the IPO, raising $172.4 million after expenses, according to a filing yesterday with the Securities and Exchange Commission.
Dolby’s widely recognized brand — stamped on movies, DVDs and video games — made it easy for the company to drum up investor interest, said David Menlow, president of the IPO Financial Network.
“It’s a platinum name. Just about everyone who heard about (the IPO) wanted to be signed up for shares before they even took a look at the company’s finances,” Menlow said.
Dolby has long been profitable, but it has been making even more money because of the explosive growth of DVDs and home entertainment systems that rely on the company’s technology. Dolby earned $39.8 million last year on revenue of $289 million. The company’s annual revenue has more than doubled since 2001 when its sales were $124.7 million.
With technology changing at such a fast pace, Dolby remains vulnerable to another upstart coming along with sound improvements that could undermine its market share, Menlow cautioned. The cash raised from the IPO, coupled with the liquidity of a publicly traded stock, gives Dolby more financial muscle to ward off potential rivals.
Dolby became a household name long before the DVD craze. The company’s sound system has been used in 16,000 movies released in theaters and its technology is featured in 1.7 billion consumer electronics products.
Until recently, Dolby made huge royalty payments to its founder. The company paid $83.3 million to Ray Dolby in the past three years. As part of the IPO, Dolby turned over all intellectual property rights to the company.
Although he will no longer have a claim on the patents, Ray Dolby will retain tremendous control over the company’s direction. Like online search engine leader Google and several major media companies, Dolby’s stock is broken down in two classes, with the company founder holding most of the shares with the greatest voting power.