Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratories Conference Call Discussing Fiscal Second Quarter 2008 Results. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. [Operator Instructions]. As a remainder, this call is being recorded, Thursday May 1st, 2008. I would now like to turn the conference over to Kevin Yeaman, Chief Financial Officer for Dolby Laboratories. Please go ahead Mr.Yeaman.

Thank you operator and good afternoon everyone. Welcome to Dolby Laboratories' second quarter fiscal 2008 earnings conference call. Joining me today is Bill Jasper, Dolby Laboratories' President and CEO. In addition, Tim Partridge, Executive Vice President of Product and Technologies: Ramzi Haidamus, Executive Vice President of Sales and Marketing and Marty Jaffe, Executive Vice President of Business Affairs are here to participate in today's Q&A. On this conference call, we will be making forward-looking statements that include projections of future operating results for a fiscal year ending September 26th, 2008. Market trends for the industries in which we compete, and our expectations concerning how those trends will affect our operating results, the capabilities and market acceptance of our products and technologies and our strategic and operational plans. Important factors could cause actual results to differ materially from those in the forward-looking statements. These factors are detailed under the section captioned risk factors and elsewhere in our most recent and any subsequently filed quarterly reports on Form 10-Q available at www.sec.gov, or on our website at www.dolby.com under the Investor Relations section. Dolby disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or otherwise. As for the structure of this call, Bill will begin with an overview of business, and I will follow with a rundown of Dolby's financial results. So with that introduction behind us I will now turn the call over to Bill. N.W. (Bill) Jasper, Jr., - President, Director, and Chief Executive Officer: Thank you Kevin. Good afternoon everybody. Thank you for joining us today. I'm happy to report strong financial results with fiscal second quarter year-over-year growth of 34% of revenue and 44% in earnings per share. During the quarter, we continue to benefit from the…

Thank you, Bill. I'd like to discuss Dolby's overall financial performance and highlight some of the major drivers for the quarter. Revenue for the second quarter was $172.6 million, up 34% year-over-year and 15% sequentially. Second quarter licensing revenue was $149.6 million, an increase of 40% year-over-year and 22% sequentially. Growth was primarily driven by strong results from our PC market as well us from our gaming and broadcast markets. After excluding $7.7 million of prior period PC royalties recorded in the second quarter of fiscal 2007, licensing revenue from our PC market doubled year-over-year this quarter. The year-over-year performance was primarily driven by shipments in PCs with Microsoft Vista Home Premium or Ultima editions and/or third party DVD playback software each containing Dolby technologies. Licensing revenue from our PC market experienced strong sequential growth in the second quarter of fiscal 2008, which we attribute to increased PC shipments and a continued strength of Microsoft Vista. Our broadcast market grew over 20% year-over-year on demand for digital televisions containing our technologies. Sequentially, broadcast grew on increased revenue from digital television and set-top box shipments. Our CE market experienced mid-single digit growth year-over-year and sequentially on higher reported revenue from standard-definition DVD and Home Theatre in a Box. Our other markets category had very strong sequential growth and nearly doubled year-over-year led by revenue from gaming and from the addition of our mobile market with the acquisition of Coding Technologies in the first quarter of fiscal 2008. Second quarter product sales were $15.6 million, up 1% year-over-year and down 22% sequentially. Product sales declined sequentially due to a reduction in shipments of our cinema audio processors and because we sold more of our digital 3D systems in the first quarter driven by the release of Bewolf. Second quarter services revenue was…

Thank you. [Operator Instructions]. We'll take our first question from Ingrid Chung with Goldman Sachs.

Hi, good afternoon. Thanks and great quarter. So, if I’m doing my math right, it looks like at the midpoint of revenue guidance, that you have to do about 11% growth in terms of revenue in the second half. I was just wondering if that is... if you're reluctant to raise revenue guidance, something you're seeing in the macro environment or is it, the lapping of Vista sales or something else that you’ve been saying. And then secondly, on PCEE, I was wondering with the new version that you launched in March, whether you've seen some increased penetration with Acer and Lenovo and Toshiba?

Sure. So, and Ingrid you’re focused on total revenue, right.

Yes.

So, if you break that down into licensing versus product and services, you'll see that the licensing range of guidance for the second half equates to about 13% to 23%, whereas products and services is down to... slightly up but, on the low side down double-digits and that's on the products and services, that's because of our pushing the digital cinema revenue into the beginning of '09. On the licensing side, the 13% to 23% revenue growth, our outlook has been raised because of our view of the PC market, we entered the year, I think with what we thought were reasonable estimates for PC market growth, and as you know, an element of caution around whether the ISV attach rate would continue along with the shipments of Vista Premium. As the year is going on, we have continued to see that attach rate hold firm, we're halfway through the year, so we're increasingly confident that will continue. But, even though we do see Vista lapping in the third and fourth quarters, in other words comparing Vista quarters to Vista quarters, we do see a number of elements that will drive higher revenue growth than the overall PC unit growth rate. We still have good year-over-year comps in the second half on PCEE. We still have good year-over-year comps on the percentage of PC units that are shipping with Microsoft Vista Premium or Ultimate, and we still see the notebook part of the market driving most of the growth as opposed to desktops, which of course works in our favor. So why don't I turn it over to Ramzi for a color on how we're progressing on the PC88.

The PC88 program has shown continued growth, we're pretty excited. The three companies you named Acer, Lenovo and Toshiba are the leaders in terms of skilled option. They have grown from last year to this year. And also looking at positive adoption for the second generation of PCEE for these three companies and beyond which include the PCEE next-generation includes surround sound, Dolby headphone and we are seeing similar market acceptance to that. So overall, the trend looks fairly encouraging.

Okay, great. Thanks.

We'll take our next question from Ralph Schackart with William Blair & Company. Ralph Schackart - William Blair & Company: Hi, good afternoon. Another great set of results guys. Bill, I was wondering if you could help us sort of frame this PC market opportunity that you have, that continues to be pretty robust maybe in a pretty high level sense. Question I get all the time is what's the penetration rate with Dolby. What is the sustainability of this growth rate? May be you could give to us in a baseball analogy what inning are you in and the sort of growth trajectory with the PC business today? N.W. (Bill) Jasper, Jr., - President, Director, and Chief Executive Officer: I like your framing of the question, Ralph. Ralph Schackart - William Blair & Company: Making it easy for you Bill. N.W. (Bill) Jasper, Jr., - President, Director, and Chief Executive Officer: We still see a lot of growth. Obviously the whole industry is moving much more towards the use of notebooks as media centric PCs are well positioned there. We still see growth coming from Microsoft going forward. We think there is continued, as Kevin pointed out, continued attach rates for second ISPs, Dolby Digital decoders and PCs. So we remain fairly well optimistic. We have factored in greater confidence that many PCs will shift through fiscal 2008 with the DVD playback software, and overall we are comfortable with our unit growth assumptions. We expect plus or minus 10% unit growth worldwide again mainly on notebook computers. So we think we're very positive in future. Kevin, you want to add anything.

I just want to add is that... and actually Ramzi covered it as well, but we’re just beginning to see PC units shipped with Blu-ray players. So that... well that's very early days for us and probably not a factor in '08 it is over the... over the longer term another reason to believe that there is strength in the ISV market for DVD players. Ralph Schackart - William Blair & Company: Great. That was helpful. And one more for Kevin, if I could Kevin, I have to ask the consumer question here. I mean these set of results obviously don't show it, but are you seeing any other consumer headwinds start to work the way into the business. And I think last quarter you said you had visibility to about half of the yearly numbers and so far no consumer rolling in the business. Just wonder if you can give us an update there? Thanks.

Yes. So far we haven't seen any tangible signs of it. And at this point, we obviously half our year done more one quarter in arrears obviously in terms of the reports we receive but we do look to industry analyst data, we look to the results of other companies and ecosystems that are relevant to our markets. We speak to our customers and we triangulate all of that when we come up with a market growth assumption for the unit categories that are particularly important to our revenue growth rates. And we think we take a conservative view of those data points but we haven't seen any intangible signs of slowdown. And I guess the other thing that I would emphasize that we... we emphasized last quarter but still holds true for the rest of the year and that’s for two of our largest growth markets, PC and broadcast, the growth is being driven largely by increased attach rates relative to the prior year quarters where we're on… we have more technologies in PCs this year than we did a year ago, because of the increasing attach rate of Vista Premium, the continued strength of ISVs, the PCW initiative, we run more televisions and set-top boxes around the world because of the fact that in North America any TV shipping with the tuner has to have a digital turner, due to the fact that in Europe, you're announcing television shipping with Dolby Digital to take advantage of the HD services which are also driving set-top box growth in Europe. So, those are the primary drivers, and as for the consumer we read everything eagerly as you do, but haven’t seen anything specific yet. N.W. (Bill) Jasper, Jr., - President, Director, and Chief Executive Officer: I think one thing to remember Ralph is the fact that we are global, we are out there not just in North America, but many, many countries around the world. So, I think to the extent that U.S. does slide slightly, we're well positioned in rest of the world. Ralph Schackart - William Blair & Company: Right. Thanks guys.

We will take our next question from Mike Olson with Piper Jaaffray.

Thanks, good afternoon. A couple of quick questions, as far as the gross margin for the year, I guess with the change in revenue mix for the year, what do you think gross margin could be for the remainder of the year, given it was 90% this quarter, can it stay at that level?

So, yes it can stay at about that level, because we're going to see... we're going to continue to see a similar mix until we start recognizing the digital cinema revenue in the beginning of next year. And then we'll start to see a shift back towards more balance on the product side.

Okay. And then as far as Dolby Volume, that seems like that could be a pretty huge opportunity and can you just talk about the kinds of royalty rates for looking at, I would guess it’s less than the $1 average royalty for the company. But, is it significantly lower? N.W. (Bill) Jasper, Jr., - President, Director, and Chief Executive Officer: Much with like the other technologies, we have not announced obliviously the royalty ASPs on specific technologies. But, to your earlier comment it is, it continues to look like a good opportunity for us. Right now, we are at the phase were a series of integrated circuit and implementation chips are getting tested and certified. Our goal is to have several of those be in the marketplace as we speak and as we edge towards the end of the fiscal year. And the next phase of course is the product uptake by televisions and receivers and we saw the Toshiba announcement were the first two televisions test is certified and will be shipping in Japan. So we are on the right track, it's the track that we're expected to be on, so it's looking fairly good.

Okay. And then just one last quick one, I understand that Dolby is becoming more of a defect of standard in Europe on the digital TV side. Is there any chance, European countries adopt ATSC for Digital TV and you become mandatory. N.W. (Bill) Jasper, Jr., - President, Director, and Chief Executive Officer: The switch to ATSC in Europe is pretty unlikely. The European Community is very comfortable with its performance of the DVD standard and in other areas where it's not, it will be such as satellite bay and broadcast of course those are their own standards. So, we do not see that shift, nevertheless we're very happy with the uptake of Dolby Digital... Dolby Digital Plus and ATSC on those regions.

Okay. Thanks a lot.

We will take our next question from Paul Costaer with JP Morgan.

Thank you. Is there any way in which you can quantify the importance of the increased attach rate as a revenue driver by product category?

Well, I guess I would say that we've been, the first half of the year as we've said each of those quarters we doubled the revenue from the PC category. So the increased attach rate in the form Vista Premium and Ultimate and the increased attach rate of PCEE is the primary driver of that revenue growth over and above PC unit growth and the shift towards notebook so it's the largest driver.

What about in the other categories?

And in broadcast again, we've been growing at a healthy clip that was... it was just over 15% of revenue in 2007 and it will be between 15% and 20% in 2008. And it's been again the largest driver. I mean we're planning for more growth in the mid-single digits for worldwide TV shipment. So really where a lot of the growth is coming from is the increased attach rate both in North America and Europe. In the consumer electronics market, that's where for the largest product category in that market for our standard DVD, the attach rate is not particularly a driver there so it is very much a matter of unit growth. We are expecting a decline in unit growth around the world in standard DVD players. What's offsetting that is the… our [inaudible] increases. But also increased attach rates and inclusion of technologies and some of the smaller but in some cases growing categories such as digital camcorders, home-theater-in-a-box systems etcetera.

How long will we have to wait before Mobile becomes a sort of material subset of your licensing?

Well, it's a meaningful part of our other category between... with the addition of Coding Technologies, the revenues from the inclusion of HEAC on many multimedia handsets around the world as part of that other category. I wouldn't venture a guess yet as to when we might be breaking that out as a separate category from other.

Okay, great. Thank you.

We'll take our next question from Brian Thackray with Deutsche Bank.

Thanks guys, good quarter. If we look at Europe and television broadcast market, can you give us a sense of your penetration has increased significantly at all in the last three months? Where do you expect that to go over say the next six months?

I'm sorry. I missed the very beginning of your question. Was it?

If you look at your penetration of Europe and the television broadcast markets, where do think that can go in the six months, has it changed at all materially in the last three?

Well, first of all, the data, which we get on this ourselves gives us a pretty good ability to get measurements on that on an annual basis. But in increments of a quarter or two that's more difficult for us to address. What I can tell you is that there has been a significant increase in the attach rate year over... in '08 over '07 and we think there is considerable growth available to us over the next couple of years as digital television continues to adopt Dolby Digital and HEAC.

Okay. And I may have missed this on the PCEE... the second gen PCEE, is there any royalty change at all with that technology? And can you also talk about potential other potential OEMs adopting PCEE in addition to the three major ones you have now?

Let me answer your second question first, the PCEE continues to see a new adoption or continually seeing, certainly over last year an increased adoption both in terms of SKUs and company, number of companies adopting it, and we will be looking over the next 12 months at adding more companies and SKUs, to take on the PCEE second generation. So, overall it is on a growth trajectory both from the perspective of SKUs as well as the number of companies adopting technology.

Yes. In terms of the ASP question, we're not going to get into breaking out the ASPs by technology, but if I would say that the greater significance of pointing out the next generation of PCEE continues to be that we are at stage where we're out getting lots of design wins getting on more SKUs, and that's really the... that should be the primary focus in terms of revenue drivers at this stage in the cycle.

Thanks.

It's not cheaper than the first version.

Okay. And then, Kevin, I think, you mentioned that the gaming vertical was particularly strong this quarter. How much of that was seasonal, do you think and how much of that is sustainable moving into the back half of your year here?

Well, we are assuming that, in our guidance that it's largely seasonal, we... I think we saw a very, well we did see a very strong increase in the fiscal second quarter. We are assuming that tails off in the second half due to seasonality.

Okay. Thanks, guys. Good quarter.

We'll take our next question from Andy Hargreaves with Pacific Crest.

Hi, guys. First of all, I didn't realize you guys got COLA [ph] licenses, or COLA increases, it must be nice to get 90% margins and COLA increases. But, wondering, if you narrow, down again back on the PCEE, you went through all the reasons it’s so strong but, wondered if you could help us, I guess breakdown how much of the increase that you're referring to in a license guidance increase is coming from our performance in Q2 versus higher expectations for Q3 and Q4?

So, in total we raised licensing guidance by about $25 million and as you can see, we guided on annual basis, but relative to consensus expectations we can see that it was approximately $15 million over the second quarter. As we do look at it on an annual basis, and on that annual basis, it was predominantly PC and then to a much lesser extent gaming, because of that really strong seasonal performance in Q2. And so, it is spread throughout the year, it’s not concentrated in just in Q2. And it's partly because we had very strong performance in Q2, and it's partly because we're that much closer to Q3 and Q4 now, that we at least have some data points on how others and the ecosystems have done and we also have greater confidence about the continued success of the ISV providers of getting embedded into units in cases where there… in cases when there is also Vista Premium and of course another cases whether the only DVD player and that as we look beyond this year, I think they stand about a bit from the Blu-ray upgrade cycle.

Okay. And then on the product side, is most of the delay in product sales are weakness in the product sales, whatever you want to refer to it, related specifically to continued lagging from the DCIP, it was a fairly same as movie producers that had been complaining about that fairly publicly recently or is it broader than the DCIP?

Let me first clarify and then turn over to Tim. Let me first clarify that we were not referring to lag in product sales. If anything... our product sales in the digital cinema space are doing a little better than what we had thought when we first came into the provided guidance. But what has changed is our revenue guidance because we don't plan on recognizing the revenue from those sales until the first half of 2009. We used to be expecting it in the second half of 2008. But in terms of your question on where the market stands...

We… Andy, we have said in the past that as digital cinema takes off, it could negatively impact our traditional cinema products and we continue to see a little bit of that. But as Kevin said, it’s mostly about the digital cinema servers, which are selling a little bit now, but we are waiting for this ramp up. As you know, the whole industry is talking about a major real lout [ph] and the other exhibitors talking about that happening in the second half of this year. So, that’s what we’re giving up for. We think we are well positioned for it and because of the delay in DCI selecting agencies around the world to provide certification that a particular server is DCI compliant, that’s why we are having to delay our own revenue recognition. So we do think we are well positioned for the real lout when it happens and we still believe that it will happen in the second half of this calendar year.

Great, thanks.

We will go next to Daniel Ernst with Hudson Square Research.

Yes, good evening. Thanks for taking the call. Two questions, if I may. On the embedded, single… or mid-single digit growth in the traditional Consumer Electronics, was DVD still positive? And then if not, do you think in your sort of 12 months to 18 month forecast, would Blu-ray start to make up for that, and make the category, DVD players and Blu-ray combined, a positive trend again? N.W. (Bill) Jasper, Jr. - President, Director, and Chief Executive Officer: We've continued to see single digit. We've continued to see slight revenue growth from the DVD category in the first half. As we look to the second half, we continue to base our guidance on declines in DVD volumes, and that’s for just standard DVD. We factored in very little contribution from Blu-ray stand-alone DVD players in this fiscal year, obviously, they have to ship by June 30 to hit this fiscal year. And not prepared to give any guidance on 2009. But, I'm sure Ramzi could add some color on our thoughts around Blu-ray generally.

Blu-ray, as I mentioned earlier, since Toshiba stopped making and manufacturing and promoting HD, it did clear up the way for almost all CE manufactures to rally around the Blu-ray format. So, instead of having competition between two formats of course, now have competition on one format, but on price, which is ideally what we really would like to see. So, in this new world, we're looking at the latest prices of Blu-ray disk covering around $299 price points, $399 price points is the general Sony's… have their $399 price point on the Web. So, it's not at the magical $199 that you would like to see for mass adoption, but I would say that trend is going in the right place. I think 2009 will be the year that we will see Blu-ray take off as we also look at the PC side of it, and we start to look at the high-end PC... laptop starting to ship for a premium price with Blu-ray disk such as HP, Dell, Acer and Lenovo all for $200 to $300 will add a blue Blu-ray disk player and drive. So, the trend overall looks to be fairly positive and I'd say '09 will be the right year where it will take off.

Great. That's very helpful. As a follow-up question, you mentioned a lot of positive trends on your exposure on international broadcast either as a standard or as an obvious upgrade embedded in the standard. How about on the IPTV side, which is pretty… very [inaudible] from Deutsche Telekom to Apple TV… and maybe Apple TV because it’s a little more relevant as of today with their ability to get day-and-date releases of digital at opportune time as DVD. But, can you comment on your positioning in the IPTV world? N.W. (Bill) Jasper, Jr. - President, Director, and Chief Executive Officer: IPTV is a very compelling application, the ones that we have seen and whether you look at [inaudible], it is quite a compelling offering. But, frankly I would say the entire industry has not seen the uptake that we hope and thought would happen. So, where… I think it now has a critical mass of adoption at this point, and we're still waiting to see it take-off to see what kind of content and technologies will be used in these type of solutions. So, I would say other than a few large companies trying to push it, it’s still not the critical mass so who really make large observation about the trend and day-in with DVD or large releases.

But, we think we're well positioned with aacPlus.

Dolby Digital Plus is another technology that Dolby has been pushing. So, between HE-AAC as well Dolby Digital Plus from a technology perspective, Dolby is certainly working with all the key players on making sure that our technologies are being used for stereo and multi-channel use.

Great. Thank you.

We'll take our next question from with Hunter DuBose with Morgan Stanley.

Thank you. My first question is, can you give us some idea of the proportional contribution to total PC revenue, license revenue from PCEE this quarter, and some indignation of how that's ramped over the last few quarters? And my next question is, obviously, you have made clear you reluctant to discuss specific of ASPs from technology to technology, but it would be useful for helping to size up the opportunity and quantify the opportunity from some of your newer technologies just to get a sense of relative proportionality? For example, if a new market internationally were to select aacPlus versus Dolby Digital for its broadcast technology there. Is Dolby agnostic to that from an ASP point of view or would one represent a better opportunity than the other? Thank you. N.W. (Bill) Jasper, Jr. - President, Director, and Chief Executive Officer: On PCEE, I'm not prepared to break out the PC market by product category. I would just say that it was… as we said before, there was very little revenue in 2007, it's been growing through '08, and it's a meaningful contributor to the growth in the second half as a percentage of absolute dollar growth. So, it’s doing well. On ASPs, it really varies by new technology. Ramzi, if you have any perspective on that?

To your PCEE question, we have… I can add a little bit more texture to what I have said earlier. The PCEE opportunity tends to find itself… the proliferation seems to be in three areas, notebooks, desktops and motherboards. In that order. So, the largest prevalent uptake is on the notebook, which we would like to see, because that's where we have the lead compliance issues, us as second, and a motherboard from Intel is a distant third in terms of volume. As I mentioned earlier, we have seen significant uptakes in the number of skews, adopting them and we're looking at more companies looking forward. We have not broken out the ASP on PCEE nor… but your second question on how agnostic we are on the technologies out there, Dolby Digital and Dolby Digital Plus are somewhat of a different piece from a likely perspective than HE-AAC. Prior to Dolby acquiring Coding Technologies, Dolby Digital and Dolby Digital Plus were a full licensing package, which include trademark know-how on patents, which commanded a royalty commensurate with previous historical royalties that the company has collected from manufacturers. HE-AAC prior to the acquisition of CT was strictly a patent licensing program and by its nature it does command a lower royalty because you don't know how the trademark or the know-how that comes along with it. As Bill and Kevin had mentioned on previous calls, the synergies between the CT acquisition and Dolby, should they play out the way we plan to, will hopefully command an additional stream from branding and from know-how, but we haven't realized those at the time, given that… because the acquisition didn't happen that long ago. So, looking forward, we would like to be at the point where we can say we are agnostic between the two.

Okay. Thank you.

We'll take our next question from Alan Davis with DA Davidson.

Yes, thanks. Just a couple of questions here guys. Following up on that last question on the perhaps increased revenue stream we can create from Coding Technologies, can you just comment on what kind of premium or what they were getting that you could possibly command as premium? N.W. (Bill) Jasper, Jr. - President, Director, and Chief Executive Officer: It's a bit early to comment on that. The product roadmaps are all being completed and communicated under NDAs to our potential licensees. It’s suffice to say that we are looking at compatibility… we're looking at creating a product line, which will prove to be compactable with existing receivers. So, we are looking at the use of HE-AAC plus Dolby Digital and/or Dolby Digital Plus to make sure that while we take advantage of an efficient transition line using HE-AAC, the compatibility at the receiver and player side is preserved and that offers us the opportunity to take advantage of both technologies, within was branding opportunity on top of that. So, clearly there is value out here for the broadcasters in terms of efficient use of their pipelines and bandwidth and for the consumer viz-a-viz compatibility with existing consumer electronic that they’ve purchased. The delta and ASP has not finalized yet, since we are still in the heart of finalizing the product roadmap.

Okay. And then just one point of clarification here. Given Microsoft's 5% growth in client unit volume last quarter, in the March quarter, and your increased outlook in the PC space, sounds like the biggest delta there in your prior guidances and increase in your view on premium mix of Vista? N.W. (Bill) Jasper, Jr. - President, Director, and Chief Executive Officer: It is also that… remember that coming into the year, we had some caution built-in around whether the ISV attach rate would continue to be strong, given all the shipments of Microsoft Vista and we’ve continued to see that hold firm and now that we are further through the year, our guidance represents more confidence in that.

Okay. And, you mentioned your expectations declined in the standard definition DVD market royalties in the second half. Are those constant or have you changed your outlook there in the second half at all? N.W. (Bill) Jasper, Jr. - President, Director, and Chief Executive Officer: We haven't changed it significantly. We came in, I think, with a pretty conservative view of DVD growth or I should say DVD declines. We did probably a little better in the first half than we were assuming coming into the year, but that hasn't changed our view on the second half, which is to expect declines in that category.

Okay. And then early days, but update on traction you're getting with TrueHD, and Blu-ray players? N.W. (Bill) Jasper, Jr. - President, Director, and Chief Executive Officer: The content with TrueHD, it’s not as prevalent as Dolby Digital Plus and Dolby Digital. It is something that is high on our priority in terms of marketing and encouraging its uptake. What we have seen in Blu-ray players is that you will see TrueHD in all high-end Blu-ray players. So, the Sony players and other players which we considered high-end, i.e. $500 plus, you're going to see a Dolby Digital Plus and TrueHD multi-channel decoder. On the lower end players, you're going to see a bare-bone player, and not just on the Dolby perspective, from all technology… all premium technology perspective. So, today, the way I will categorize it is, TrueHD is being shipping in high-end players. As the price for these players do go down and content becomes more prevalent from a TrueHD, we do foresee higher penetration of TrueHD over time.

Okay. And therefore some premium over which [inaudible] players? N.W. (Bill) Jasper, Jr. - President, Director, and Chief Executive Officer: That is correct.

Okay. And then lastly, just wondering if you are willing to share… I'd have missed it, your expectations in terms of percentage of licensing revenues for each of the four categories, product categories you talk about. N.W. (Bill) Jasper, Jr. - President, Director, and Chief Executive Officer: Yes, I walked through our assumptions for each category, but I haven't yet punctuated it with our expectations or composition. It nets out to expecting PC to rise from around what was just about 35% in '07, we see that rising to probably getting… approaching 40% for the full year '08. with the offset primarily being the CE market. Again, it's growing slightly, but it will probably fall from around 35% to around 30% of the market, with broadcast and other markets holding around with good strong growth and being broadcast probably between 15% and 20% and other markets, which are comprised of gaming, automotive, mobile, and our via licensing services, making up the other markets, and making up the difference. That's what we have seen so far.

Okay.

There are no further questions at this time. Mr. Jasper, I'll turn the call back over to you. N.W. (Bill) Jasper, Jr. - President, Director, and Chief Executive Officer: Okay. Thank you very much. Thank you all for participating today. Thank you for your excellent questions. Thank you to everybody in Dolby for another very, very good quarter. And we look forward to speaking with you all the next quarter. Thank you very much.

This does conclude today's conference call. We appreciate your participation. You may disconnect at this time.