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Friday, March 30, 2007


A recent Dolby Labs newsletter headlines D-Cinema. And states, "a milestone year for the digital cinema industry". I'm not sure what the digital cinema industry is. What I am sure about is the fact that Dolby, a publicly traded company( with a share price in the $33 - 38 dollar range, and a high current price/earnings ratio of 38) is put into the box of every other public company. To improve sales and profit margins on a regular and in most cases, quarterly basis, so as to endear themselves to the Wall Street analysts who follow and rate their performance. What drives a stock's price is earnings and/or its earnings potential. In Dolby's case it is currently the marketing and sales of its D-Cinema based products to the movie exhibition side of its business that will contribute to its overall growth and profitability- as the sales of sound processors and peripheral products to theatre exhibitors is not growing as it once did.

I'm not faulting Dolby. There Digital Cinema products are stellar and perform extremely well. Additionally, Dolby has one of the greatest brands and certainly an insiders place in Hollywood - one which is well earned and deserved.

It is only natural that Dolby push its D-Cinema products. The recent JPEG2000 upgrade tweeked its share price up but with P/E in the high 30's Wall Street will be looking for higher sales and earnings.

Jim Lavorato


The price of corn has skyrocketed on the futures markets and farmers are increasing their acreage of corn to an all time record. Why, because of the promise of ethanol as a replacement for gasoline. To make matters worse, this summer, gas is expected to rise to the $3/gallon price as crude oil hits the $70/barrel mark.

So cinema exhibitors get hit with a double whammy. Higher popcorn prices and higher gas prices, both of which impact theatres negitively. What's the answer, if any.

Watch your popcorn suppliers pricing, and if possible purchase corn now for stock through the summer or better still contract with the supplier for set pricing now with delivery later.

Look closely at your popcorn pricing. If possible nudge up your pricing or recast your pricing to force more moviegoers to purchase middle or large sized popcorn portions. Make these sizes the value buy, force customers to the middle price popcorn size.

Think up promotions: Gas discounts on concession purchases. For example $1 off on all concession purchases over $10. Offering Pic n' Play concession giveaways. Colaborating with local gas stations for fillups and a movie. Be creative.

The price increases for gas and corn will impact every movie exhibitors bottom line. So take action now. The roster of summer films looks very good but you need to be proactive and begin to impliment tactics to offset the gas/corn issue.

Good luck!
Jim Lavorato