Real Client Managed Portfolio Investment Recommendation

TO: RCMP Spring 2012 Class

From: Amin Rizwan, Mike Ollmann, Tyler Haida

Subject: DTS Inc. Recommendation

Date: April 26th, 2012

Company Overview

DTS Inc. is a digital software company that focuses on high-definition audio technology for various forms of devices and applications. Its product segments include home theaters, car audio, PCs, videogames, DVD players, TVs, smartphones, and ever device capable of playing a Blu-Ray movie. DTS profits from licensing its software and technology to semiconductor manufacturers and consumer product manufacturers. DTS Inc. have offices in the U.K. as well as throughout the Pacific Rim.

Strategy

DTS Inc. focuses its interests on R&D to keep up with the ever-changing technology of mediums through which consumers can view media. They currently have a lot invested in their Blu-Ray sound technology, but are moving towards the fully digital media trend with UltraViolet, which could become their future vehicle for growth.

Recent Highlights & Outlook

DTS plans on acquiring SRS Labs in the third quarter of 2012. They work with developing audio and voice technology solutions. The focus on audio rendering, voice, and surround sound technologies and do business with consumer product and semiconductor manufacturers. They are an international company with services offered throughout the Pacific Rim and in Europe. The acquisition of SRS adds more brand partnerships to DTS’s portfolio and expands their product base.

Blu-Ray technology is expected to continue to eat up market share in the DVD and home entertainment industry. As consumers demand more high definition products, DTS will see the benefits in terms of more royalties from Blu-Ray device manufacturers and other product manufacturers.

Current Position

RCMP currently holds no shares of DTS and it is not on the watch list

Recommendation

Our recommendation is to buy 200 shares at the market price. Although the Comps value ranges from $24-30, compared to the current stock price of $30.13, our DCF valuation was $35.05. Also we like the company’s business and believe they have a good strategy for future growth in revenues, so this is why we are recommending a buy.