EDITOR'S NOTE: This story has been changed from the original to correct the company's revenue last year, and add an explanation about why revenue related to an acquisition was not recorded in the third quarter.

Calabasas company DTS Inc., once known for making movie theater sound systems, hit on another formula for success during the last decade when it switched to audio technology for Blu-ray disc players. Now, the company is attempting a second transformation around mobile devices and Internet-connected televisions.

But it’s off to a rough start.

That was evidenced last week, when shares plummeted after a disappointing third quarter earnings report. DTS on Nov. 8 posted a larger than expected $19 million loss and lowered revenue guidance for next year. Investors fled and the stock fell 29 percent to $14.80 for the week ended Nov. 14, making it the biggest loser on the LABJ Stock Index. More than $100 million in market capitalization was wiped out during the week as shares hit a three-and-a-half-year low.

“Physical media is going away,” said Andy Hargreaves, an analyst at Pacific Crest Securities LLC in Portland, Ore. “They’ve been trying to offset that with smart TVs, smartphones and tablets, but it hasn’t worked as well as they’d hoped.”

This quarter’s loss marks the largest since the company went public in 2003. Executives partly blamed an overall slowdown in the consumer electronics industry, lowering revenue guidance to between $140 million and $150 million, down from $160 million to $175 million.

The company also attributed the loss to costs associated with investments in new technology as it transitions to streaming devices. Most notably, the company spent $148 million earlier this year in its largest-ever acquisition to purchase SRS Labs of Santa Ana, which specializes in enhancing audio output from mobile devices.

Much of those costs were recorded in the third quarter. The company said that certain revenue related to the acquisition was not recorded in the quarter due to accounting rules.

But during a Nov. 8 earnings call, Chief Executive Jon Kirchner said the company was on the right path.

“We continue to believe that our strategy is the right one,” he said. “The long-term drivers of our business, namely the acceleration towards cloud-based entertainment delivery and the proliferation of network connected devices, remain very much intact.”

The company declined to comment for this article.

‘Jurassic’ origin

It’s not the first time the company has remade itself. DTS launched in the early 1990s by supplying digital sound systems to movie theaters linked to the release of the blockbuster film “Jurassic Park.” The company, then known as Digital Theater Systems Inc., began shifting to home theater systems in the last decade, signing an agreement in 2004 to supply audio coding technology on all Blu-ray players.

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