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    Nuance Communications drops as 1Q disappoints

    Associated Press – Fri, Feb 10, 2012

    NEW YORK (AP) — Shares of Nuance Communications Inc. tumbled Friday, after the voice software maker reported fiscal first-quarter results that fell short of Wall Street predictions. One analyst noted that revenue growth in the company's mobile division is slowing despite the increasing popularity of smartphones.

    THE SPARK: Burlington, Mass.-based Nuance on Thursday posted revenue that's adjusted for accounting tied to recent acquisitions of $382 million for the October-December period. Analysts polled by FactSet expected $392 million. The company's adjusted profit of 34 cents per share was two cents short of Wall Street projections.

    Its guidance for the current quarter and fiscal year bracketed analyst expectations.

    THE BIG PICTURE: Nuance's mobile and consumer segment specializes in voice control services. It makes software for the Siri voice-command software on Apple Inc.'s fast-selling iPhone 4S.

    The company also makes voice recognition software that's used in hospitals and a wide range of other businesses.

    Nuance said the recent quarter's results got a boost from its health care, mobile and document imaging divisions.

    THE ANALYSIS: But Wedbush analyst Scott Sutherland said revenue growth at the company's mobile division, excluding recent acquisitions, slowed to 16 percent in the October-December quarter from 27 percent in the previous three months. That's "surprising," he said, given the increasing popularity of iPhones and Siri, increased consumer interest in voice technology and rising overall demand for smartphones.

    He backed his "Underperform" rating for Nuance.

    But Raymond James analyst Shyam Patil said the timing of the company's deals with big mobile companies was the problem in the most recent quarter, and didn't suggest that demand was slowing for Nuance's technology. Patil kept a "Strong Buy" on Nuance.

    Canaccord's Richard Davis, who has a $30 price target on the stock, recommended that investors buy shares because of the stock-price decline.

    THE SHARES: Nuance shares dropped $3.77, or 12 percent, to $26.68 in heavy afternoon trading. Shares are up about 21 percent in 2012, and have ranged from $15.56 and $31.15 in the past 52 weeks.

     

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