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A Seriously Siri-Less Apple

Analemma profile picture
Analemma
31 Followers

Summary

  • Siri could soon be lost to Samsung with an impending deal.
  • Carl Icahn owns 20% of Siri host, and seems to want to sell.
  • If Apple loses their voice, they lose the war of the wearables.

As we enter a seemingly shaky period in the market, and Apple (NASDAQ:AAPL) sits at all-time highs, investors must be wary of any looming risks. While the story of missing Apple-style innovation is well-discussed, there is one risk currently that seems to be missing from the discussion and could be a rude awakening.

Unbeknownst to many, Apple does not own the technology behind Siri. The technology is provided by Nuance Communications (NUAN), also known for the Dragon dictation software and Swype keyboard.

Stock in Nuance shot up in June on the announcement that Samsung (OTC:SSNLF) was in talks to buy Nuance. The stock then sold off on the news that the deal had slowed due to "complexities." However, the news was that the deal "slowed," not stalled or fell apart or the like.

NUAN Chart

Nuance went back into a decline as the market forgot about the deal until Tuesday, when the stock spiked again on more news that the Samsung deal was in process.

NUAN Price Chart

NUAN Price data by YCharts

Who, What, Where, When, Why and How

The story begins back in April 2013, when Carl Icahn announced he had taken a 10% stake in Nuance. Over time, Icahn gradually built up his stake to just under 20%. Uncharacteristically, a usually vocal Icahn didn't say a word about it. Essentially, the only statements made by Carl were two tweets he sent out when he reached a standstill agreement with Nuance wherein he would not be an activist in exchange for placing two of his people on the Nuance board, his son Brett Icahn [whom he credits with his Netflix (NFLX) success] and another associate, Dave Schechter. Tweets here and here.

Rumors swirled regarding the reasons for Icahn's stake in Nuance, but the oddity of Carl Icahn saying virtually nothing while taking a 20% stake

This article was written by

Analemma profile picture
31 Followers
Analemma seeks favorable risk/reward scenarios in the market with a medium term outlook. Analemma prefers down-and-out long opportunities and over-hyped short opportunities.

Analyst’s Disclosure: The author is short AAPL. Author is long NUAN and has no position in SSNLF. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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