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'Siri': What's With Nuance?

At CES in Las Vegas last month, I met with 'Siri', Ford Sync (and more) provider Nuance. I'm sharing views of their earnings miss. When I first wrote about Nuance we didn't buy it (ingerletter.com doesn't often pick stocks in this Index or ETF world; focusing mostly on E-mini S&P); suggesting it would miss on earnings.

Why write about it at all? We select 'a' stock once yearly for 'survey' services; and this was the pick for later in 2013.

We got the poor report, partially blaming 'usage rather than license revenues'; management's nervous mediocre guidance; partially due to soft Windows 8 PC markets; slow Dragon sales (due to low CapEx from businesses); and healthcare delays (new healthcare programs will ultimately require digital record-keeping).

Price-wise I talked in our Daily Briefing (available at www.ingerletter.com) of ideally buying not at 24, ideally the mid-'teens; but under 20 in any event.

We do not and never owned NUAN shares; do expect a few hedge funds to sell; look for downgrades to washout high-priced buyers on consumer product hype; and see all as reason for this hoped-for slide (from 52-week hi to low in a flash). A NUAN breaks 20 this morning has it moving to reestablish value.

Looking for exhaustion as the year unfolds, we'll update this voice command, speech & control leader, as a 2014-2018 potential workout. Caveat: Google must not really threaten; due to hiring Ray Kurzweil or any breakthrough as may 'really' be behind Google Glass.

Bottom-line: not surprised; projected disappointment since CES. With a looming overall market drop (caveat emptor), I'm optimistic NUAN will become attractive, to us for the first time, at some point later this year. It may be near the lowest price of the last year or more; and perhaps a low level for the rest of the decade.

Stay tuned as we'll follow up on it.

Gene Inger

ingerletter.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.