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Nuance pares post-earnings losses; Oppenheimer

  • Nuance (NUAN -1.8%) is now down just slightly after providing soft FQ4 guidance (attributed to a sales shift towards recurring revenue) to go with an FQ3 beat.
  • Though lowering its PT to $23 from $25, Oppenheimer thinks 10%+ shareholder Carl Icahn could soon push for a sale of the company.
  • FBR (Market Perform) argues the voice recognition software/services leader is "well-positioned given good secular trends and a strong product cycle," but remains cautious on account of "execution issues and a painful transition to a subscription model."
  • Nuance mentioned on its CC hosting-based sales now make up 32% of revenue (30% a year ago), and that the estimated 3-year value of its on-demand contracts is up 11% Y/Y. Also, professional services backlog grew 35% Y/Y in FQ3, and the number of "unique connected devices" relying on Nuance's cloud services doubled.
  • CEO Paul Ricci admitted "transitions and execution issues" affected Nuance's guidance, and that the company recently replaced a senior manager in its European sales ops. Ricci also reiterated Nuance is willing to let mobile deals "be delayed for the sake of price discipline."
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