A rumor Nuance (NUAN +3.3%) has hired Goldman to explore strategic alternatives is fueling a rally in shares of the voice recognition giant. Needless to say, Carl Icahn's newfound interest in the company have much to do with investor hopes for a major payoff. 11% of the float was shorted as of March 15.
The Street showed no mercy to Nuance (NUAN -18.5%) in response to its EPS miss and forecast for multiple quarters of weakness in healthcare and EMEA sales. Goldman thinks Nuance's goal of $1B in FY13 healthcare sales is now at risk, and Needham (downgrading to Hold) is concerned about guidance for a 200-250 bps FY13 gross margin drop, worse than a prior forecast. Management suggested on the earnings call it's counting on clinical documentation software sales and PC/mobile OEM deals to drive future growth.
Nuance (NUAN) now -14.6% AH thanks to its FQ1 EPS miss and light FQ2/FY13 guidance. On its earnings call, management blamed the guidance on declining healthcare transcription volumes thanks to the adoption of electronic records and Dragon, soft EMEA sales due to macro issues, and declining Windows software sales due to PC demand. The healthcare issues are expected to last a few quarters. Healthcare sales (51% of profits) +3% Y/Y in FQ1, Mobile/Consumer +17%, Enterprise +10%, Imaging +6%. On-demand solutions now 31% of sales (27% a year ago).
Nuance (NUAN): FQ1 EPS of $0.35 misses by $0.01. Revenue of $492.4 (+28.9% Y/Y, lifted by acquisitions) in-line. Guides in prepared remarks for FQ2 revenue of $500M-$533M and EPS of $0.36-$0.45 vs. consensus of $524.3M and $0.44. Also guides for FY13 revenue of $2.146B-$2.196B and EPS of $1.76-$1.87 vs. consensus of $2.19B and $1.89. Shares -7.5% AH. (PR)
Nuance (NUAN +6.5%) rallies after stating it has no plans to make a bid for clinical transcription rival M*Modal (MODL -1.6%), which is set to be purchased by JPMorgan's P-E arm for $14/share. The weak Q2 report delivered yesterday by M*Modal could be a reason why. M*Modal had previously disclosed it turned down a $17/share offer from a competitor widely believed to be Nuance, due to timing and antitrust worries.
Nuance (NUAN +3.4%) rises following a mixed FQ3 report. Deferred revenue totaled $304M, -3% Q/Q and +15% Y/Y. FQ4 guidance is for revenue of $483M-$503M and EPS of $0.46-$0.50 vs. a consensus of $500.7M and $0.48. In prepared remarks (.pdf), Nuance forecasts an FQ4 mix shift towards mobile solutions, such as its virtual assistant (Siri and Vlingo), custom auto, and voicemail-to-text solutions. The company also sees mobile's R&D needs continuing to grow. (debt offering)
Nuance (NUAN +4.5%) jumps after introducing Nina, a virtual assistant solution for iOS and Android customer support apps. Nina uses a combo of Nuance's voice recognition (VR), text-to-speech, and voice ID tech, and has already picked up financial services firm USAA as a customer. Nuance has been quickly fleshing out its mobile portfolio: other solutions include Swype, Vlingo, a developer program for its Dragon VR software, and the VR tech behind Apple's Siri.
M*Modal (MODL +3.2%), which has agreed to be sold to JPMorgan's P-E arm for $14/share, jumps after disclosing it received a $17/share offer from a competitor it refers to as "Party A," but turned it down due to uncertainty about timing and antitrust issues. There's a good chance the company is Nuance (NUAN -1%), which is already a giant in the clinical transcription space. M*Modal traded as high as $14.99, and is currently moving at $14.51. (previous)
Nuance (NUAN +2.2%) trades higher following the purchase of rival clinical transcription/voice recognition solutions provider M*Modal (MODL) by JPMorgan's P-E arm. Deutsche (Buy) notes the deal's valuation (2x estimated FY13 sales) is in-line with the that paid by Nuance for recent acquisitions, and thinks it's evidence P-E firms are "becoming more active" in the medical transcription and records space.