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Futuristic Nuance Communications - Who’s In? Icahn and Others

September 03, 2013 | About:
Sally Jones

Sally Jones

49 followers
One zealous billionaire stakeholder like Carl Icahn makes you wonder who else is into Nuance Communications Inc. (NUAN), its numerous speech recognition products and its visionary mobile advertising format intended to allow people to “converse” with their favorite product brands.

One of the “first responders” to the unveiling of Nuance’s Voice Ads was Guru Carl Icahn who made a new buy of 29,329,291 NUAN shares back in March when the stock price was around $19.50 per share. Since that time, Icahn remains the top stakeholder with 16.58% of shares outstanding. He continues to enlarge his position, increasing by 727.59% as of June 30, 50.27% as of Aug. 7, and most recently adding 2.84% to his position as of Aug. 29, 2013. Icahn now holds 52,437,750 shares. As of the end of second quarter, he averaged a loss of 4% on 31,547,631 shares bought at an average price of $19.84.

Down 19% over 12 months, Nuance Communications Inc. (NUAN) has a market cap of $5.92 billion. Its P/E is 40.60; the P/B is 2.20. The company’s 12-month revenue growth rate is 26.8%, annual rate per share. The EBITDA growth rate is 20.3% over 12 months. The current share price is $19.09.

Tracking share price, revenue and net income:

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Nuance Communications Inc. is a provider of voice and language software solutions. The company's technologies, applications and services are used to facilitate tasks and services such as requesting information from a phone-based self-service solution, dictating medical records, searching the mobile Web by voice, entering a destination into a navigation system, or working with PDF documents. Nuance Communications Inc. was incorporated in 1992 as Visioneer Inc. In 1999, the company changed its name to ScanSoft Inc., and then in 2005, changed its name to Nuance Communications Inc.

More Guru Action

Here’s a look at other gurus trading NUAN, some with long-time holdings going back as far as 2008:

PRIMECAP Management increased its position by 47.76% as of June 30, 2013, buying 4,737,100 shares at an average price of $19.68 for a 3% loss. The trading history shows a five-year holding for PRIMECAP with current shares at 14,655,300 or 4.63% of shares outstanding.

As of June 30, 2013, Pioneer Investments reduced its position by 81.59%, selling 2,452,399 shares at an average price of $19.68, for a loss of 3% on this long-time holding. Current shares stand at 553,416.

In the same quarter, Steven Cohen reduced his position by 95.444%, unloading 622,151 shares at an average price of $19.68 for a 3% loss. Cohen has averaged a 0% loss on 1,311,227 shares bought at an average price of $19.14. On 1,281,478 shares sold at an average price of $18.83 he made a 1% gain.

In the second quarter of 2013, Paul Tudor Jones sold out his long-time position that was making solid gains in seven quarters from early 2008 through the end of 2010. He sold 15,600 shares at an average price of $19.68 for a 3% loss.

Louis Moore Bacon made a new buy of 250,000 NUAN shares as of June 30, 2013. He now owns 0.08% of shares outstanding. The trading history shows that Bacon last sold shares in the third quarter of 2010 and made a gain of 21% on 125,000 shares at an average price of $15.78 per share.

Nuance Communications Financial Results

In early August, Nuance Communications Inc. reported financial results for its third quarter fiscal 2013, ended June 30, 2013, as follows:

Nuance Communications reported GAAP revenue of $469.8 million in the third quarter fiscal 2013, an 8.8% increase over GAAP revenue of $431.7 million in the third quarter of fiscal 2012. Nuance reported non-GAAP revenue of $490.8 million, which includes $21.0 million in revenue lost to accounting treatment in conjunction with acquisitions. Third quarter fiscal 2013 non-GAAP revenue grew 9.5% over non-GAAP revenue of $448.2 million in the third quarter of fiscal 2012. In the third quarter of fiscal 2013, the company recognized GAAP net loss of ($35.0) million, or ($0.11) per share, compared with GAAP net income of $79.3 million, or $0.25 per diluted share, in the third quarter of fiscal 2012. For the same quarter, Nuance reported non-GAAP net income of $109.5 million, or $0.34 per diluted share, compared to non-GAAP net income of $143.7 million, or $0.45 per diluted share, in the third quarter of fiscal 2012. Nuance’s third quarter fiscal 2013 non-GAAP operating margin was 28.1%, down from 36.1% in the third quarter of fiscal 2012. Nuance reported cash flow from operations of $85.5 million in the third quarter of fiscal 2013, down from $141.5 million in the third quarter of fiscal 2012. Nuance ended the third quarter of fiscal 2013 with a balance of cash and cash equivalents of $873.1 million, according to a company press release.

Tesla Saw It First

What is a voice ad? The company explains, “Nuance Voice Ads is optimized for the unique capabilities of the mobile device: location awareness, mobility and voice input. Voice Ads technology is fully scalable, and is easily integrated with and distributed across the entire mobile ad ecosystem. Further, Voice Ads are simply easy and fun for consumers to use. An ad appears and prompts the consumer to participate by speaking to it. From there, the conversation drives the experience, which is tailored to meet both the needs of the brand and the consumer.”

Another way of looking at the technology is through the visionary eyes of inventor Nikola Tesla, who hinted at the potentials of wireless in the early 1920s, "When wireless is perfectly applied the whole earth will be converted into a huge brain, which in fact it is, all things being particles of a real and rhythmic whole. We shall be able to communicate with one another instantly, irrespective of distance.”

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 4.5/5 (2 votes)

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