Nuance Communications Inc. (NUAN), a maker of speech-recognition software, tumbled the most in more than five years after first-quarter earnings and revenue trailed analysts’ estimates on deferred sales in its mobile segment.
Nuance dropped 13 percent to $26.50 at the close in New York for the biggest one-day percentage decline since Aug. 9, 2006. Yesterday the company reported earnings excluding some items of 34 cents a share. Analysts in a Bloomberg survey had estimated 36 cents.
The Burlington, Massachusetts-based company, which also provides technology for health-care companies, in December agreed to acquire Vlingo Inc. to gain a system that conducts Internet searches based on voice commands. The purchase is intended to help capture growing demand for voice-command technology, which is being driven by software such as Apple Inc. (AAPL)’s Siri for the iPhone, Nuance said.
“Clearly, the hype and excitement surrounding the iPhone 4S Siri launch was not matched by the fundamental output in the quarter,” Tom Roderick, a Chicago-based analyst with Stifel Nicolaus & Co., said in a research note. “Management’s tone indicated a level of confidence that the business will snap back in the coming quarters,” he said.
Roderick recommends buying the shares.
Nuance, which provides dictation software for smartphones including Apple’s iPhone and Research in Motion Ltd.’s BlackBerry, said “more comprehensive and complex” relationships with mobile customers caused revenue deferral during its fiscal first quarter ended Dec. 31.
“Some revenues can be deferred for quite some considerable period of time,” Paul Ricci, chairman and chief executive officer, said on a conference call yesterday. “Some of the negotiations under way over the last six months that might have been completed in the first quarter were not.”
The company forecast sales of as much as $415 million for the fiscal second quarter. Analysts in a Bloomberg survey had forecast $401.4 million.
Revenue in the mobile and consumer unit, on an adjusted basis rose 24 percent in the fiscal first quarter ended Dec. 31, the company said. Nuance said it added a number of key mobile customers during the period.
Nuance reported adjusted net income of $108.5 million or 34 cents a share for the period, compared with $86.1 million, or 28 cents a year earlier. Analysts had estimated 36 cents.
Adjusted sales were $382 million, compared with $317.3 million a year earlier. Analysts had predicted $388.2 million.
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