Nuance Communications Inc., a maker of speech-recognition software, plunged the most in more than six years after the company lowered its full-year sales and earnings forecast as new technology curbed use of older transcription services.
The stock retreated 19 percent to $20 at the close in New York, for the biggest decline since August 2006. The stock has lost 10 percent this year, compared with a 6.7 percent advance for the Russell 1,000 Index.
Nuance, which specializes in technology for the health care industry and for mobile devices, cut its fiscal 2013 sales forecast to $2.15 billion to $2.2 billion yesterday, down from a November projection of $2.17 billion to $2.22 billion. The Burlington, Massachusetts-based company also lowered its adjusted earnings forecast to $1.76 to $1.87 a share, from $1.84 to $1.94.
Nuance said that transcription volume is falling as customers in the health industry transition to electronic medical records and its new Dragon Medical speech-to-text software. A contraction in the market for personal-computers, exacerbated as corporate customers postponed spending to await the Microsoft Corp.’s new Windows 8 software, also contributed to the forecast reduction. In Europe, a sluggish economy is also prompting businesses to curb spending.
“These factors have undermined the bull thesis that Nuance is riding a secular wave of growth in mobile and health care, and likely put the stock in the penalty box until growth can accelerate,” Mark Murphy, an analyst at Piper Jaffray Cos., wrote in a research report.