Nuance Units Seen Having Higher Value Separately Than Together

Nuance Communications Inc., the voice-recognition software company whose biggest shareholder is Carl Icahn, is worth more as separate units than as one entity, according to Bloomberg Intelligence.

A sum-of-parts valuation using peer sales multiples showed the value of the company’s four segments -- health care, mobile, enterprise and imaging -- is $7.9 billion, more than a billion dollars above its current enterprise value of $6.8 billion, analyst Mandeep Singh wrote in a report Tuesday.

Almost half of Nuance’s revenue comes from the health-care unit, and total license sales have dropped in six of the past eight quarters. Activist investor Icahn has an almost 20 percent stake in the Burlington, Massachusetts-based company and may push for major changes, including selling off businesses, Singh said.

The health-care segment is “ripe for disruption” because of new competition from Google Inc. and Microsoft Corp., though both have yet to enter the space in a meaningful way, Singh said in an interview. Selling the imaging unit may help Nuance raise cash and narrow its focus on mobile and enterprise, “which will likely be key sales growth drivers,” Singh wrote in the report.

A voicemail seeking comment from Ann Joyal, spokeswoman for Nuance Healthcare, wasn’t returned. Icahn wasn’t immediately available to comment.

Google and Microsoft have moved to develop their own voice-recognition systems for the health-care industry, both organically and through acquisitions. While selling the health-care unit may also help Nuance generate cash and focus on its growth businesses, the company’s profit could be hurt in the near term, Singh said.

Nuance’s growth prospects hinge on moving to a cloud-based model, and pursuing small acquisitions in the voice- and speech-recognition market, he said.

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