Nuance Lowers Outlook On Weak PC Sales, Europe
Fri, Feb 08 2013 00:00:00 E 00_WEB
By Brian Deagon, Investor's Business Daily
Posted 02/08/2013 01:17 PM ET
. Shares of Nuance Communications (NUAN) were down 19% in midday trading Friday, at a six-month low, after the speech technology firm lowered its outlook because of weak PC sales and Europe's woes.
Nuance late Thursday reported earnings per share of 35 cents, a penny below Wall Street estimates. That was up just 3% year over year, breaking a string of seven straight quarters of double-digit growth.
Revenue rose 42% to $462 million, edging the $460 million consensus estimate of analysts polled by Thomson Reuters, for its first quarter ended Dec. 31.
For 2013, Nuance lowered revenue expectations by $25 million, in part blaming softer-than-expected sales of personal computers and weak demand in Europe due to that region's troubled economy.
For the current quarter, Nuance sees revenue of $500 million to $553 million. The midpoint would mark a 35% increase from the year-earlier quarter.
"While the overall pipeline appears strong, we fully expect shares to be weak this morning as investors hit the sell button in light of the lower FY13 guidance as longer on-demand sales cycles and investments in the business take their toll," Daniel Ives, an analyst with FBR Capital Markets, wrote in a research note Friday.
"With that said, although we believe Nuance has some wood to chop to achieve its goals for the remainder of the year, we believe the company's fundamental profile remains very strong," he wrote.
Key markets for Nuance include health care, where it derived 47% of sales in the last quarter, and mobile, where it derived 29% of sales.
According to analyst Brent Hill at UBS Securities, Nuance's speech recognition software is used in the Apple (AAPL) iPhone and in Samsung smartphones. The software is also used in tablets and smart TVs.
"Mobile activity shows Nuance leadership," Hill wrote.
