$NUAN – Nuance Communications currently trades at 21.80.
It has an average weekly (volatility) move of $2.08 which means on any given week the stock could move at least $2 on average. That is about a 9% average move per week (Calculating 2/21.80).
Time to get technical and check out the chart for Nuance.
Click the Chart for a fuller image
They have mostly beat their earnings estimates and numbers seem to add up nicely so lets examine the recent news as well as the recent 200 page SEC 10-K Filing below (along with some videos).
What Nuance Communications does:
Nuance Communications, Inc. is a leading provider of voice and language solutions for businesses and consumers around the world. http://www.nuance.com/
For fiscal 2011 73% of revenue was generated in the United States and 27%, was generated by our international operations in Australia, Belgium, Canada, Germany, Hungary, India, Italy, Japan, and the United Kingdom.
Effective in the fourth quarter of fiscal 2011, we are organized in four segments; Healthcare (38%), Mobile and Consumer (28%), Enterprise (21%), and Imaging (13%). The increase in the proportion of revenue generated domestically was primarily due to contributions from our Healthcare on-demand solutions, which are sold predominantly in the United States
Healthcare (38% of Revenue)
The healthcare industry is under significant pressure to streamline operations, reduce costs and improve patient care. In recent years, healthcare organizations such as hospitals, clinics, medical groups, physicians’ offices and insurance providers have increasingly turned to speech recognition solutions to automate manual processes such as the dictation and transcription of patient records.
Direct distribution is supplemented by distributors and partnerships with electronic medical records application and other healthcare IT providers such as 3M, Allscripts, Cerner, Epic, GE, IBM and McKesson.
Mobile and Consumer (28% of Revenue)
We help consumers use the powerful capabilities of their phones, cars, tablets, desktop and portable computers, personal navigation devices and other consumer electronics by enabling the use of voice commands, text-to-speech and enhanced text input solutions to control and interact with these devices more easily and naturally, and to access the array of content and services available on the Internet.
Our solutions are used by mobile phone, automotive, personal navigation device, computer and other consumer electronics manufacturers and their suppliers, including Amazon, Apple, Audi, BMW, Ford, Garmin, GM, HTC, LG Electronics, Mercedes Benz, Nokia, Samsung, T-Mobile, TomTom and Toyota.
Our significant debt could adversely affect our financial health and prevent us from fulfilling our obligations. We have a significant amount of debt. While they have significant debt, their Long Term debt to assets ratio has decreased in the past 3 years from 25% to 20%. And their Gross Profit Margin has remained at 62%.
If we are unable to maintain profitability, the market price for our stock may decline, perhaps substantially.
Voice and language technologies may not continue to garner widespread acceptance, which could limit our ability to grow our voice and language business. The market for voice and language technologies is relatively new and rapidly evolving. Our ability to increase revenue in the future depends in large measure on the continuing acceptance of these technologies in general and our products in particular.
The individual markets in which we compete are highly competitive, and are rapidly changing. Within voice and language, we compete with AT&T, Microsoft, Google, and other smaller providers. Within healthcare, we compete with Medquist and other smaller providers.
Some of our current or potential competitors, such as Adobe, Microsoft and Google, have significantly greater financial, technical and marketing resources than we do. These competitors may be able to respond more rapidly than we can to new or emerging technologies or changes in customer requirements. They may also devote greater resources to the development, promotion and sale of their products than we do.
Because we operate worldwide, our business is subject to risks associated with doing business internationally. Most of our international revenue is generated by sales in Europe and Asia. In addition, some of our products are developed and manufactured outside the United States and we have a large number of employees in India that provide transcription services. Because we have international subsidiaries and distributors that operate and sell our products outside the United States, we are exposed to the risk of changes in foreign currency exchange rates.
In 2011 Acquired Equitrac, a leading provider of print management solutions, to expand the offerings of our Imaging segment. We also acquired SVOX, a Swiss based seller of speech recognition, dialog, and text-to-speech software products for the automotive, mobile and consumer electronics industries in our Mobile and Consumer segment. On October 6, 2011, we acquired Swype, Inc., a provider of software that allows users to type by sliding a finger or stylus from letter to letter.
Expand Global Presence. We intend to leverage opportunities in emerging markets such as Asia and Latin America.
Fiscal 2011 Compared to Fiscal 2010
Healthcare segment revenue increased by $77.6 million (18.5%) due to continued strong demand of our Healthcare license offerings resulting in part from continued strength in Dragon Medical solutions.
Mobile and Consumer segment revenue increased by $83.8 million (42.5%) due to increased volume of transactions in our connected mobile services as well as professional services revenue to support the implementation of recent handset and automobile design wins. The world’s leading automotive manufacturers look to Nuance for groundbreaking speech technologies. That’s because we anticipate industry needs and drive innovation. Car Manufacturers: Audi, BMW, Fiat, Ford, Hyundai, Mercedes, Jaguar, Porsche ,PSA Peugeot Citroën, Renault, Volkswagen. Below is a Video of the just announced Dragon Drive (5-22-2012)
Disclaimer: Currently No Position in $NUAN as of this writing as the technical price points don’t satisfy my tastes but fundamentally everything checks out fairly well.
Feel free to comment below and share your insights.