Shares of Nuance Communications Inc. (NASDAQ:NUAN) took a major tumble after the bell yesterday, falling by more than 10% after the Burlington, Massachusetts-based technology company’s revenue missed both their own expectations as well as those of analysts.
CNBC spoke with analyst Herb Greenberg today about Nuance Communications Inc. (NASDAQ:NUAN), and he pointed to one key factor that is conspiring to hold the company, which produces the software that runs Apple Inc.’s (NASDAQ:AAPL) Siri, from being profitable; this is Nuance Communications Inc.’s (NASDAQ:NUAN) seventh consecutive quarter with a loss.
Addressing a question that was posed to Nuance Communications Inc. (NASDAQ:NUAN)’s CEO Paul Ritchie yesterday during a conference call about how the company missed their revenue mark because they didn’t make as many acquisitions, Greenberg said that is precisely the issue, just in another sense.
“That’s the point here. These companies ultimately have to grow on their own, and organic growth, that is, internal growth without acquisitions; at Nuance it just isn’t there. It’s getting a little better, but when you compare it to a year ago when it was really bad, it’s still negative. So the company has to prove itself,” Greenberg said.
Analysts had expected Nuance Communications Inc. (NASDAQ:NUAN) to pull in adjusted earnings of $0.27 per share on revenue of $498.6 million, but revenue came in below expectations at $486.8 million. Coupled with operating expenses that rose by 10.5% to $275.5 million, the company suffered a net loss of $54.2 million for the quarter ending June 30.
Furthermore, Nuance Communications Inc. (NASDAQ:NUAN) had to adjust their expectations downward for the current quarter ending September 30. They now anticipate earnings of 23 to 29 cents per share, on revenue on $500 million to $520 million. Analysts were predicting a much loftier 34 cents per share on revenue of $540 million.
Greenberg, however, did admit that with Carl Icahn being a shareholder of Nuance Communications Inc. (NASDAQ:NUAN), that in itself is a wild card that could have an untold influence on the company. He now considers the company a yellow flag, as opposed to a red flag, solely because of Icahn’s presence.