Can Nuance Kick-Start Its Engines?

Convenience is king. Nuance Communications (Nasdaq: NUAN  ) is all about making human-to-computer interactions easier and more convenient. It stands to reason that the company should be having the time of its life these days as gadgetry invades our everyday lives, one facet after another.

The stock has delivered a market-beating 16% return over the last three months and a 34% jump in the last year. Perhaps overheated expectations explain why Nuance is down today.

The company missed analyst targets on both the top and bottom lines in the fourth quarter, though by slim margins. Revenue grew 16% year over year to $304 million while non-GAAP earnings stayed flattish at $0.28 per share. Management's guidance for fiscal 2012 wasn't overly optimistic either, and the stock took a temporary 9% dive in early Thursday trading.

The bulk of Nuance's sales happen in the health care and enterprise segments, but management is excited about the opportunities to make a mint in consumer markets. You'll find Nuance solutions lurking around almost everywhere:

• Voice recognition products are shipping with smartphones and navigations systems and also power voice-to-text voice mail services. New customers from this side of the tracks in the fourth quarter included TomTom, Telefonica (NYSE: TEF  ) , and Motorola Mobility (NYSE: MMI  ) .
• The company also hopes to make a mark in your living room. Dragon voice recognition is becoming a popular method for controlling ultramodern TV sets and set-top boxes from Panasonic (NYSE: PC  ) , Sony (NYSE: SNE  ) , and other electronics giants.

According to CEO Paul Ricci, we should expect "more advanced speech-enabled systems accessing content and enabling actions from mobile devices and from the living room." Nuance is hoping to catch a ride with two of the most impressive growth engines in recent memory, perhaps stoking a growth engine that has sputtered badly in the last couple of years.

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