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Nuance Communications Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Nuance Communications (Nasdaq: NUAN  ) rose as much as 11% in early trading, after the maker of voice recognition software reported better-than-expected results for its fiscal third quarter.

So what: Revenue rose 20% to $328.9 million, as the company reversed last year's $0.01-a-share net loss with a $0.13-a-share profit. Adjusted profits rose 17% to $0.35 a share. Analysts had been expecting $0.34 in earnings on $338.1 million in revenue, according to data compiled by Yahoo! Finance.

Now what: Nuance has since given back much of its early gain, probably owing to a combination of the revenue miss and market volatility. So be it. At 13 times forward earnings, the stock is priced about in line with long-term growth estimates -- fair, but not exactly cheap. Do you agree? Disagree? Weigh in using the comments box below.

Interested in more info on Nuance Communications? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

Motley Fool newsletter services have recommended buying shares of Nuance Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 10, 2011, at 11:21 PM, nutdoctor wrote:

    I am a "Foolish" Family Physician who is both invested in Nuance and a full-time user of Dragon Naturally Speaking. Because of my invested position, I worried about whether Dragon would be good enough when I started using it 3 years ago. Since then, while I have found that Dragon is far from perfect, I will also say that it is good enough - today I saw 25 patients in a timely manner using it. While I think that their management could be more investor friendly and pay themselves less, overall they seem to be executing on their strategy, and my confidence has grown. I plan to remain invested for the long-term unless something fundamentally changes.

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