Carl Icahn Is Going to Lose a Lot of Money on This One

In a recent filing with the SEC, Carl Icahn revealed that he has increased his stake in speech-to-text software maker Nuance Communications (NASDAQ: NUAN  ) to nearly 11%. He did this after Nuance reported disappointing earnings and deeply disappointing Q3 guidance, and the stock plunged to new levels of cheapness.

But is Nuance stock cheap for a reason? Fool contributor Rich Smith thinks Icahn is making a big mistake in buying into this company -- maybe even as big as his mistake when he bought into Blockbuster. Listen in, and find out why.

Speech recognition is yet another nascent technology set to explode with the rise of tablets and smartphones, and no company is better poised to benefit from this coming boom than Nuance Communications. However, this growth story doesn't come without risks, too. The Motley Fool recently published a premium research report to break down what investors interested in Nuance absolutely have to understand before investing, so click here now to grab your copy today.


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  • Report this Comment On May 21, 2013, at 7:47 PM, Mjpbfool wrote:

    Don't you think this is getting a little bit ahead of yourself? He bought into the company just 2 or 3 months ago and I'm going to think the guy with $20B might have a team that handles due diligence. Comparing the investments in Nuance (a company that is at the forefront of a technology shift in how people search/derive information) with Blockbuster (a company that at the time was on the wrong side of where technology was headed, burdened with two much brick & mortar) just seem like apples and oranges to me.

  • Report this Comment On May 21, 2013, at 8:24 PM, bdaverocker wrote:

    Are you sure they burned 800 billion last year? Also, you cite problems with cash burn and cash flow, and poor management. Isn't that right up Icahn's alley? Why do you think he's going to lose money? Isn't putting half their cash to work buying back stock a sign of a turn from acquisition to investing in the current biz? Also, you left out the 8 millions shares he effectively owns via options, which puts him at around more like 13% ownership if he simply exercised the options. Every bear case article/video I come across on Nuan seems to confirm my long position. Thanks :)

  • Report this Comment On May 22, 2013, at 9:02 AM, mtheis17 wrote:

    I have to agree with Mipbfool on this one. Comparing Nuance to Blockbuster is invalid. Every Billionaire investor is entitled to one massive screw-up, wouldn't you say? Besides, I'd say he made that up by buying Netflix (from which he has made over 1 billion in profit). The fact that Nuance has such problems is what has attracted Icahn in the first place...he likes fixing companies that are broken and profiting from the outcome.

    At the end of the day, Carl Icahn has amassed a fortune of about $20 Billion, while you have amassed a fortune of ____ ? So, statistically speaking, he's probably right on this one as well.

    Yes, you're allowed to disagree with smart investors. However, instead of focusing your article on how Carl is wrong (it seems a bit personal. Did his Limo drive through a puddle and soak you on your way to work?), why not just discuss the case against the company without discussing others who have invested in it. Icahns stake is not the reason this company will do well, although it may help the turnaround happen sooner than it otherwise would have.

    To the Executives of the Motley Fool:

    Please hire atleast a couple people over the age of 25. I know it's tough, because all the talented college graduates are using that talent to make money, but its a shame when the kid (yes kid) in the video looks like the kid I sit across from in my capital markets class.

  • Report this Comment On May 22, 2013, at 12:34 PM, Mjpbfool wrote:

    I also think it's clear that the author's argument about how "Nuance is not well-run by its management" was a reason WHY Icahn bought in in the first place (and subsequently increased his stake). Similar to Herbalife, one of the things he looks to do immediately is exert shareholder pressure and change up management if its needed. What does that mean? That means having a potentially revolutionary new technology in the hands of a management team that actually knows what they're doing and can get something to market.

  • Report this Comment On May 22, 2013, at 1:14 PM, roseldlcruz wrote:

    How old is this guy? How old is Carl Icahn? Who has the longest experience in the stock market? I would rather go to the wisdom of Carl Icahn than listening to this unknown analyst.

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