Why Carl Icahn Can't Save Nuance Communications

According to a recent SEC filing, billionaire activist investor Carl Icahn increased his stake in Nuance Communications (NASDAQ: NUAN  ) from about 11% of common shares outstanding to about 16%.

This comes at a time when Nuance has been struggling with a difficult revenue transition from the way it's being compensated. Many customers have begun updating their purchasing agreements and will no longer pay for services upfront, but instead, only based on usage over the life of the contract.

With Carl Icahn deepening his conviction, some investors may be betting on the chances of a quick turnaround for the company, fueled by activist ambitions. However, as Fool contributor Steve Heller points out, Nuance has implemented a "poison pill" provision, which seriously limits Icahn's (or any activist investor's) ability to maneuver. Check out the video below to get the full story.

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  • Report this Comment On August 13, 2013, at 12:34 PM, Glasscase wrote:

    Steve....it's starting to look like your short NUAN. Two neg. videos within a wk..

    MF so conflicting. 1st. of Aug. David Gardner presents a report: Voice + Prediction + Gesture = $$$$. I'll let you guess which stock made the pick for Voice.

  • Report this Comment On August 13, 2013, at 2:14 PM, gogiants2010 wrote:

    "Fool contributor Steve Heller owns shares of Nuance Communications"

    Is someone being true to their name "fool" by publishing this article. Can't understand why :(

  • Report this Comment On August 14, 2013, at 2:22 PM, TMFTopDown wrote:

    @Glasscase,

    Here at the Motley Fool, we believe considering a diverse range of insights is what makes us better investors. That's what makes us "Motley." We aren't intentionally trying to be conflicting.

    Even though I am currently LONG Nuance Communications, I have grown more bearish on its prospects due to the company's difficult revenue transition. I also don't think Carl Icahn will be of any help in the near-term to the Nuance Communications storyline because of the company's poison pill provision.

    Between these two factors, it makes me question if I should consider holding on, or move onto other growth investment opportunities.

    Thanks for your comment,

    Steve (TMFTopDown)

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