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What Do This iPhone Supplier's Earnings Tell Us?

Steve Heller
December 10, 2012

A recent earnings report from Nuance Communications (NASDAQ: NUAN) may provide clues about how Apple's (NASDAQ: AAPL) iPhone 5 is faring. Nuance supplies key technologies that power Apple's voice recognition tool, Siri. Let's dive into the release to see if we find anything telling.

A tale of growth
Nuance continued to deliver strong top-line growth across all of its businesses. For the fourth quarter, total revenue grew to $468.8 million, or 28% when compared to 2011 fourth quarter results. In the same period, Nuance's net income rose from a quarterly loss to a gain of $117.6 million, or $0.36 per share.

On a quarter-over-quarter basis, sequential revenue growth came in at nearly 9%. It's important for a company like Nuance to keep delivering strong sequential growth for the foreseeable future. If uptake begins to stall, long-term investment merit will quickly come into question.

It's simple, really
The whole reason investors like Nuance in the first place is for its long-term growth prospects. Consumers and businesses alike are beginning to realize the value of integrating voice recognition technology. Talking tends to be three times faster than typing, which saves times and increases productivity. At the end of the day, that saves money for businesses. A business that helps other businesses save money is attractive in my book.

Just how we