The market hasn't been too kind to mobile growth play Nuance Communications (NASDAQ:NUAN) so far this year. Heading into the end of 2012, the company finds its shares down nearly 11%. However, investors have hung with it, in no small part thanks to its close ties to the tech investing storyline of the decade -- the rise of mobile devices, including smartphones and tablets.
Looking beyond its slumping share price, though, the company still managed a relatively strong set of financial performances this year, growing its top line by more than 20% each quarter. Translating those results to the bottom line, however, did prove somewhat problematic. Regardless, no one disputes the immense growth potential the company holds, and the massive payouts it could generate for shareholders as a result.
The real question when it comes to sizing up Nuance, and whether to buy in, is how likely shareholders are to see this outcome, The Fool recently enlisted one of our star tech writers to create a premium research report on Nuance. To acquaint our readers, we're including a brief excerpt from the report here for you today, free of charge. If you want to learn more about Nuance, you can access the report in its entirety by just clicking here. Enjoy!
The five areas you MUST watch
- Voice interactions in mobile devices: While Apple's Siri has received a lukewarm reception among consumers, being more of a novelty than the revolutionary assistant it was originally billed as, it has sparked interest in voice interactions in mobile devices. Siri's shortcomings stem from the application software layer and not the underlying speech engine (unless a connection isn't available). The technology will continue to improve now that consumers demand it, which will benefit Nuance.
- Android OEMs: Since Android has voice-technology built in, investors need to keep an eye on whether OEM customers ditch Nuance for Android's integrated capabilities, something that has not happened meaningfully yet but could in the future. Android is potentially Nuance's biggest threat in mobile, since Apple appears content to license Nuance's engine instead of developing one in-house.
- Automotive design wins: Voice interfaces in vehicles are an important part of improving safety on the roads, especially in the age of constant connectivity, distractions, and texting. Most, but not all, car manufacturers currently tap Nuance. For example, Honda uses IBM's speech technology.
- Smart TVs: The next consumer space that voice-recognition is set to infiltrate is smart TVs. Nuance powers Samsung's smart TVs and also offers Dragon TV. In all likelihood, Apple's rumored Apple TV will feature voice interactions powered by Nuance. Google and Microsoft are also making big pushes into the living room, but both develop speech technology in-house.
- Electronic health care records: Nuance has taken note of an increased interest in using mobile devices to access electronic health care records, and is expanding its product lineup accordingly to capture growth. Transitioning to electronic health care records is a daunting undertaking, but is being pushed along slowly but surely.
Andrew Tonner has no positions in the stocks mentioned above. The Motley Fool owns shares of Google, International Business Machines, and Microsoft. Motley Fool newsletter services recommend Google, International Business Machines, Microsoft, and 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.