Hear ye! Hear ye! The town crier (that would be me) is heralding the fiscal fourth-quarter earnings report from Motley Fool Hidden Gems recommendation and speech-recognition firm Nuance Communications (NASDAQ:NUAN). The report is due out this Thursday -- let's get a read on the company ahead of the call.

What analysts say:

  • Buy, sell, or waffle? A total of 11 analysts now cover Nuance. Six of them give the stock a buy rating, and the other five suggest a hold on shares. In our Motley Fool CAPS community, nearly 4,795 investors have given opinions on the company, giving it a five-star rating (the highest possible).
  • Revenue. The average forecast calls for revenue of $172.2 million, a 29% jump from last year's $133.3 million.
  • Earnings. The average analyst is estimating net income of $0.15 per share, up slightly from the $0.14 per share last year.

What management says:
Earlier this year, Nuance swallowed a couple of large acquisitions -- Tegic, from Time Warner's (NYSE:TWX) AOL, and VoiceSignal -- to give it a strong presence in the market for mobile solutions on devices such as Nokia (NYSE:NOK) phones, Palm PDAs, and Research In Motion (NASDAQ:RIMM) BlackBerries.

Then, after only a brief M&A hiatus, Nuance picked up the pace again in the last few months with deals to buy companies Commisure, Vocada, and Viecore. CEO Paul Ricci noted in last quarter's report that strong financial results "demonstrate our ability to extend Nuance's position in the global speech industry and to realize the benefits and synergies of recent acquisitions."

What management does:
Bottom-line profitability is not currently an explicit goal for Nuance -- it's more focused on market share and building a competitive moat. Still, investors can see strong growth in operating margins as gross margins slowly decay in the maturing business.

Margins

3/06

6/06

9/06

12/06

3/07

6/07

Gross

75.1%

73.4%

72.2%

71.3%

70.1%

69.9%

Operating

1.6%

1.1%

4.1%

5.5%

6.9%

8.2%

Net

(5.2%)

(7.3%)

(5.9%)

(4.3%)

(3.9%)

(3.2%)

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Outside of all the acquisitions designed to get more of its products into more industries, Nuance also recently joined the Open Handset Alliance. Standing with companies such as Qualcomm (NASDAQ:QCOM), China Mobile (NYSE:CHL), and Google (NASDAQ:GOOG) in an effort to redefine how people acquire and use mobile phone applications, Nuance will help a world full of creative software developers embed its speech tools into a wide variety of mobile applications. While the success of the alliance is uncertain at this point, any opportunity for Nuance technology to proliferate in more products sounds good to this Fool.

Nuance is up 191% since first being recommended as a Motley Fool Hidden Gems pick. Check out what other gems lead analysts Tom Gardner and Bill Mann are recommending with a free 30-day trial of the service.

Fool contributor Dave Mock is long past his growth cycle, and anticipates shrinking any year now. He owns shares of Qualcomm and is the author of The Qualcomm Equation. Palm and Time Warner are Stock Advisor recommendations. The Fool's disclosure policy is all over chili cheese fries, but still maintains a great figure.