Nuance Communications, Inc. (NASDAQ:NUAN)

Their technical edge and continued applications by sundry industry users is simply too far ahead
of an admitted crowded field.

As with all they must continue to execute...we'll see if they are stayers.

best voice recognition system in the market place.

They are in an area that has virtually no competition. On top of that they are gaining a lot of recognition with the release of the iphone 4s and come on who doesn't know about "Siri". I think their future is very bright and the CEO seems to have the right mindset on the companies future actions.

http://www.fool.com/investing/general/2012/01/31/should-you-buy-sell-or-hold-nuance-communications.aspx

Should You Buy, Sell, or Hold Nuance Communications?

People have been talking about voice recognition for years, so the concept itself is not particularly new. However, the technology's advances in recent times and its potential for mainstream usage is a recent development.

Should you buy, sell, or hold voice expert Nuance Communications (Nasdaq: NUAN ) ?

Buy: Mobile
When it comes to mobile devices such as smartphones and tablets, voice and touch are the new keyboard and mouse. Technological interactions are quickly moving toward these intuitive media as the form factors of today's mobile gadgets demand. Basic voice commands utilizing speech recognition have been around but are more usable now, and Apple (Nasdaq: AAPL ) is taking it to the next level with its virtual assistant Siri.

While Siri's strength lies in interpretation and intelligence, it does rely on Nuance for its back-end recognition. Before Apple bought Siri, it used technology from rival Vlingo before making the switch since Nuance is just plain better. It also doesn't hurt that Nuance has "the most IP in speech synthesis technologies in the industry," according to Siri co-founder Norman Winarsky. Oh, and that Vlingo company mentioned a moment ago? Yeah, Nuance just bought it, but more on that later.

The fact that rival tech giants Amazon.com (Nasdaq: AMZN ) , Google (Nasdaq: GOOG ) , and Microsoft (Nasdaq: MSFT ) are similarly focusing heavily on voice should be a testament to the importance of the technology. Amazon quietly picked up a small speech recognition start-up in November, Google followed suit in December, and Microsoft just gave the Xbox ears.

Buy: Smart TVs
It doesn't stop at mobile devices. Voice will soon power one of the least-mobile devices you have: televisions. Smart TVs will displace the dumb TVs that preceded them, just like smartphones are replacing dumb phones. The difference is that since TV upgrade cycles are in the neighborhood of seven to eight years, as opposed to the roughly two-year cycles that smartphones see, the transition will take longer.

There's little doubt that Apple's upcoming Apple TV set will feature voice control (likely powered by Siri). Microsoft's Xbox voice integration is also geared toward bringing TV content to the console. Nuance recently announced its new Dragon TV platform that partners with LG to add voice recognition features. There's little doubt that voice interactions with technology will continue to find their ways into our lives.

Sell: If you can't touch it, is it real?
Nuance has picked up a taste for acquiring smaller companies, and they've proven so delicious that the company can't seem to stop gobbling up the little guys. Just a few examples would be the aforementioned Vlingo acquisition, Swype, Equitrac, and SVOX last year, but there are many more.

Organic growth always tops growth by acquisition, partially due to the abstract accounting of goodwill and intangibles. At the end of fiscal 2011, it had almost $3.1 billion on the balance sheet in goodwill and net intangible assets, representing more than 75% of its total assets. Those amortization costs add up, to the tune of $143.3 million last year. That's in addition to the other $21.9 million in acquisition-related costs.

As with any company that relies heavily on acquisitions to drive growth, a major risk lies in how well the buyer can stitch those purchases together in an integrated fashion, and do so in a way that delivers value to shareholders. If those acquisitions don't pan out as well as hoped, that's a lot of goodwill to be written down and impairment charges can be painful.

Sell: Valuation
Nuance is downright pricey. And this is coming from a guy who likes small-cap growth stocks, a motley bunch notorious for trading at high multiples. Shares currently trade north of 234 times earnings. Fiscal 2011 turned a $38.2 million profit, the first sign of black ink followed by at least five consecutive years of losses.

On top of that, Nuance has accumulated a fair amount of debt. At the close of fiscal 2011, it had $887.4 million in gross debt outstanding, including $145 million in term loans due in March of next year, with another $492 million due three years after that. Also included in that total is $250 million in convertible debentures, which carry a conversion price of $23.36, meaning that holders could potentially force Nuance to redeem them since shares now stand above $28.

Hold: Competition
Nuance's annual report specifically names Microsoft and Google as some of its larger rivals, which are two worthy competitors with deep pockets. Mr. Softy and Big G are currently Nuance customers, but they are developing competing technologies. Having Apple on its side is certainly a blessing, but it's partially offset by the presence of Microsoft and Google on the other side of the equation.

The verdict
Despite the nuances of accounting for acquisitions, Nuance Communications is a buy. The company will play a vital role in how our interactions with technology will evolve, and it has established itself as the clear leader in voice technology.

Much of the net losses generated in recent years can be chalked up to amortization of intangibles. Looking at cash flow, Nuance generated $322.5 million in positive free cash flow last year. It reported a net loss of $19.1 million in fiscal 2010, but behind that figure was $270.3 million in free cash flow.

I'm following up my bullishness with an official outperform CAPScall, since I think Nuance is poised to win. I already have some investments in touchscreen microcontrollers, and I may even add Nuance to my portfolio to round out my voice-and-touch thesis.

ties to apple

An alternative, or addition to playing AAPL.
There is vertually no competition.
Of the peer group, you tell me who's competing.
Right now, none of them.
ADBE, SYMC, CHKP, CA, RHT, ADSK, BMC, ANSS, TIBX, SNPS?

High P/E, High PEG and High P/B.

Nuance is a very unique company with a great potential for continued growth in the world! It is very well placed for the future.

Quality voice recognition is going to become standard, just as touch did. This is a complex b-b play dealing with licencing agreements, etc. and revenue streams may not be cut and dry, thus it is a bit of a speculative/trend play.

Leader in a new revolution of speech recognition based products

Good financials and it appears that their earnings are picking up. I just downloaded their dictation app for my iPad.

***

The future looks very bright for Nuance with its recent acquisition of Swype. From recently posted articles here on MF, it sounds like management is very aggressive in searching for more markets for its voice recognition software.

Are you kidding? Dragon software for dictation, Siri for asking questions... this company finally has us talking to our computers ala Star Trek!

Buy out by IBM

Voice recognition software is the future of not just smartphones, but of everyday lifestyle. Think ahead, and I don't mean iPhone 5 ahead - the prospects of a brand new technology inserted into the millions and millions of iPhones that are sold each year.. now try and wrap your mind around the fact that voice rec will be the norm on every smartphone released from this point forward. iPhones have revolutionized so many aspects of the smartphone industry, and you can add voice rec to the list. Still not intrigued? Take what I just said, and try and wrap our mind around the fact that this software will branch out to so many different outlets, the possibilities are endless. Every drive-thru window of every franchise fast food place, parking garages, home security systems, even your refrigerator are just the few that will be sure to add this software. 10 years from now don't be the one who looks back and says "Wow if only I saw this coming, I could have snagged $NUAN at around $25/share. The growth of this company, and technology in general are so appealing, I feel that Nuance Communications is the next big thing. I can go on and on with more and more industries that voice recognition can be used (medical, automotive, education, etc.) it's truly a stock that is a must own in my opinion. The question most people ask is "How isn't there a competitor in NUAN's sights?" After following this stock closely for the past 4-5 years I can tell you that any company that was coming even close to emerging with a new patent, technology, advancement was scooped up by Nuance before they even got their chance to make a splash. Nuance owns so many patents in regard to the voice recognition market, that it would probably be close to impossible to successfully establish yourself as a competitor in this industry. Strong Buy. -GV

AAPL news will fade and the deal may not be so hot from a revenue standpoint as one would hope

SW likes their Siri software that Apple licenses.

GM usage pluss Appl