Nuance Communications Up on Takeover Talk, Options See Action

Is Carl Icahn finally having his way with Nuance Communications Inc. (NASDAQ:NUAN), the company that is said to be the brain behind Apple Inc. (NASDAQ:AAPL)’s Siri voice recognition system?

Nuance Communication Logo

After appointing son to board, Icahn is optimistic

Nuance Communications Inc. (NASDAQ:NUAN) is up significantly today amid brisk volume on takeover talk. ValueWalk reported when Icahn upped his stake from 9 percent to 16 percent in August of 2013 and Tabinda Hussain wondered out loud if Icahn was planning a coup. Then in December 2013 ValueWalk reported Icahn upped his stake, adding 50,000 shares and buying on a relative drawdown at $14.2 per share. The December purchase followed Icahn gaining two board seats in October, one of the seats when to Icahn’s son Brett.

At the time of the younger Icahn’s appointment, Carl tweeted  “I’m optimistic their impact at NUAN will be similar to The Hain Celestial Group, Inc. (NASDAQ:HAIN), where stock went from $20.20 to $79.56 over the 3 years they sat on the board.”  The stock began to dive near the start of October, hit a low near Icahn’s December entry price at $14.2 per share, then bounced, currently trading at $15.72.

Nuance stock moves higher with noted options action

Today’s move higher in Nuance stock was noted on volume in not only the stock, but also the call options, which are often an indicator of insider or hedge fund interest in a firm. With the December increase in stock, Icahn had upped his stake in Nuance Communications Inc. (NASDAQ:NUAN) at 18.72 percent.  Icahn had signed a “standstill agreement” at that time that limited his acquisition to no more than 20 percent.

In December the software company had reported disappointing earnings. Nuance Communications Inc. (NASDAQ:NUAN)’s earnings per share slipped 41% year over year, while revenue disappointed at $472.2 million as against the Wall Street estimate of $489.56 million during a period of time when Sales were down 4% on the year.

The Nuance Communications Inc. (NASDAQ:NUAN) investment comes as Icahn also has exposure to Apple Inc. (NASDAQ:AAPL) Computer, where he has been advocating a share buyback that would likely boost the stock price, as previously reported.

Speech recognition software company

In October Nuance announced that its FreeSpeech voice biometrics technology was used by Barclays PLC (ADR) (NYSE:BCS) (LON:BARC) Wealth & Investment Management division in its call center.  The technology authenticates users while attempting to engage in natural conversation.

In December Nuance Communications Inc. (NASDAQ:NUAN) announced that its voice recognition platform supported the Mandarin Chinese language.  The software also works on various mobile platforms, such as Android platform, allowing drivers to speak to make calls, find, play and change music with their voice, as well as obtain directions and have the latest news articles read aloud to the driver.

 



About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com