The management of Nuance Communications Inc. (NASDAQ:NUAN), provider of voice and language solutions for businesses and consumers worldwide seeks advice from Goldman Sachs Group, Inc. (NYSE:GS) after activist investor Carl Icahn purchased a stake in the company, according to Wall Street Journal sources.
Early this month, Icahn acquired 9.3 percent passive stake in the company. The activist investor did not specify his intention for the company in his filing with the Securities and Exchange Commission (SEC). Although the stake is passive it does not mean that Icahn will not push for changes in the company if he believes it is necessary. He can always turn around and launch an activism.
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Stifel Nicolaus analyst Tom Roderick opined, “Any time you get an activist shareholder involved, the perception is, there’s something within the structure of the company they’d like to change. More value could be unlocked by selling pieces of the company.” He thinks Icahn might push to split the company.
Goldman Sachs Group, Inc. (NYSE:GS) is one of the go-to firms in Wall Street when corporations foresee or are under pressure from activist investors such as Icahn. Goldman Sachs and other banks provide services for companies from writing press releases, analyzing the cost of break up, opposing the demands of activist investors, or identifying the vulnerabilities of a company before an activism happens.
In the case of Nuance Communications Inc. (NASDAQ:NUAN), perhaps the company wants to identify its vulnerabilities and how to address those in order to prevent an activism stance from Icahn.
The company reported a net loss of $22.1 million or $0.07 per share and $462.3 million GAAP revenue for the first quarter of fiscal 2012. The company said its revenue and operating cash flow grew by 29 percent and 37 percent during the quarter, respectively.
Nuance Communications Inc. (NASDAQ:NUAN) is composed of four business units including Health Care Solutions, Mobile & Consumer, Enterprise, and Imaging. During the first quarter, the company said the revenues of its four business units increased by double digits. Health Care Solutions recorded the highest revenue growth of 49.6 percent, while Enterprise Solutions posted only 10.4 percent revenue growth.
The company recently announced that its automotive voice technologies will be integrated with the new line of Si-Rui branded vehicles of BYD, one of the leading domestic car manufacturers in China to meet the increasing demand of Chinese consumers for sophisticated in-car infotainment features.