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Technology Stocks : NUANCE COMMUNICATIONS (NUAN) -- Voice Interface Software -- Ignore unavailable to you. Want to Upgrade?

To: bob zagorin who wrote (183)	3/16/2001 3:19:49 PM
From: A.L. Reagan	Read Replies (1) \| Respond to of 191

Dog Of The Day: Nuance Communications Mark Lewis, Forbes.com, 03.16.01, 2:19 PM ET NEW YORK - Speech-recognition software firm Nuance Communications issued a profit warning, and the message was all too clear to investors. The stock lost almost half its value, earning it the title of Forbes.com's Dog Of The Day. Nuance (nasdaq: NUAN - news - people) said late yesterday that it expects to report a first-quarter pro forma loss in a range of 31 cents to 38 cents per share. The consensus Wall Street estimate was a loss of 11 cents per share. Nuance was off 47% in afternoon trading. The company, based in Menlo Park, Calif., sells interface software that makes information and services accessible over the telephone. Nuance blamed its shortfall on "general economic conditions" which have led customers to put off capital investments. "The company believes its visibility is limited for both the second quarter and full-year results," the company said in a statement. Translation: more warnings may lie ahead. Analyst James Faucette of Pacific Crest Securities says he wasn't surprised by the first-quarter warning because he had noticed that discretionary spending by Nuance's potential customers "is essentially going to zero in a big hurry." At least one analyst downgraded Nuance yesterday after the warning was issued. But analyst Marianne Wolk, who follows the stock for Robertson Stephens, maintained her "buy" rating. She theorized in a research note that Nuance would open today at $13 or lower, after closing yesterday at $17. At that lower level, Nuance would have a valuation "that we feel is compelling, given our belief in the sizable future opportunities for the voice-enabling market.'' Good call. Nuance fell right past the $13 mark to $9. At that price, Faucette says, the stock is definitely a "buy." The company has plenty of cash on hand to get through the current lean times, he says, and eventually the market for speech-recognition products "is going to become very important." His point was echoed by Nuance itself: "With approximately $200 million in cash and short-term investments, we are confident that we have the resources to maintain our leadership position," Chief Executive Ron Croen said in a statement. Perhaps, but today Nuance was only leading its rival, SpeechWorks International (nasdaq: SPWX - news - people), in a race to sharply lower valuations. SpeechWorks was off 42% on the Nuance warning.