Nuance Communications: An End to Acquisitive Growth

Summary: The acquisition machine which fueled growth at Nuance might be slowing down due to the high debt that Nuance Communications (NUAN) has accumulated in the last two years. Nuance’s interest coverage ratio is close to 1 and hence it is highly unlikely that Nuance could or want to add more debt. Organic growth across all business segments has been slowing while insiders, including CEO & CFO, have been selling shares in 2008. Overall, Nuance competes in diverse segments such as traditional IVR services, medical transcription services, mobile software and imaging services. It has acquired multiple non-core service businesses which has taken a toll on its core software product expertise and added a lot of unnecessary debt to its balance sheet.

Organic Growth & Competitive Landscape