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Carl Icahn Increases Stake in Nuance, May Seek Seat on Board (2)

August 30, 2013

Billionaire investor Carl Icahn boosted his stake in Nuance Communications Inc. (NUAN:US) and may seek to put a representative on the board of the speech-recognition software maker.

Funds controlled by Icahn, including Icahn Partners LP and Icahn Onshore LP, reported a combined 16.9 percent stake in Nuance, up from 16.4 percent, according to a filing (NUAN:US) with the U.S. Securities and Exchange Commission yesterday.

Icahn uses holdings to seek change in companies he deems undervalued or ill-managed. When Icahn fist took a stake in Nuance, the investment was seen as a move to push the company to sell itself or shed some businesses. Nuance Chief Executive Officer Paul Ricci is seeking to revive growth as the Burlington, Massachusetts-based company expands in voice-recognition tools that can be used over the Web and on mobile devices.

The Federal Trade Commission also granted Icahn approval of a Nuance-related transaction yesterday without providing further details. Nuance adopted a stockholder rights plan, which went into effect yesterday, designed to reduce the likelihood that a shareholder can gain control of the company by buying up shares on the open market.

If he gets a board seat, Icahn could push Nuance to sell some of its businesses, or the entire company. Potential suitors for Nuance could include Microsoft Corp. (MSFT:US), International Business Machines Corp. or Oracle Corp. (ORCL:US), according to Shyam Patil, an analyst at Wedbush Securities Inc. It’s also possible that Apple Inc. or Google Inc. (GOOG:US) would be interested in Nuance’s mobile technology, he said on Aug. 8.

Profit Outlook

Shares in Nuance rose 2.1 percent to $18.69 at 11:33 a.m. in New York, after reaching $19 for the biggest intraday gain since May 21. The stock had declined 18 percent this year through yesterday.

Nuance plunged (NUAN:US) the most in more than six years on Feb. 8 after cutting full-year sales and profit forecasts, citing shifting demand for software. The company said at the time that transcription volume was falling as health-industry customers switched to electronic medical records and its new Dragon Medical speech-to-text software.

“We remain committed to maintaining greater price discipline and to driving towards a focus on recurring revenues,” Ricci said on an Aug. 6 conference call (NUAN:US) with investors. “For these reasons, and being mindful of recent execution issues, we’ve taken a guarded approach” to guidance.

Carl Icahn didn’t respond to a request for comment. Richard Mack, a spokesman for Nuance, said the company “welcomes communications with stockholders and values input toward the goal of enhancing stockholder value.”

To contact the reporters on this story: Olga Kharif in Portland at; Jeremy R. Cooke in Boston at

To contact the editor responsible for this story: Pui-Wing Tam at

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