Why Nuance Communications (NUAN) is Dropping on Tuesday

NEW YORK (TheStreet) -- Nuance Communications (NUAN) is dropping after guiding for below-consensus second-quarter earnings.

By early afternoon, shares had taken off 4.5% to $15.05.

After the bell Monday, the voice and software developer said it expects revenue for the March-ending quarter between $476 million and $490 million, compared to consensus of $497.8 million. Per-share earnings are expected between 21 cents and 25 cents.

"Our Q1 14 bookings benefited from year-end seasonality, a large Federal booking in healthcare, a number of significant automotive bookings and several large enterprise on-demand bookings, including one that we had anticipated signing in Q2 14. For Q2 14, we anticipate a slower year-over-year growth rate than in the Q1 14," the company said in a statement.

Over its first quarter, the Burlington, Mass.-based business reported net income of 24 cents a share, 3 cents higher than analysts surveyed by Thomson Reuters had expected. Revenue of $490.1 million exceeded consensus of $485.73 million.

Also see: Nuance Announces First Quarter Fiscal 2014 Results

Also see: Nuance Communications (NUAN) Earnings: What to Expect

TheStreet Ratings team rates NUANCE COMMUNICATIONS INC as a Hold with a ratings score of C-. The team has this to say about their recommendation:

"We rate NUANCE COMMUNICATIONS INC (NUAN) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."

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