Nuance Communications — best known as the software makers of Siri — saw a slump in profits below its forecast 2014 projections, thanks to a shift to a subscription-based business model.
The move, which brings in less money upfront and instead is spread over a longer period, ensures more predictable recurring revenue — but also means a short-term hit in profit margins.
“We are embracing this transition despite its effect on near term revenues because our customers are demanding it and because we value the recurring nature, predictability and longevity of these revenue streams,” said chief executive Paul Ricci in a conference call with analysts.
Analysts were expecting earnings of $1.41 per share on revenue of $2.08 billion for the year ending September 2014. Instead, adjusted forecasts show profit of $1.05 and $1.15 per share on a revenue of $2.03 billion to $2.09 billion.
Nuance shares have dropped 13 percent since October 8, when it agreed to outspoken investor Carl Icahn’s board nominees to include son Brett Icahn.
Source: Times of India
