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Nuance fourth-quarter forecast misses expectations

By Lehar Maan

(Reuters) - Speech recognition software maker Nuance Communications Inc forecast current-quarter adjusted revenue and profit below expectations as the company continues to struggle from its transition to a subscription-based business model.

Nuance, which makes the software that runs the Siri feature on Apple Inc's iPhones, also reported its seventh quarterly loss in a row.

The company's shares fell as much as 10 percent after the bell on Monday.

A subscription-based model brings in less money upfront as payment is spread over the entire period of use, unlike traditional packaged software, but typically ensures more predictable recurring revenue.

"Nuance continues to be a work in progress as the company transitions to a subscription-based model and still faces some growth challenges in the field," FBR Capital Markets analyst Daniel Ives wrote in a mail to Reuters.

Nuance said in June it held talks with potential buyers for a sale, the Wall Street Journal reported, citing people familiar with the matter.

"The company needs to see a growth turnaround in healthcare and mobile to move the top-line in the right direction, otherwise this remains a name in the investor penalty box," Ives said.

Nuance forecast adjusted profit of 24 cents to 29 cents per share on adjusted revenue of $500 million to $520 million for the current quarter ending September.

Analysts were expecting a profit of 34 cents per share on revenue of $540.5 million, according to Thomson Reuters I/B/E/S.

Nuance said in June it held talks with potential buyers for a sale, the Wall Street Journal reported, citing people familiar with the matter.

The company said net loss widened to $54.2 million, or 17 cents per share, for the third quarter ended June 30, compared with a loss of $35 million, or 11 cents per share, a year earlier.

Total operating expenses rose 10.5 percent to $275.7 million.

On an adjusted basis, the company earned 27 cents per share, while revenue fell marginally to $486.8 million.

Analysts had expected a profit of 27 cents per share on revenue of $498.6 million, according to Thomson Reuters I/B/E/S.

Product and licensing revenue declined 12 percent from a year earlier due to weakness in its imaging business, which provides software for customers to create and edit documents online.

Adjusted revenue in the company's mobile and consumer business segment fell 1.6 percent to $109.2 million due to weak sales of its software, which allows users to interact with electronic devices using voice command.

Nuance Communications' shares closed at $18.10 per share on the Nasdaq on Monday.

(Reporting By Lehar Maan in Bangalore; Editing by Saumyadeb Chakrabarty and Feroze Jamal)

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