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Nuance Communications (NUAN) Message Board

  • bdavidcombs@gmail.com bdavidcombs May 15, 2013 2:05 AM Flag

    What Goldman told Nuance

    My theory of what Goldman told Nuance is this…

    You guys have Icahn on your back, so you need to pull a Netflix and get the stock price up so he’s happy. As Icahn said, when someone makes me (a lot of money), I don’t punch him in the mouth. So here’s what you do.
    The name of the game is to hit it out of the park on Q3 earnings. First, take half of your cash on hand and buy back as many shares as you can. You’ll need a lot of sellers to buy $500 million in shares, so we need to knock the stock down temporarily.

    You’ve got some sour earnings coming out in May, so I want you to report them early. Catch everyone off guard by announcing at 1 am that you’ll announce in a few hours. You usually report after the bell, but in this case do it before the bell. Also, do it on the last day of the month. Funds that have to disclose their portfolios each month won’t want to show a “dog” in their holdings and they’ll rush to close the position. The combo of last day of the month and sudden earnings will bring out a lot of sellers. Also, guide down future earnings so that it will really bring out the sellers.

    Then, in the rush to sell, start buying back shares as fast as you can. Support will probably be around 17 to $18, so buy with a limit at 19 to get the volume you’ll need. To keep up appearances, insiders can sell, but obviously you won’t want to sell too much, maybe 10 percent or so. But don’t be buying.
    Step two is to pull in as much revenue into the quarter as possible. Also, cut expenses where you can or defer to Q4 where possible. You’ll have guided down, so analysts will follow suit and lower estimates, so the bar will be quite low. Between reducing shares outstanding with the buyback, lowered estimates from analysts, increased revenue and reduced expenses, your earnings will beat the Street by miles and the stock will shoot up. Icahn will make a ton and leave you alone, and anyone thinking of making a bid for the company will think twice w/ new mkt cap

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