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Nuance Communications (NASDAQ: NUAN ) just can't catch a break.

After running up in anticipation that Carl Icahn's investment stake will improve the company's prospects, shares made an about-face following its fiscal second quarter earnings results. To make matters worse, the speech recognition company lowered guidance for the upcoming quarter, pushing shares below pre-Icahn levels. Naturally, these developments haven't eased investor concerns that there could be structural issues with Nuance's business model.

Breaking down the disappointment
For the quarter, Nuance reported non-GAAP revenue of $484 million, which represented an increase of 15.9% year over year, but was sharply below expectations. Analysts were expecting Nuance's revenue would come in around $516 million. Here's how Nuance's business breaks down:

Segment

Revenue

YOY Change

QOQ Change

Percent of Total

Health care	$229.3	53%	5%	47%
Mobile/consumer	$116.2	1%	(12%)	24%
Enterprise	$74.5	(19%)	(11%)	15%
Imaging	$64	5%	7%	13%

Source: Nuance FQ2 Results. Dollars are in millions. YOY = year-over-over. QOQ = quarter-over-quarter.

Nuance blamed poor sales execution and the challenging macro environment in Europe for why the company didn't meet expectations. Still, it wasn't enough to deter the company from announcing a $500 million share repurchase program, which, as the CEO put it, "underscores our confidence in the business and our focus on shareholder value as we expect growth to accelerate in fiscal 2014."

Between all of its business segments, Nuance estimates its total addressable market to be somewhere in the neighborhood of $48 billion. Surprisingly, Nuance's enterprise segment remains its biggest long-term opportunity, which it pegs as a $26 billion opportunity.

Something's not adding up
For a company that's only expected to tap only about 4% of its $48 billion addressable market this year, there seems to be a disconnect between reality and potential. Investors could argue that the company is only getting started and market share will increase in the coming years. This is entirely possible, but some of the numbers to support this belief suggest otherwise.

In the first quarter, which was the same time frame as Nuance's fiscal second quarter, IDC reported a 42% increase in worldwide smartphone shipments year over year. However, Nuance's mobile and consumer business segment, largely driven by smartphone and automotive adoption, only realized a 1% increase in revenue. Nuance CEO Paul Ricci even highlighted that automotive performed quite well. What gives?

Although Nuance has admitted that Apple (NASDAQ: AAPL ) is a customer, it won't talk specifics about the nature of their agreement. However, it's widely believed that Nuance helps power Siri, Apple's voice-activated personal assistant. During the quarter, Apple sold 37.4 million iPhones, the majority of which support Apple Siri. Samsung, which is also pegged as a Nuance customer, experienced a 61% growth in shipments and shipped over 70 million smartphones. Combined, over 100 million devices were sold during the quarter -- and yet Nuance didn't materially benefit.

The million-dollar answer
During the conference call, Nuance acknowledged that the company is continuing to experience a negative shift in the way that it's compensated. Customers are changing their billing agreements toward usage-based terms, pressuring revenue across the board, indicating that its products are not in as high demand as once believed. The company claims this revenue shift will ultimately build stronger, more predicable revenue streams over the long term, but I beg to differ.

This new approach assumes that end users will want to increase their usage of speech recognition technology. The fact that Nuance could only squeeze out 1% growth on 42% smartphone growth isn't convincing me that this will be the case. After all, taking a horse to water is one thing, but getting it to drink is entirely different. In hindsight, I probably shouldn't have purchased Nuance in the first place.

Nuance's growth story doesn't come without risks, too. The Motley Fool recently published a premium research report to break down what investors interested in Nuance absolutely have to understand before investing. Click here now to grab your copy today.

FirstEnergy (NYSE: FE ) announced today that it plans to retire two coal-fired Pennsylvania power plants by the end of October.

A combination of low electricity prices and high costs to meet environmental regulations has pushed the utility to action, shuttering the equivalent of 2,080 MW at the two plants, representing around 10% of FirstEnergy's total generation capacity. According to the company's press release, these two plants would have required around $280 million in environmental compliance costs, or around 30% of FirstEnergy's total estimated spending to comply with the Environmental Protection Agency's Mercury and Air Toxics Standards.

About 380 plant employees and generation-related positions are expected to be affected. The company announced the deactivation of nine plants last year.

Hot High Tech Stocks To Invest In 2014: Pacific Ore Ltd (PSF.AX)

Pacific Ore Limited engages in the identification, acquisition, exploration, and development of resource projects. The company is based in Perth, Australia.

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Target Corporation operates general merchandise stores in the United States. The company offers household essentials, including pharmacy, beauty, personal care, baby care, cleaning, and paper products; hardlines comprising music, movies, books, computer software, sporting goods, and toys, as well as electronics that comprise video game hardware and software; apparel and accessories consisting of apparel for women, men, boys, girls, toddlers, infants, and newborns; and intimate apparel, jewelry, accessories, and shoes. It also provides food and pet supplies, including dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce, and pet supplies; and home furnishings and d�or, such as furniture, lighting, kitchenware, small appliances, home d�or, bed and bath, home improvement, and automotive products, as well as seasonal merchandise, which include patio furniture and holiday d�or. The company sells its merchandise products under private-labe l and exclusive licensed brands. In addition, it provides in-store amenities. As of January 28, 2012, Target Corporation operated 1,763 stores in 49 states and the District of Columbia under Target and SuperTarget names. Further, it offers general merchandise through its Website, Target.com. The company distributes its merchandise through a network of distribution centers, as well as third parties and direct shipping from vendors. Additionally, it offers credit to guests through its branded proprietary credit cards, the Target Visa Credit Card and the Target Credit Card, as well as through its branded proprietary Target Debit Card. Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota.

Advisors' Opinion:

[By Robert Holmes]
Analyst Mark Wiltamuth pins his "overweight" rating for Target on the retailer's plans to move into Canada and a focus on the company's core U.S. business.

"We see a significant middle market opportunity in Target's entry into Canada and a retailer that can drive stable growth in the U.S.," Wiltamuth writes. "With TGT's valuation near a 15-year low, we see valuation recovery once investors look forward to the 16-20% EPS growth and rising free cash flow in 2013 and beyond."

A return of 20% based on Wiltamuth's price target would make any investor happy, but Wiltamuth's most bullish scenario has Target shares up a huge 42% next year if all things align perfectly. His most bearish prediction, on the other hand, would likely mean a 25% slump for the stock over the next 12 months.

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Advisors' Opinion:

[By Robert Hsu]
Through all of 2010’s ups and downs in the global markets, China stood out as a major player on the world stage. In fact, right now China’s economic growth is matched by no other major economy in the world, and the wealth potential there is life-changing.

That’s why my top stock pick is China National Offshore Oil Company (NYSE: CEO) — China’s offshore exploration and production energy giant and the most dynamic of China’s Big Three state-owned energy giants.
[By Dave Friedman]
Institutional investors bought 1,474,410 shares and sold 1,532,340 shares, for a net of -57,930 shares. This net represents 0.00% of common shares outstanding. The number of shares outstanding is 44,669,199,980. The shares recently traded at $187.66 and the company’s market capitalization is $82,478,290,357.81. About the company: CNOOC Limited, through its subsidiaries, explores, develops, produces, and sells crude oil and natural gas.

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Adams Resources & Energy, Inc., together with its subsidiaries, engages in marketing crude oil, natural gas, and petroleum products. It purchases crude oil, and arranges sales and deliveries to refiners and other customers in Texas and Louisiana with additional operations in Michigan and New Mexico; purchases, distributes, and markets natural gas; and offers value added services by providing access to common carrier pipelines and handling daily volume balancing requirements, as well as risk management services. The company also markets branded and unbranded refined petroleum products, such as motor fuels and lubricants. In addition, it transports liquid chemicals on a �for hire� basis in the continental United States and Canada, as well as engages in the exploration and development of domestic oil and natural gas properties primarily in Texas and the south central region of the United States. Adams Resources & Energy, Inc. was founded in 1973 and is headquartered in Hous ton, Texas.

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Masimo Corporation, a medical technology company, develops, manufactures, and markets noninvasive patient monitoring products worldwide. The company offers Masimo Signal Extraction Technology (SET), which provides the capabilities of measure-through motion and low perfusion pulse oximetry to address the primary limitations of conventional pulse oximetry; and Masimo rainbow SET products that monitor multiple blood measurements, including oxygen content, carboxyhemoglobin, methemoglobin, hemoglobin, pleth variability index, respiration rate, Halo Index, and In Vivo Adjustment. It develops, manufactures, and markets a family of patient monitoring solutions comprising circuit boards, monitors and devices, sensors, and cables; Masimo SafetyNet, a remote monitoring and clinician notification system; and software for Rainbow measurements, as well as other future measurements or features. The company sells its products to hospitals and the emergency medical response organizations through its direct sales force and distributors, as well as to original equipment manufacturer partners in the United States, Europe, the Middle East, Asia, Latin America, Canada, and Australia. Masimo Corporation was founded in 1989 and is headquartered in Irvine, California.