Nuance does it again: $265M goes to Tegic purchase

Speech-recognition company Nuance Communications Inc. announced it will purchase Tegic Communications Inc., which supplies the popular T9 predictive-text software for cellphones, in a deal worth $265 million. Nuance said the transaction will allow the company to build a “multimodal” input product for cellphones that will “combine voice, text and touch to dramatically improve the user experience.”
“Tegic shares our vision of delivering an integrated, superior and flexible user experience for today’s wireless subscribers,” said Paul Ricci, chief of Nuance. “Together, we are poised to redefine the way people interact with their mobile devices, delivering a more convenient, simple way for consumers to control features and access information on their phones, and search and navigate the mobile Web.”
The move is the latest in what has become Nuance’s unabated buying spree. In May the company plunked down $300 million for speech-recognition company VoiceSignal Technologies Inc., and shortly before that paid $140 million for another speech-rec firm, BeVocal. Last year, Nuance bought out Dictaphone for $357 million.
And Nuance isn’t the only company apparently willing to pay top-dollar for speech-recognition offerings; Microsoft Corp. earlier this year picked up Tellme Networks Inc. in a deal rumored to be worth as much as $800 million, and several smaller players are continuing to draw investment capital.
Based on the company’s purchases, it appears that Nuance’s goal is to provide much of the software that will allow cellphone users to input information into their handsets. VoiceSignal made major strides in the speaker-independent, voice-activated dialing market, racking up Samsung Electronics Co. Ltd. and Motorola Inc. as customers, and Tegic is regarded as the standard for predictive-text input, with customers including Nokia Corp. Samsung, Sony Ericsson Mobile Communications L.P., LG Electronics Co. Ltd. and Motorola. Indeed, Tegic’s software has been installed on more than 2.5 billion devices.
Despite its successes in the market, it appears Tegic is currently a loss-making operation. Nuance said the company, a subsidiary of Time Warner’s AOL L.L.C., will contribute a loss of between $0.12 and $0.13 per share in 2008 to Nuance’s financials.
On the revenue side though, Nuance said Tegic will supply revenues of between $45 million and $48 million to its 2008 fiscal year.
Nuance’s stock appeared to slip slightly in after-hours trading on news of the acquisition, to 17.75 per share.
The company said its purchase of Tegic is expected to close in its fourth quarter, and is subject to customary closing conditions and regulatory approvals.