Through a variety of acquisitions, Nuance Communications (NASDAQ:NUAN) has built a comprehensive portfolio of software for speech recognition, file conversion, call-steering, and text-to-voice conversion. Now it's aiming to leverage those technologies into the red-hot mobile search market with its latest purchase: MobileVoiceControl. However, it's still unclear when this market will ripen.

The details released did not mention how much Nuance paid for MobileVoiceControl. However, in light of Nuance's market cap ($1.79 billion), there's a good chance that the price tag was less than $100 million. (Rumor pegs it somewhere less than the $15 million to $20 million range.)

MobileVoiceControl provides voice-activated services on a variety of devices, including gadgets from Research In Motion (NASDAQ:RIMM), Motorola (NYSE:MOT), and Palm (NASDAQ:PALM). For example, by talking into one of these smart phones, you can dial a phone number; place a calendar entry; get a stock quote; or even dictate an email or browse the Web. (For example, you can say, "Go to website") MobileVoiceControl charges users $6 per month for these services.

This market opportunity is still in its early stages, with a projected total size of $300 million or so. Major competitors in the space include IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT). Furthermore, companies like Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO) are eager to enter this market as well; mobile devices should be ideal for applications like local e-commerce.

Nuance has one big advantage against its larger competitors: a treasure trove of patents, with more than 400 either issued or pending. And there are a myriad of other upstart companies it could buy to further build its intellectual property assets.

Unfortunately, Nuance's stock seems highly valued to me. The company's enterprise value is about 7.7 times its trailing-12-month revenues. Moreover, it had to borrow $349 million to finance its Dictaphone acquisition. For the third quarter, Nuance's interest expense was roughly the same as its operating income (or $7.3 million).

While Nuance is positioned nicely for a big market opportunity, such things take time. After all, people have mostly been accustomed to using mobile devices for calling people -- not browsing the Net, writing email and so on. Nonetheless, investors are valuing the stock as if the trend will emerge fairly quickly.

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Nuance is a Motley Fool Hidden Gems selection. To find out why, and to access our entire archive of past picks, take a 30-day free trial of the newsletter. Yahoo! and Palm are Stock Advisor picks. Microsoft is an Inside Value recommendation.

Fool contributor Tom Taulli does not own shares mentioned in this article. He is currently ranked 292 out of 16,877 in CAPS.