Speech specialist and Motley Fool Hidden Gems recommendation Nuance Communications (NASDAQ:NUAN) is playing town crier once again and heralding a new acquisition -- that of mobile software maker VoiceSignal Technologies. Nuance announced that it intends to pay approximately 5.8 million shares of common stock and a net cash payment of $204 million, valuing the deal just shy of $300 million.
Management decided it was time to further penetrate the market for mobile voice translation, where functions of a mobile phone can be activated by simple, spoken commands. Privately held VoiceSignal has a strong presence in this market already, with its speech interpretation software pre-installed on many popular wireless devices from Nokia (NYSE:NOK), Motorola, and Research In Motion (NASDAQ:RIMM). The company claims that its software solution has been embedded in more than 110 million phones since 2002.
The acquisition adds to a long list of companies that Nuance has acquired and integrated into operations. The serial acquirer has built its speech and dictation business in pieces over the last several years, buying assets from the likes of Lernout & Hauspie in 2002 and more recently acquiring Dictaphone. The approach has given the company a broad revenue base across several markets related to automated speech recognition, image recognition, and dictation services.
While Nuance will pile on more debt as a result of the purchase, it's smart to pounce on VoiceSignal at this juncture. The mobile search and advertising business is gaining momentum, and companies are scrambling to either buy or build the tools necessary to tap the value of all sorts of mobile transactions. Witness recent acquisitions such as Microsoft's (NASDAQ:MSFT) purchase of Tellme and Time Warner's (NYSE:TWX) buy of Third Screen Media to help prevent online media giants Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO) from taking over the space. Each of these giants and a host of others are angling for a way into the lucrative value chain of mobile services and the advertising attached to it.
With Nuance's dominance of speech applications across multiple industries, the acquisition of VoiceSignal should give it new tools to help further position the company to cash in on the booming trend of voice access and control.
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Fool contributor Dave Mock speaks softly but has little need to carry a big stick -- Jedi mind tricks work just fine. He owns shares of Motorola. Dave is the author of The Qualcomm Equation. No limp wrists here -- The Fool's disclosure policy always gives a firm, confident handshake.
