Tuesday, May 10, 2005
Chuck Does It Again! ScanSoft to buy Nuance
ScanSoft has announced its plan to buy speech recognition rival Nuance for $220 million. Scansoft had previously acquired Speechworks, the assets of bankrupt Lernout & Hauspie, and voice assets from Philips Electronics.
This deal will likely end up at the DOJ - as in speech recognition Scansoft's chief rival is Nuance; Gartner estimated that at the end of 2004 the two vendors together controlled 77 percent of the market for speech server systems.
This is the second nice exit by CEO Chuck Berger - who previously sold Vicinity (VCNT) to Microsoft. I want to be on his next ride. ScanSoft will pay 0.77 shares of ScanSoft stock for each share of Nuance plus $2.20 cash per share. Nuance had a $112 million market capitalization pre-announcement, which given the net loss of $4.6 million on revenue of $11.8 million for the quarter ended 3/31/05, is a nice valuation indeed.
So Scansoft is paying 4.6x revenues at a 100% premium for a zero growth money-losing company. Good job Chuck!
This deal will likely end up at the DOJ - as in speech recognition Scansoft's chief rival is Nuance; Gartner estimated that at the end of 2004 the two vendors together controlled 77 percent of the market for speech server systems.
This is the second nice exit by CEO Chuck Berger - who previously sold Vicinity (VCNT) to Microsoft. I want to be on his next ride. ScanSoft will pay 0.77 shares of ScanSoft stock for each share of Nuance plus $2.20 cash per share. Nuance had a $112 million market capitalization pre-announcement, which given the net loss of $4.6 million on revenue of $11.8 million for the quarter ended 3/31/05, is a nice valuation indeed.
So Scansoft is paying 4.6x revenues at a 100% premium for a zero growth money-losing company. Good job Chuck!
