* Says $102.5 mln payable to Swype shareholders
* Says has already paid $77.5 mln
* Says to pay rest 18 months after closing the deal
* Deal to enhance smartphone, tablet offerings
By Soham Chatterjee
Oct 7 Speech recognition and digital imaging
software maker Nuance Communications Inc bought rival
Swype Inc for $102.5 million to enhance its offerings for the
red hot smartphone and tablet market.
Nuance's acquisition comes on the heels of Apple Inc
releasing its latest iPhone 4S featuring "Siri" voice
recognition software. Siri uses Nuance's speech recognition
"Nuance is bulking up on the mobile front so that they can
have a bigger presence on the next-generation handsets," FBR
Capital Markets & Co analyst Daniel Ives told Reuters.
"They can't just stand by and just stick to their core
competency of being a voice recognition technology player on
Android, the most popular mobile operating system,
has its own voice recognition software -- Google Voice Actions.
Microsoft also has its own speech recognition
Swype, founded by Cliff Kushler, makes a keyboard that
allows users to input words on a touchscreen device by sliding a
finger or a stylus from letter to letter.
It is one of the most popular alternative keyboards for
devices running on Google Inc's Android and Nokia OYJ's
Symbian mobile-phone operating systems.
Nuance already offers the FlexT9 keyboard -- which lets
users speak, trace, write or tap in information using its Dragon
dictation and T9 predictive text input technologies -- on
It is a crowded market, with Swype and FlexT9 going toe to
toe with TouchType Ltd's SwiftKey X Keyboard, Dasur Ltd's
SlideIT Keyboard, Beansoft's Thumb Keyboard and Dexilog LLC's
Smart Keyboard Pro.
"Right now the name of the game is patents. This is Nuance
trying to own more patents," analyst Ives said. "Ultimately, the
company is going to have a much more integrated software set
that they can sell to OEM and handset providers."
This is the second time Nuance has bought a company founded
by inventor and entrepreneur Cliff Kushler.
In 2007, Nuance bought Tegic Communications -- a company
co-founded by Cliff Kushler -- that created the T9 predictive
input software used on mobile devices.
The Swype deal marks Nuance's fourth acquisition this year.
In August, Nuance bought Telecom Italia's speech
technology unit Loquendo for about $74.66 million.
Last year, Nuance bought ShapeWriter, an application similar
to Swype, from an IBM Research spin-off.
Nuance said in a filing with the U.S. Securities and
Exchanges Commission that it has already paid $77.5 million to
Swype shareholders and will pay the remaining amount 18 months
after the deal closes, provided certain key executives do not
terminate their employment with Nuance.
Shares of the Burlington, Massachusetts-based company were
trading flat at $21.75 on Friday morning on Nasdaq. Nuance
shares have risen about a fifth this year on speculation that
Apple may expand its licensing deal with the company.