UPDATE 1-INTERVIEW-Rosetta Stone looks to grow outside U.S.

* Brazil, Italy seen as target expansion areas

* Intellectual property rights may thwart China growth

* No need seen for debt, equity offerings

* Cash to be used for growth, not dividend

By Ernest Scheyder

NEW YORK, April 13 (Reuters) - Rosetta Stone Inc RST.N plans to grow its international business from 11 percent of revenue to as much as 50 percent in the next four years, though the language software maker is unlikely to make a big move into China because of intellectual property concerns.

Chief Executive Tom Adams said he will use the company’s $100 million in cash to aggressively expand in countries like Brazil and Italy. Teaching English conversation skills to Koreans and Japanese customers is also another growth area, he said.

However, China’s lack of respect for intellectual property rights makes Rosetta Stone wary of entering there, the world’s largest language-learning market, Adams said.

“It’s one of the examples of how China is hurting itself,” Adams told Reuters. “I’ve seen the abuses you can go through as a foreign company in China.”

The Arlington, Virginia-based company sells software to help users learn one of 31 languages, including Farsi, French and Irish. Rosetta Stone has no debt and does not need to raise cash, Adams said.

The company likely won’t announce a dividend any time soon, preferring to use its cash for expansion, he said.

“We may see acquisitions over time that we want to go after,” Adams said.

Venture capital firms ABS Capital Partners and Norwest Equity Partners, which helped supply initial funding for Rosetta Stone and currently own about 40 percent of its shares, likely will sell their stakes within two years based on what they have done with other investments, Adams said.

Rosetta Stone first went public in April 2009, raising $112.5 million. Since then its stock has gone on a roller coaster ride, from nearly $33 to a tad over $16. On Tuesday the shares closed unchanged at $25.08.

While the language-learning market may seem obscure, Adams said it is worth $83 billion each year -- more than the music industry.

Ironically, given Google Inc's GOOG.O current battle with China over censorship, Rosetta Stone is trading barbs with the search engine giant over a similar topic.

Rosetta Stone is suing Google, claiming the company profits by allowing rivals that pirate Rosetta Stone’s technology to buy the top “sponsored link” ad on search results pages.

“They make a market for them,” Adams said of Google, referring to software pirates. “For us it’s about principle. You don’t sell other people’s stuff.” A trial is set for May.

Most international customers chose to study English, said Adams, a Swedish native who learned Chinese and Russian using Rosetta Stone and speaks a total of seven languages.

Rosetta Stone is launching a fourth version of its popular software later this year that will include social networking and applications for Apple Inc's AAPL.O iPhone.

Adams also noted that he’s not afraid of translation services like Google Translate taking away business.

“The free online programs are free for a reason,” he said. “They’re not very effective.”

(Reporting by Ernest Scheyder; Editing by Phil Berlowitz)

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