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Nuance Buys New York Software Firm

SAN FRANCISCO -- Continuing to consolidate the software market for speech recognition, Nuance (NUAN - Get Report) said Tuesday it acquired Commissure, a New York-based developer.

Commissure develops speech recognition and other data-capture software specifically for medical imaging labs. The deal enables Nuance to provide a fuller suite of software for the radiology market.

Friedman Billings analyst Daniel Ives estimated that Nuance paid $4 million for the company. But the deal is Nuance's sixth in 2007 and brings its total acquisition outlay to between $775 million and $800 million, Ives said in an interview. The company is using acquisitions to expand its product portfolio, rather than to buy market share.

Nuance is by far the leader in voice-recognition software, with nearly 66% of the market in 2006, according to Gartner. The company's nearest competitor, LumenVox, has 7.8%, while IBM (IBM - Get Report) has 6.6% and Microsoft (MSFT - Get Report) has 3.2%.

Although a small transaction that should have a "negligible financial impact," the deal beefs up Nuance's healthcare product suite, Ives said in a research note Tuesday.

The acquisition will enable Burlington, Mass.-based Nuance to speed its transcription process while reducing costs, "hitting a major pain point of current healthcare customers worldwide," Ives wrote. FBR makes a market in shares of Nuance.

Shares of Nuance were recently down 7 cents, or 0.4%, to $19.32. The stock trades at 25 times 2008 expected EPS of 78 cents.

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