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Nuance Buys New York Software Firm

The company adds another speech recognition provider.

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

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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.

"We continue to be fans of NUAN's acquisition strategy, as the company has done a great job of finding diamonds in the rough to beef up its strong product footprint across a number of verticals," Ives wrote.

Earlier in the year, Nuance closed larger deals acquiring BeVocal, Tegic Communications and VoiceSignal Technologies. Other acquisitions include Focus Infomatics and MobileVoiceControl.

Nuance said 218,000 shares of stock currently valued at $4.2 million would be granted to 21 Commissure employees who are joining Nuance.

Founded in 2005, Commissure counts Mt. Sinai Medical Center, Cleveland Clinic Foundation and New York University Medical Center among its clients.