Interest in Nuance Resurfaces (NUAN, AAPL, GOOG, MSFT, ADBE)

Posted in General 
May 9th, 2011

Nuance Communications, Inc. (NASDAQ: NUAN) has just seen a massive jump on rumors that Apple Inc. (NASDAQ: AAPL) is in talks “of an unknown nature” as per reports from the blog TechCrunch.  MarketWatch noted this is likely a licensing deal for its speech recognition software.

For whatever this is worth, we have considered that Nuance could ultimately be acquired.  The problem in thinking that Apple would acquire is that this Dragon NaturallySpeaking software is used on so many Windows machines. 

Speech-to-text and text-to-speech are likely to only grow.  Our take is that ultimately Nuance will be acquired.  The three acquirers we had considered as possible acquirers came to a tie between Microsoft Corporation (NASDAQ: MSFT) and Google Inc. (NASDAQ: GOOG) followed in a distant third place by Adobe Systems Inc. (NASDAQ: ADBE).  The problem is that Nuance is getting pricey on a nominal dollar basis.

After a 10% pop to $22.00 and with just over 4 million shares traded already this morning, the market cap is now $6.6 billion.  The new 52-week range just went higher today and that is $14.45 to $22.93.  The average daily volume is about 2.35 million shares per day.

JON C. OGG

(10:17 AM EST)

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