July 11, 2007

Kiosk Technology -- Speech Recognition Coming of Age?

Speech-recognition technologies are coming of age. Drivers tell Global Positioning Systems where they want to go. Callers speak commands into cellphones instead of pressing buttons. Doctors dictate patient histories into devices that automatically transcribe them. Growing at 22% a year, sales of such technologies -- which remain imperfect -- are forecast to reach $2.3 billion in 2007, according to Datamonitor, a consulting firm.

That is good news for Nuance Communications Inc., the largest company devoted almost exclusively to selling speech-recognition software. Nuance has about 75% of the market for speech-enabled call centers, the company says. And about 50% of medical-transcription devices run on its software. The Burlington, Mass., company projects sales of $596 million this fiscal year.

Investors have begun to recognize that. Nuance's shares reached a record high of $18.85 last month before pulling back recently. The company's market value now is about $3 billion. Many investors expect Nuance's shares to keep rising. They fell 52 cents, or 3.1%, to $16.45 as of 4 p.m. in Nasdaq Stock Market composite trading.

'Stock Is Still Cheap'

"I believe the stock is still cheap," says Michael Alpert, managing director of New York investment firm J&W Seligman & Co., which manages $20 billion. The firm holds 960,000 Nuance shares, according to its last reported position. "Their strategy is built around domination, and we think its earnings forecasts are low," he says.

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Posted by staff at July 11, 2007 08:44 AM