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New Technology Articles:
New Technology Articles: Finally Sounding Out
A Special Report for Dynamic Market Alert
by Ann Sosnowski, Senior Editor, WaveStrength Hot Sheet
I'm not afraid to admit it: I text message and make phone calls on my cell phone when I'm driving. And I'm not alone.
A survey of 1,000 drivers across Germany, Japan and the United States confirms that the majority use wireless devices in the car. They're also willing to pay extra for speech-enabled applications in cars, making our wireless fascination less dangerous.
There is a growing demand for speech-enabled applications in our fast-paced world. As new generation cell phones come to market, many will allow users to control applications through voice technology, instead of through buttons.
The New Technology of Voice Technology
The survey reiterated the necessity for voice technology. Sixty-five percent of drivers admit that they would like to be informed by voice about incoming calls. Seventy-six percent believe that controlling navigation systems by speech is easier. More than 60% of drivers would prefer a car with voice destination applications. And nearly 70% believe that controlling audio and entertainment systems by voice makes them easier to use while driving.
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But this technology isn't just useful in the car; it's generally more efficient. New voice technology allows you to press one button, say a recipient's name, and dictate a message of up to 20 words. The full message appears in less than a minute and you can send it with one more touch of a button.
Many cell phone companies are embedding this technology into their handsets to enable users to better surf the Web, shop online, and download ring tones. Wireless carriers and Internet portals such as Google Inc. (GOOG:NASDAQ) and Yahoo Inc. (YHOO:NASDAQ) are supporting this technology.
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New Technology Articles: Voice and Technology
Nuance Communications Inc. (NUAN:NASDAQ) is a leader in voice-enabled controls. The company owns the largest portfolio of speech and imaging solutions with a small-market cap of $1.4 billion. NUAN is currently "testing a voice engine that lets users search a catalogue of more than 1 million songs from a mobile phone." It's also developing speech services that help Web searches and e-mail composition.
Industry insiders say that of the nearly 1 billion mobile handsets sold this year alone, up to 150 million will be voice-enabled. Nuance believes this number will double by the end of 2007.
The company makes 20 cents per phone and $5 to $7 for each voice-enabled automobile where its software is embedded. More voice-enabled devices mean a bigger bottom line.Emerging New Technologies: Speech-Enabled Networking
NUAN is headquartered in Burlington, Mass. and has 1,112 employees in 35 offices around the world.
NUAN makes a user's experience more natural and dynamic by transforming the way people interact with information. Users interact with NUAN's programs when they call directory assistance, attain account information, dictate patient's records, use a navigation system to arrive to a destination or digitally reproduce documents. Its speech technologies enable voice-activated services over a telephone, transformation of speech into written word, and control of devices simply by speech.
NUAN's imaging solutions eliminate the need to reproduce documents as well as make it easier to use electronic documents and forms within databases, the Internet, mobile technologies and other business applications. Most importantly, Nuance has a partnership with Gracenote, Inc. for developing and marketing speech-enabled software solutions for digital music collections on mobile devices.
NUAN's products are used in the financial services, healthcare, government, education, utilities, travel and telecommunication industries.
"More than 16 million people use a Nuance productivity application; more than half the Fortune 100 use Nuance speech solutions and nearly one thousand devices - handsets, printers, automobiles - incorporate Nuance technology."
The company's network includes 2,000 partners like independent software vendors and distributors. Some of these partners include Canon, Cisco, IBM, Microsoft, Sony and Xerox, which help bring Nuance's technologies to the global market.New Technology Articles: The Company's Fundamentally Sound
NUAN is just wrapping up its 2006 fiscal year. While its current profit margin is -7.26%, its quarterly revenue growth year over year is 99.10%, which indicates to me that this could be a turnaround year for the company. NUAN has the highest quarterly growth compared to its competitors and is second only to Adobe Systems Inc. (ADBE:NASDAQ) in gross margin.
For the third quarter ending June 2006, Nuance reported revenue of $113.1 million, a 100% increase over the year before. The company reported net income of 11 cents per diluted share, compared with 5 cents per diluted share the year before during the same period.
Its non-GAAP revenue loss of $7.9 million was directly connected to the company's acquisition of Dictaphone Corporation. Dictaphone has a customer base of over 4,000 hospital and outpatient facilities and approximately 400,000 physicians.
NUAN's third-quarter performance was highly successful, according to Paul Ricci, chairman and CEO of Nuance.
"Strong performance from our healthcare business, including Dictaphone, embedded speech and our imaging products fueled revenues and earnings above our expectations. In particular, we believe early results for Dictaphone reflect a smooth integration and strong demand for its enterprise and hosted dictation solutions. We experienced a very strong quarter in our imaging business. In addition, demand for our network speech solutions was up from the previous quarter. Our results from embedded speech are noteworthy, especially in international where we secured several important contracts and design wins."Nuance's Growth in Emerging Technologies
NUAN's acquisition of Dictaphone was complete on March 31, 2006, and the company created the Dictaphone Healthcare division to expand their service portfolio. Dictaphone's successful performance verifies the strength in this acquisition.
The company's embedded speech services showed a 35% increase in revenue. It secured strategic design partnerships with companies like Casio, Ford, and Samsung, as well as an important contract with a "significant handset manufacturer in Asia-Pacific."
Nuance's Dragon NaturallySpeaking products for dictation performed well in the third quarter and helped to expand contracts within Kaiser-Permanente. Total revenues were down to prepare for Dragon NaturallySpeaking's "version 9" July 2006 launch.
Nuance continues to perform well in the imaging sector as well. Its revenues for imaging increased by 35%, the same as its embedded speech services. For the second quarter ending March 31, 2006, the company reported a 35% increase in revenues at $71.7 million. It announced a loss of 1 cent per share. Embedded speech revenues were up 45% from the same quarter the year before.
NUAN recently introduced Nuance Mobile, an initiative to deliver new speech-enabled search and communication applications for use on mobile phones. For 2005, its gross profits were up 65.38% compared to two years before.
Additionally, total revenue has already exceeded the year before. In 2005, the company announced revenues of $232.39 million. For the three quarters completed in its fiscal 2006 year, NUAN has already made revenue of $260.40 million.
Nuance Communications should be announcing its fourth-quarter and 2006 fiscal year numbers in the next month and a half. We should see continued revenue from the company's Dictaphone Corporation acquisition, as well as revenue from continued sales of its embedded speech services for mobile applications.
Both International Business Machines (IBM:NYSE) and Nuance are talking to phone carriers about launching voice-activation services, but there are no specifics as of yet. We'll want to be on the lookout for any news covering this angle.
I think Nuance Communications Inc. (NUAN:NASDAQ) is a company to continue to watch into 2007, as the voice-enabled industry finally gains its legs.If you enjoyed this report, sign up for the WaveStrength Hot Sheet, the new service from Ann Sosnowski, delivering new investment opportunities from her hot sheet. This is a new service Ann is currently beta-testing... and it's available to you absolutely FREE. Sign up today. This FREE offer is only available for a limited time. Join WaveStrength Hot Sheet here at NO COST TO YOU.
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Copyright 2006, The Taipan Group, LLC and Dynamic Market Alert, 808 St. Paul St., Baltimore, MD 21201
All rights reserved. No part of this report may be reproduced or placed on any electronic medium without written permission from the publisher.
Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed.