Nuance Buys SNAPin For $180 Million In Stock

Nuance Communications, which develops voice-recognition software, said today it is acquiring privately-held SNAPin, a Bellevue, Wash.-based company, which builds instructional software for smartphones that helps carriers avoid service phone calls into customer care. Nuance said it will pay about $180 million in Nuance stock and that SNAPin shareholders will be eligible for additional payments based on certain financial milestones. The transaction is expected to close in October, pending customary closing conditions. Release.

The unlikely pair explained the acquisition by saying that with the help of Nuance, SNAPin will be able to get introductions to large mobile operators and handset manufacturers that Nuance already works with. Nuance said the opportunity is huge: Companies worldwide will spend more than $100 billion in customer care in 2008, and estimates suggest that more than 200 billion calls are placed into customer service around the world every year. An estimated one-third of those calls are placed from mobile phones and the number is expected to grow to two-thirds before the end of the decade. Together, the two companies can provide customer care for a few pennies while typical calls cost $4.50 a call on average. Today, SNAPin’s customers include T-Mobile USA and Vodafone (NYSE: VOD). Vodafone is using its software to provide its customers with the ability to to figure out common requests on their own — such as diagnosing and repairing configuration problems — from their phone. Nuance expects the acquisition to add up to $32 million in non-GAAP revenue during fiscal 2009 and non-GAAP earnings between 1 cent and 2 cents a share.

Last week, Nuance made an unsolicited bid for mobile ad and search firm Zi Corp. in an all-cash deal valued around $40.5 million, but it was declined by Zi’s board. Nuance also bought VoiceSignal a year ago, and acquired AOL’s (NYSE: TWX) Tegic dvision which makes the T9 predictive text technology. Through its acquisitions, Nuance is now “multimodel,” meaning you can conduct a search with your voice, and get a text-based list back of results. In buying SNAPin, it will gain expertise in showing people how to use theses services. At times, SNAPin has been compared to “Clippy,” the animated paperclip that helps people format letters in Microsoft (NSDQ: MSFT) Word. When people dial “611” from their phone, a service intercepts and prompts people to look at their phone’s screen for a list of solutions to the most common problems.

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