Nuance Communications Inc. (NUAN), the U.S. maker of speech-recognition software, advanced the most in almost 18 months in Nasdaq trading on reports that Apple Inc. (AAPL) has held negotiations with the company.
The companies are in talks about an acquisition, or, more likely, a partnership, TechCrunch reported May 6, citing several unidentified sources. In November, speculation of a deal between the two surfaced after Apple co-founder Steve Wozniak said the company had bought Nuance. He later said he’d made a mistake.
Nuance’s software could become part of the operating system that runs Apple’s devices such as the iPhone, TechCrunch said. Apple, which also makes the iPad, bought mobile-application developer Siri Inc. a year ago, gaining technology that lets users search the Web by talking to their phones. Siri has used Nuance’s speech recognition software for more than a year.
Richard Mack, a spokesman for Nuance, said the company doesn’t comment on rumors or speculation. Steve Dowling, a spokesman for Cupertino, California-based Apple, didn’t return requests for comment.
Nuance rose $1.67, or 8.3 percent, to $21.76 at 4 p.m. New York time in Nasdaq Stock Market trading. The Burlington, Massachusetts-based company’s shares have added 20 percent this year.
If Nuance agreed to be bought by Apple -- or even did a deal that gave Apple exclusive rights to its technology -- it would risk losing a large percentage of its sales, said Brad Whitt, an analyst at Gleacher & Co.
The stock jump is less about the likelihood of an acquisition, than about hopes for an expanded relationship with Apple, said Daniel Ives, an analyst at FBR Capital Markets.
“It really feels like Apple has every intention of incorporating more speech recognition in the core OS,” he said. “Nuance is the clear leader.”
Trading of bullish Nuance options jumped to 14 times the full-day average over the past four weeks as 17,750 calls to buy the stock changed hands, 2.6 times the number of puts to sell. Implied volatility, the key gauge of option prices, for at-the- money contracts expiring in 30 days jumped 29 percent to 42.86. The most-active contracts were July $23 calls, which more than doubled to $1.05.
Nuance, which has boosted sales for at least five years, has a market value of $6.54 billion. Apple has made eight acquisitions in the past five years, all of them with an announced value of less than $300 million.
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