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The acquisition of Nuance by Microsoft is strategic and will help the latter to venture into the AI and speech recognition market.
Nuance Communications Inc (NASDAQ: NUAN) stocks are up over 23% in pre-market to trade above $56.30. The sudden spike has been attributed to news that Microsoft Corporation (NASDAQ: MSFT) is in talks to purchase the speech-recognition company Nuance according to media outlet CNBC.
According to Bloomberg, Microsoft intends to value Nuance at about $56 per share, although the terms may change accordingly. As a result, Nuance would get equity of approximately $16 billion. If the deal is finalized as predicted, it would be Microsoft’s second-largest acquisition after the $27 billion LinkedIn acquisition.
Reportedly, Microsoft first approached Nuance back in December and proposed the deal. The announcement is expected to be announced on Monday according to a person familiar with the matter who confirmed it to CNBC.
Nuance Acquisition by Microsoft
Nuance is a multinational software and technology company that has majored in speech recognition and artificial intelligence. Notably, the acquisition of Nuance by Microsoft is strategic and will help the latter to venture into the AI and speech recognition market.
“This can really help Microsoft accelerate the digitization of the health-care industry, which has lagged other sectors such as retail and banking,” said Anurag Rana, a Bloomberg Intelligence senior analyst. “The biggest near-term benefit that I can see is in the area of telehealth, where Nuance transcription product is currently being used with Microsoft Teams.”
Microsoft and Nuance have in the past collaborated, particularly in the health industry. Back in October 2019, Microsoft and Nuance partnered to enable ambient clinical intelligence to exam rooms, allowing ambient sensing and conversational AI to take care of some of the more burdensome administrative tasks and to provide clinical documentation that writes itself.
As a result, medical health practitioners can focus on providing efficient services to patients. The announcement did not have much effect on Microsoft shares at the time of reporting. According to metrics provided by MarketWatch, Microsoft shares were down approximately 0.19% in pre-market and traded around $255. However, Microsoft stocks remain one of the best covid performers as they added approximately 54% last year. Besides, they are up approximately 17% year-to-date according to MarketWatch. According to a survey conducted by MarketWatch, Microsoft shares received an average of Buy rating from 34 ratings. The company has a market valuation of approximately $1.93 trillion with 7.54 billion outstanding shares.
During the first quarter revenue results, Nuance reported a 28% Healthcare Cloud Revenue growth with strength in Dragon Medical Cloud solutions. In addition, the company reported Non-GAAP revenue of $345.8 million and non-GAAP earnings per diluted share of $0.20 during the past three months. During the first quarter Nuance acquired Saykara a healthcare IT company, which will add onto Microsoft Corp’s portfolio after the deal is finalized.