Hi Mark and all the rest of you,  Just the latest on Dragon.  The
Capitalist system is curious.  Gordon
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Boston Globe Online: Print it!
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Speech Works offers $12.2m in L&H deal

Bid may include units in Burlington, Newton

By Peter J. Howe, Globe Staff, 10/23/2001

SpeechWorks International of Boston said yesterday it has bid $12.2
million
for parts of Lernout & Hauspie's speech technology business, possibly
including
segments of L&H units in Burlington and Newton.

If approved by judges in the United States and Belgium, where L&H is
based,
the deal could provide cutting-edge technology for SpeechWorks, which
has
landed
more than 350 customers, including airlines and brokerage houses, for
its
interactive speech systems.

L&H has been shattered by an accounting and stock-fraud scandal that
wiped
out $10 billion in shareholder wealth, after widespread reports last
year
that
executives reported phony sales to bogus East Asian companies to pump up
Lernout's reported revenue and stock price.

While it is still fighting to get bankruptcy protection in Belgium, as
it
already has in the United States, L&H has sold off several units
including
its
automated language-translation software business. Connecticut-based
Dictaphone, which L&H acquired last year in a $938 million stock deal,
is to
be spun
back out as its own independent company again.

What remains of L&H has been divided into eight operations that are
being
put up for bid. L&H said SpeechWorks is bidding on two units, the
speech-recognition
business and another that synthesizes digital text into
computer-generated
speech, and offered about $10 million in cash and SpeechWorks stock
worth
over
$2 million.

SpeechWorks spokeswoman Leah Lesser said her company would confirm only
that
it has made a bid for ''business and technology assets'' of L&H.

It is not clear whether SpeechWorks' bid will be accepted. L&H officials
said Credit Suisse First Boston, representing L&H's creditors, would
probably make
recommendations to US and Belgian judges, who would have the final say
over
which bids are accepted.

L&H has reportedly received bids for the whole speech and language
technology division from Mastervoice Technologies of Belgium and
Critical
Path Inc. of
San Francisco. The eight units up for sale include specific product
lines
for call centers and government offices, speech-recognition products
aimed
at
consumer and business markets, and a unit that develops
speech-recognition
technology for handheld devices.

There has been widespread speculation that Janet and James Baker of
Newton,
who sold their Dragon Systems to L&H last year for $460 million in
stock,
may
try to buy back some part of Dragon. The Bakers were not available for
comment last night.

L&H officials would not comment.

L&H still employs about 250 people in Massachusetts, down from a high of
more than 700, and has continued to work on new products. This week, L&H
is
rolling
out a version 6.0 of Dragon's ''Naturally Speaking'' software, enhanced
with
L&H technology, which converts dictated documents into Microsoft Word or
Excel
text.

SpeechWorks said if its bid is accepted, the company would support
several
L&H technologies and continue to operate an engineering center in
Belgium.
SpeechWorks
already has access to high-end speech synthesis technology developed at
AT&T's labs, through a deal last year in which AT&T took a small stake
in
SpeechWorks.

In Nasdaq Stock Market trading yesterday, SpeechWorks was unchanged at
$6.49. Its shares have fallen more than 90 percent in the last year
since an
August
2000 initial public offering. SpeechWorks is due to report quarterly
earnings tomorrow, and analysts polled by Zacks Investment Research
expect
on average
a 27-cent-per-share loss.

Peter J. Howe can be reached by e-mail at
[log in to unmask]

This story ran on page D5 of the Boston Globe on 10/23/2001.
©
Copyright
Hi Mark and the rest of you,  Any comments?  The Capitalist
2001 Globe Newspaper Company.

End of Article
####


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