Nuance Close To Spinvox Buyout?

Speech-to-text firm Spinvox is on the verge of being bought out by market leader and American rival Nuance Communications, according to a report in The Sunday Times, which predicts a $150 million (£92m) deal could be finalised before Christmas.

Spinvox claims to convert voice messages into text using what it describes as “a Voice Message Conversion System, known as D2 (the Brain)” that can “call on human experts for assistance”. However, earlier this year it was revealed that most of the work was actually done by humans in call centres in Africa and the Philippines.

“The machine doesn’t understand anything. You have to start typing when you hear the message,” an operator in an Egyptian call-centre formerly used by Spinvox told the BBC in July.

The allegations caused great controversy, particularly over questions of data protection. One call centre worker, Kareem Lucilius, told the BBC that the transcribing was done 100 percent by people. “We heard the message from the very beginning to the very end. Love messages, secret messages, messages with sexual content, even people threatening to kill each other,” he said.

At the time, Nuance said that the Spinvox service could never have worked as described. “In Nuance’s view, this task will never be able to be totally automated in the near future. You cannot control the person leaving your voicemail, or the environmental factors,” said John West, solutions architect in Nuance’s mobile group. “Spinvox is offering something that is impossible to deliver now.”

Spinvox denied the accusations, saying that its technology worked as claimed. “We’re in the last mile of solving the problem of reliable automatic speech conversion,” said Spinvox co-founder Daniel Doulton. He added that Spinvox’s technology “is unique to the speech market, so there is little to which it can be compared.”

The rumoured deal, if true, might indicate Nuance has changed its mind about Spinvox’s abilities – but could simply mean it wants Spinvox’s contacts and contracts. The company is currently projected to earn £7 million next year and £30 million in 2011, after signing contracts with several mobile operators.

However, there are still hurdles to overcome before a takeover can go ahead. Spinvox is currently in debt to the tune of £30m – a loan that was due to be repaid this week. The firm made a loss of £47m in 2007, and has delayed the publication of its 2008 accounts. In September it emerged that one investor had written down the value of its stake in Spinvox by 90 percent.

The company has been told that it has until the end of January to find the money to pay off its debts. A source close to the company told the BBC that Spinvox had been told “We’re not going to put the company into administration over the £30 million.”

Both Nuance and Spinvox declined to comment on this story.