Seattle's Tegic sold in $265M cash deal

Nuance Communications announced Thursday that it is purchasing Seattle-based Tegic Communications from Time Warner's AOL subsidiary for $265 million in cash.

Tegic develops the commonly used T9 software that predicts what people type into their mobile phone for easier text entry. Last year, the software was shipped on nearly two-thirds of all cellphones. Nuance, based in Burlington, Mass., builds voice-recognition software, including a version for mobile phones.

AOL purchased Tegic in 1999 for $350 million in stock. In 2005, AOL also acquired Kirkland-based Wildseed, combining it with Tegic to form a new wireless division while creating a larger presence in Seattle.

The Nuance acquisition does not include the Wildseed technology. AOL did not return phone calls seeking information on what would happen to the software. Originally created for cellphones, Wildseed's software had been adapted more recently to build a new digital music player.

The transaction is expected to close in Nuance's fourth quarter, which ends Sept. 30.

In fiscal 2008, Nuance expects Tegic to contribute up to $68 million in revenue. Nuance said it expects to keep most of Tegic's roughly 100 employees, who will remain in Seattle.

"We plan to have a real major presence in Seattle," said Peter Mahoney, Nuance's vice president of worldwide marketing. "It's a great place to recruit and retain talent. We are excited about having a strong development center in the Pacific Northwest."

Mahoney said that Nuance partnered with Tegic in 2005 to build a mobile-phone interface that would include predictive text, speech and touch modes.

"If you think about it, there's been a huge amount of interest in mobile interfaces — a lot of this was fueled by the iPhone," he said.

"One of the things people are excited about with that product is the way it improves our interaction with the phone. The current modes of using them today with a regular keypad is limited. Using touch, predictive text and speech is a compelling way to interact with a device and get all the power you can out of it."

In a media release, AOL said the sale will help it focus on its mobile advertising business. In May, the company purchased Third Screen Media, which is developing a mobile advertising network.

"We believe that Nuance is a good match for Tegic, its employees and its business partners, and we value our relationships with both companies," said Randy Falco, AOL chairman and chief executive.

"This sale also lets us focus our mobile business on building strong consumer-based, ad-supported mobile experiences."

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com