The deal will allow Dictaphone to concentrate on healthcare, and NICE may grow vertically.
Posted Apr 12, 2005
Dictaphone will sell its Communications Recording Systems (CRS) business to NICE Systems for $38.5 million in cash, and will change its corporate strategy to focus on the healthcare IT market, according to the companies. NICE expects the acquisition to "significantly add to [its] top line in 2005," pushing the $252.6 million company's revenues to between $295 million and $300 million, according to written statements. The boards of both companies unanimously approved the transaction, which is expected to close by the end of the second fiscal quarter, ending June 30, 2005, subject to certain closing conditions.
"We have an opportunity in the very short term to ramp up the sales of speech recognition technologies in healthcare," says Don Fallati, Dictaphone's senior vice president of marketing and strategic planning. "We believe the movement in this country to electronic healthcare records is creating additional incentives and market momentum to automate various processes in the healthcare area." Fallati says the company must quickly fuel its early success record in this area.
The deal will accelerate NICE's growth, according to the company, with increased revenues and a global footprint. It will also give the company the ability to transform the public security and homeland security sectors by introducing content analytics; and speed up its transformation of the enterprise interaction market. The CRS unit provides recording systems for 9-1-1 centers and other mission-critical operations in the call center, financial, and public sector markets. "This is the next stage in our growth strategy and a major milestone for the insight from interactions market," CEO Haim Shani says in a written statement. "We see this transaction bringing tremendous value to the joint customer base through additional solutions and applications."
Carole Macpherson, a CRM industry analyst, is not convinced. She says that while the move may make financial sense for NICE, going vertical is not the right move. "I don't see them vaulting into the Witness domain. I'd like to see them respond with a solid workforce management offering, spanning many industries and adding the Dictaphone [acquisition] as a strong verticalization." If NICE wants to compete with Witness Systems, Macpherson says, NICE needs "to shore up their product suite."
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