SpinVox sold for £64m (BIG LOSS...)

Troubled startup SpinVox - once a shooting star of the British technology industry - has been bought by an American rival in a deal worth $102m (£64m).

After a difficult year that saw substantial losses and unrest among its investors, it was today confirmed that the company - which converts customers' voicemails into text messages that they can read more easily - has been acquired by US technology firm Nuance.

In a statement Nuance, which makes the popular voice recognition program Dragon NaturallySpeaking, said it was buying SpinVox to help expand its reach into new countries.

"Around the world, the voice-to-text market has experienced tremendous growth over the last year," said Nuance vice president John Pollard. "With SpinVox's robust infrastructure, language support and operational experience, we will broaden the reach and capabilities of our platform."

The deal marks a heavy loss on the investments made in the Buckinghamshire-based company, which had raised more than $230m (£145m) in recent years to fund its ambitious expansion plans - and once valued itself at more than $500m.

While it boasted a legion of fans, however, the company had struggled to pay for major expansions around the world, while simultaneously fighting a series of claims that its automated voice-to-text technology actually relied heavily on call centre staff.

Over the summer, it rejected a BBC report suggesting that humans – not computers - transcribed large portions of customers' messages and held a demonstration of its system for journalists.

The increased scrutiny exposed a series of fissures inside the company, however. The management team, led by chief executive Christine Domecq, came in for criticism, and in August, recently-appointed director Patrick Russo – the former chief executive of telecoms giant Alcatel-Lucent - stepped down.

With losses mounting, the company raised more funding in August – largely to service its debts – and began paying staff with stock, rather than cash, as a way to save money. But in September one of its backers, Invesco, wrote down its outlay by 90% and confirmed that SpinVox was up for sale.

Rumours of the Nuance deal were reported earlier this month, around the same time that the company was given more time to repay a £30m loan that had placed extra pressure on its finances. However, early suggestions were that the company was closing in on a $150m price tag - significantly more than the $102.5m deal that was eventually struck.

Investors in the company – who include Goldman Sachs, Carphone Warehouse chief Charles Dunstone and Peter Wood, the founder of insurance group Directline – will receive a total of £42m in cash for the acquisition, with the rest of the money coming in the form of Nuance stock.

Shares in the Massachusetts technology company – which had climbed by more than 50% over the past year - were down around 1%, to 15.97, on the news.

http://bit.ly/5NMFEA