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Technology Stocks : LHSP: Lernout En Hauspie -- Ignore unavailable to you. Want to Upgrade?

To: KevRupert who wrote (2229)	7/6/2000 7:17:48 PM
From: the dodger	Read Replies (1) \| Respond to of 2467

....."This article sounds like the death of LHSP...." As Mark Twain once said...."The report of my death has been greatly exaggerated".(g) Here's a re-post from the Gorilla thread in March. It's a pretty good synopsis of LHSP. The biggest change since then is that LHSP bought Dragon Systems, and now own approximately 85% of the VR market. I also included a list of current stategic partners/vendors at the end...please note that MSFT, INTC and AOL are among them. OVERVIEW Last week, in one of those "New Economy Bites Old Economy" stories, a relatively unknown Belgian company called Lernout & Hauspie Speech Products bought old American standby Dictaphone using -- you got it -- its increasing stock strength to do it. With the purchase, LHSP's most important product -- speech recognition -- took another major step in knocking down an important bowling pin -- medical transcription. With its technology across the chasm and knocking down those pins, LHSP deserves a thorough analysis of its gorilla potential. LHSP is one of those messy companies that seems to be focusing on everything at once, unlike RMBS or QCOM, whose gorilla-ness focuses on the adaption or un-adaption of one core technology. The Belgian company has its hands in everything from automatic speech recognition to text to speech technology to digital speech compression to text-to-text translation and linguistic-oriented software components. LHSP has so many things going on -- PDA's which translate e-mail to speech and your spoken response back to email, next generation telephony applications that automate call centers, RealSpeak (www.ananova.com and lhs.com, etc -- it's difficult to know where to focus. However, it seems clear that the thing that's getting all the attention is speech recognition, period. Considered the leading speech technology company, LHSP has worked for years bringing this technology to its present point, on the cusp of considerable assimilation. Today, LHSP has more than 50 patents on the technologies, a considerable lead in translation and non-English recognition, high-profile strategic partnerships with leaders like MIcrosoft, Intel, and GTE, and the broadest array of market offerings in speech and language solutions across a range of industries. Market Description Customers Companies partnering with LHSP for speech technology include AOL, GTE, Hitachi, Intel, Lucent, Microsoft, Olympus, Samsung, Hyundai, Daewoo, Motorola, Nortel, and Yahoo. The complete list at LHSP's web site also includes names like Comverse, Aculab, McGraw-Hill, National SemiConducotr, Pika, Seiko, NeoTelecom, Delfi, Cellport, Clarion, etc. Recent wins rumored but unannounced are said to include Mobistar, Deutsche Telekom, France Telecom, and Alcatel. Competitors Dragon Systems, a private firm, Nuance Technologies, SpeechWorks, and IBM's ViaVoice are competitors. FINANCIAL INFORMATION Information on the speech technology industry is hard to come by -- one estimate claimed that 1999 saw speech technology make up a 700 million dollars, with LHSP raking in 340 million dollars that year. I've had difficulty making contact with the company on confirmation of percentages of the industry. However, most articles do refer to LHSP as the global leader. LHSP's revenues in the last quarter were up 50% from same quarter last year. Gross margins are at 71% and operating margin is at 23%. EPS growth is 111% this year. Market cap is at 6.5 Billion. Dictaphone's revenues last year were around 350 million dollars, or about the same as LHSP. LHSP bought Dictaphone with 15% of its market cap. There is some talk that LHSP is going to create three different entities this year and spin them off, ala Palm. GORILLA CHARACTERISTICS Is there a discontinuous innovation or a proprietary open architecture Yes. I believe that speech recognition is a classic discontinuous innovation -- replacing keyboard/screen interaction with a computer to speech/screen or speech/speech interaction is a radical shift. As the wireless revolution brings us computers everywhere and miniaturized on a variety of PDA and cell and anything-else-we-haven't-thought-of yet, speech recognition seems to be an essential part of that miniaturization. You can't fit a keyboard on a watch -- until brain-to-computer nexus is available, speech recognition will have to do. Does it have the potential to grow into a mass market phenomenon, become a standard? Yes. Speech recognition will become ubiquitous because it has to. Already, speech recognition in customer service phone technologies have "solved" the problem of two-hour waits getting thru to a customer service representative. With minituriazation, wireless, hands-off computing, etc, the next decade should be the decade of speech recognition. Carpal tunnel syndrome alone should assure it. Are there high barriers to entry and high switching costs? Aha, here is the catch. I've been trying to figure this one out, and was dispirited at first. As a "part" of the operating system, voice recognition doesn't seem to be a gorilla game. Someone I corresponded with compared it to the graphic card industry, and said he would never invest in that industry. But there are particular parts of this game which may offer it extraordinarily high incentives to stay with the first mover. Voice recognition has been held back by how long it takes to learn, and how the computer has to "learn" your voice. Once you take the time to "teach" your software/computer/handheld device/embedded computer in your rug what your voice is like, what your mannerisms are, what you mean when you say this, etc, you won't want to change! Those are man-hours that you've spent teaching the damned thing, and if you switch to different software, you'll have to do the whole thing over. It's like that favorite pair of jeans or leather jacket -- they transform to fit your particular shape, and you can't buy anything on the rack that equals it. Pretty snazzy. As well, if LHSP is sharp they'll start building a databank of different individuals voices, allowing users anywhere to tap into their own database to speed voice recognition processes. Have Value Chains developed, and have they crossed the chasm? Yes and yes. Their list of partners is impressive -- MSFT, Intel (their technology is to be embedded in some of Intel's future chips), GTE -- check out lhs.com for the entire list, which grows weekly. Their technology seems to finally be out of the chasm, good enough for mainstream usage. Their EPS growth of 100% may mean that they are entering the tornado. For now, they seem to be knocking very hard on the medical transcription bowling pin. SUMMARY & ANALYSIS LHSP is the dominant player in global speech recognitions, a technology which will be essential as we move into a one-world wireless market. Mobile commerce -- which will at some point eclipse plain old e-commerce -- depends on quick and effective speech recognition. LHSP is the first mover and the only real international player with experience in the automated translation of over 15 languages, including Chinese, Japanese, and Korean. However, the determination of whether the industry will standardize around one company's products is a bit more difficult to answer. Since this is a rather new industry, it's not clear exactly what is going to happen when competing speech recognition softwares start bumping up against each other. It may be wise in this situation to look to Europe, which seems to be ahead of us in wireless penetration and which has more inter-language questions. Apparently, last wek 5 contracts were signed for Mobile operators at the CeBit show -- MobiStar, France Telecom, and Deutch Telecom were three mentioned. As Europe becomes one marketplace, companies are going to have to figure out how to deal with a wireless market which speaks several languages. LHSP seems to be perfectly placed to grab this multi-language market -- and once users have trained the LHSP software to deal with his or her own vocal patterns, they are not likely to change. As well, companies who build software around LHSP are not likely to change -- speed counts. With LHSP set to be included in MSFT Office, selling a Linux-compatible version, and embedded in Intel chips, LHSP might be at the very left side of an enormous S curve. It's very early in this game, but their particular game is one which with a fair amount of certainty we know will be necessary to the next stage of computerization, ubiquitous and lucrative. RESOURCES www.lhsl.com is a great place to learn about everything LHSP is into. lhsl.com is a collection of press releases lhsl.com is a collection of newspaper and magazine articles... MSFT and LHSP wugnet.com mobile wireless commerce and LHSP boards.fool.com A LHSP fan speaks boards.fool.com Heard around town... messages.yahoo.com. The year is 2020 & This is Our World!! (very good post, should be made longer and stuffed with even more gorillas) boards.fool.com .......................... Here's a list of awards lhs.com ........................... Throughout the years, L&H has been developing strategic alliances that further demonstrate the company's commitment to providing state-of-the-art speech and language technologies. Here are some companies that further enhance L&H's position as the leader in these emerging fields. Here is a fairly current list of vendors/partners: Aculab America On-Line Apropos Arial Brooktrout Software Cellport Clarion Comverse Dialogic Dow Jones & Company Enuncia Ericsson everypath.com e-Voice G2Speech GTE Internetworking Hitachi Intel Corporation Lucent Technologies McGraw-Hill MessageBlaster.com Meta Innovation Microsoft MSX International Multi Ad Services National Semi Conductor Natural MicroSystems NetObjects Olympus Omnicontact Corporation Onset Technology Parigon Communications Pika Plantronics Registry Magic SAFLINK Corporation Seiko Silver Hammer Speech Machines Talkie.Com Telekol Corporation Tornado Development Virtual Celebrity Virtual Personalities voice robots GmbH Worldblaze.com Yahoo!

To: KevRupert who wrote (2229)	7/6/2000 7:47:08 PM
From: A.L. Reagan	Read Replies (2) \| Respond to of 2467

Text of Seymour article (URL posted by advalorem): Speech-Recognition Vendors Hear the Footsteps By Jim Seymour Special to TheStreet.com 7/6/00 7:01 AM ET As I said in yesterday's column, what no one's talking about (in public, at least) is the real driver in the voice-recognition market right now: Fear of Microsoft (MSFT:Nasdaq - news - boards). (Remember in the months to come that you read it here on RealMoney.com first!) For years, Microsoft has had a group of linguists, programmers and other smart people working on voice-recognition technology, and their work has produced really excellent results. I've worked with the Microsoft technology in the research labs in Redmond, and believe me, it's not only good, but a lot better than anything else I've tried. (No, unfortunately, the 'Softies wouldn't let me take a pre-prerelease copy home, so I still use Dragon's NaturallySpeaking. Sigh.) Release of the Microsoft technology, in the form of a product you and I could buy, has been held back in Redmond for years over three big arguments: 1) Where does speech recognition really belong? In applications, or in the operating system? 2) How much computing power is enough to deliver true, real-time speech recognition? 3) Is this an antitrust tar pit for Microsoft, with serious repercussions in Washington, D.C.? Where? The first argument is as much philosophical as technical. If speech recognition were embedded in an operating system, such as Windows, PC users would have access to it no matter what they were doing at their computers -- in other words, not only for operating-system functions and commands, but within every program running under that operating system. (Or, at least, within every program compliant with the operating system vendor's API, or "application programming interface" spec for that product.) Looking at directories of files, sending files and messages in an email program, dictating text into a word processor, entering tedious columns of numbers in a spreadsheet, searching in a database -- all would be "voice-enabled," for both content and commands. If, on the other hand, speech recognition is viewed much more narrowly, and built only into a specific application or two -- say, Microsoft Word, in the Microsoft Outlook integrated-software bundle -- the PC user gets to use it only in that app (and with some system-level functions, such as file saves and printing, within that application). I come down strongly on the side of putting it in Windows itself, because I can tell you, once you start getting used to dictating to your PC, you're going to want to be able to do that all the time. A solid speech interface has dozens of advantages ... and having them here but not there would be -- is -- exasperating. Putting speech recognition into the operating system also means you have just one "training session," and custom vocabulary, which works across all apps, all commands. So the burden on the user is much less, too. But those who argue for adding speech-recognition capability only to those products where its benefits are most obvious -- in other words, to word processing -- have a good point. They say we're far more likely to actually use the feature if we immediately see its benefits. And if it's not intimidating by virtue of a narrower scope. (I understand. My 7-year-old Lexus has an extremely good voice-recognition system built in for the car's [analog] cell phone. Works really well, in good part thanks to the limited vocabulary it must deal with. But a Lexus person told me a couple of years ago that their research shows very few Lexus buyers ever try that feature, as convenient as it is, and as much as it helps with safety!) PC Power? It is fair to say that good speech recognition, in something vaguely like real time, requires a lot of computing horsepower. I struggled with Dragon's products until I got a 500-megahertz Pentium III-based PC, at which point everything fell into place. Microsoft wanted to wait until a sizable portion of the installed base of PCs -- or at least, many of the PCs used by the kind of customers likely to buy into speech recognition -- had enough power. Good decision. Trustbusters? Finally, Microsoft apparently now believes that it just couldn't get any worse on the antitrust front, so what the heck: Back to designing the best products it can, not worrying about How It Will Play in Washington ... and thus, this fall you'll see Microsoft-brand speech recognition in the newest version of Office. The Microsoft Touch Note that I'm not saying it'll be perfect -- remember the rule: Look for things to settle down in about the third release of any new Microsoft product -- but I expect to see very usable voice recognition in the new Office. Well-informed investors with good memories will recall that Herb Greenberg's nemesis, Lernout & Hauspie (LHSP:Nasdaq - news - boards), licensed its speech-recognition technology to Microsoft more than three years ago, in November 1996. Does this mean what we'll see in Office this fall, four years after that deal, will be just a warmed-over version of L&H's technology? No way. I assumed at the time that Microsoft did that licensing agreement to protect itself from patent-infringement claims, and also because there was some detail in the L&H interface it wanted to pick up. 'Softies won't confirm that, of course. The advent of Microsoft-brand speech recognition would be enough to tip the apple carts of every other speech-product vendor. But add the close integration of speech recognition with the market-leading Microsoft apps in Office and... well, you get the picture. If 90%-plus of the more-or-less-serious users of PC "productivity" apps use Office -- and they do -- who's going to buy an external, inferior, add-in product for speech recognition, when the best comes free in the box...? Whatever the story on Lernout & Hauspie's financials, whatever the quality of the technology they have bought, whatever IBM (IBM:NYSE - news - boards) wants to do with its good-but-not-that-good Via Voice technology -- I think the Microsoft move this fall is going to mark a permanent change in this market. And I wouldn't want to be holding a competitor when that happens. -------------------------------------------------------------------------------- A reader advises me that Lernout & Hauspie does have Korean-language versions of its speech-recognition packages, so that goes a little way toward explaining the puzzling report of the company's sales shooting up in Korea from $97,000 a year ago to $58.9 million in the first quarter of this fiscal year. Still... The depth and breadth of knowledge of TheStreet.com and RealMoney.com readers never cease to amaze me...