BUSINESSWEEK ONLINE : SEPTEMBER 15, 1997 ISSUE
INSIDE WALL STREET

Speech-To-Text Software Sings

The words in this magazine have been created by writers tapping on keyboards. Lernout & Hauspie Speech Products (LHSPF) has developed speech-to-text software that, in theory at least, makes keystrokes unnecessary. The company is based in Belgium, but its shares trade on the over-the-counter market, recently at 26 3/4.

''Most speech-to-text systems require you to pause between words, and those that do continuous speech just don't do it very well,'' says Andrew Abrams of CWH Associates, a hedge-fund manager. ''This software is a major improvement.'' The software also converts text to speech, he adds, ''and you even get intonation in the voice.''

The Belgians' product is impressive enough for Microsoft to license. Abrams thinks Microsoft will put the software into its next operating system or develop it as a stand-alone product. Either way, he expects Microsoft will announce plans at COMDEX in November. ''If Microsoft uses Lernout & Hauspie technology, everyone creating software for Microsoft will have to license it, too,'' says Abrams. The company also makes software for translation and digitized speech.

Abrams projects Lernout & Hauspie to earn 90 cents a share in 1997; $1.50 in 1998. Selling at 18 times earnings, it's a bargain for a company whose profits he expects will grow at a 40% rate.

BY JEFFREY M. LADERMAN

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