Activist investor Carl Icahn could push Apple to buy Nuance

Carl Icahn (April 2013 Forbes cover)

A lot of watchers hit the panic button after the billionaire investor Carl Icahn announced taking a “large position” in Apple (think north of $1 billion), which more often than not acts as a Wall Street code-word for impending board/CEO changes and hostile takeovers. But these people needn’t worry if an article by the New York Post is anything to go by.

As it turns out, Icahn may be simply looking to leverage his newly acquired influence to force Apple into buying Nuance Communications, whose technology powers Siri’s speech recognition. Icahn just recently has conveniently increased his stake in Nuance and now owns 16.4 percent of the company.

Coincidentally or not, the investor said that both Apple and Nuance in his view are currently undervalued…

Kaja Whotehouse and Mark Decambre, writing for The New York Post, cite hedge-fund consultant Charles Gradante who sees a deal between Nuance and Apple in the pipeline:

It would be a small acquisition for Apple. Nuance is a leader in voice. Voice is the future. Apple needs to expand its future.

Apple could pay $7 billion for Nuance, a pocket change given its $150 billion cash pile.

Of course, this is all pure speculation.

All we know from Icahn’s 13G regulatory filing is that he had acquired a 16.4 percent stake in Nuance several weeks ago. He also acknowledged considering nominating people to the Nuance board of directors so draw your own conclusions.

Perhaps sensing what’s in the cards, Nuance adopted a plan to shield itself against a hostile takeover should an investors, hedge fund or a group of investors acquire one-fifth or more of its stock without board approval.

Remember that preceding all this talk is an Xconomy story that rose the possibility of Apple supplanting Nuance’s tech in Siri with its own in-house solution.

Fueling that speculation further, it’s been discovered that a bunch of former employees of VoiceSignal Technologies, a speech software firmed acquired by Nuance, now appear in leading roles reportedly developing Siri as a full-blown in-house application for Apple.

Icahn’s profit-making strategy typically involves making large investments in undervalued firms to gain a board seat so he could push for stock buybacks.

Apple’s been on a somewhat of an acquisition spree lately. in the past few months, for example, Tim Cook & Co. have snapped up a couple Silicon Valley startups. That being said, a deal with Nuance wouldn’t be unheard-of.

Don’t forget that Apple famously prefers to control enabling technologies and in this regard, owning Nuance would fit Apple’s broader strategy and allow the company to control its future when it comes to voice recognition, digital personal assistants and similar technologies.

While Siri won’t be included in OS X Mavericks this fall (or at least Apple hasn’t announced it yet), I have no doubt in my mind that the voice assistant will be rolled out in one form or another to Macs, $99 Apple TV set-top box and who knows what other future gadgets (iWatch?).