love the technology

Another of the portfolio chief's favorites, Nuance Communications (NUAN) creates speech-recognition and image-digitalization tools. Its shares came under pressure recently, following the pricing of a 5.6 million-share offering. "Organic growth was a little slower than we'd like this past quarter, but management expects a better second half of the year," Oberweis says.

new tech solutions

leader in voice recognition

Citigroup analyst Brent Thill went through a similar exercise last week and came up with some other M&A possibilities in software -- Informatica (INFA), Tibco (TIBX) and BladeLogic (BLOG). Other potential targets, he says, include Check Point Software Technologies (CHKP), THQ (THQI) and Nuance (NUAN).

Nuance Comm. (NUAN) was upgraded to Buy, Citigroup said. Stock is down 29% from its November highs, and is growing much faster than its peers. $23 price target.

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Voice IP portfolio

The way of the future

Never moves.

Burlington, Mass.-based Nuance has cobbled together a collection of businesses involving transcription, including the venerable Dictaphone and the software product, Dragon Naturally Speaking. A large part of what Nuance paid for some businesses is in the form of "earn outs" from the post-acquisition performance of those businesses. These arrangements allow Nuance to shift acquisition expenses off its income statement and on to its balance sheet, where they will forever remain, observes AssayResearch in a February 12 analysis of Nuance. Such moves would tend to exaggerate the profitability of these acquisitions.