Dictaphone Corporation announced today that it has signed a definitive agreement with NICE Systems under which NICE will acquire the assets of Dictaphone’s Communication Recording Systems (CRS) business for $38.5 million. The CRS unit is a leading provider of recording systems for 9-1-1 centers and other mission-critical operations in the public safety, financial, and call center markets. The boards of both companies have unanimously approved the transaction, which is expected to close by the end of the second quarter of 2005, subject to certain closing conditions.

Dictaphone’s sale of the CRS unit is part of its strategy to create a company focused principally on the healthcare information technology market. Dictaphone’s Healthcare Solutions Group deploys dictation, transcription and speech recognition software systems in over half of the hospitals in the U.S. Its solutions automate critical elements in the creation and management of health information, helping healthcare organizations improve productivity and the quality of patient care.

“For several years, we have experienced strong growth and developed an industry leading product portfolio based on speech recognition and natural language processing technologies in our healthcare business,” said Rob Schwager, Chairman and Chief Executive Officer, Dictaphone Corporation. “Seeing the tremendous opportunity in the healthcare IT market along with Dictaphone’s excellent position within it, we determined that this was an appropriate time to focus our personnel, investment and other resources mainly on our healthcare business. I am pleased that the CRS business has found a good home with an industry leader such as NICE Systems.”

Dictaphone will retain its Integrated Voice Systems and other business units. The Company intends to use the proceeds of the CRS sale to continue the pursuit of its healthcare information technology growth.

My take: Healthcare is growing quickly and this is a logical move to focus on a fast-growing and less competitive market.