The Microcap Speculator

Only a few weeks ago, Zi Corp. (Nasdaq:ZICA) announced that a nameless “strategic partner” would make an investment at substantially above-market prices to thwart the takeover offer from Nuance Communications.

Suddenly, those plans are off the table.  Zi Corp. now says that it will go it alone because recent licensing deals with Nokia, Sony-Ericsson and others have strengthened its cash position. Perhaps, but here are two more likely scenarios: (1) there never was a strategic investor, or at least one interested enough to identify itself; or (2) that Nokia or Sony-Ericsson had toyed with the idea of a strategic partnership but rejected it in lieu of a standard licensing arrangement. Either way, this latest news does not speak well of ZICA management.

Nuance Communications (Nasdaq: NUAN) is again in control.  Its not at all clear if it intends to increase its offer, go hostile, or walk away.  In this market, its a toss up.  That is why I am on the sidelines.

DISCLOSURE: No position.