The investment represented about 18.7 per cent of Speech Machines' issued shares.

The two companies would collaborate on enhancing large vocabulary speech recognition and integrate L&H's Popeye email-reading technology with Cyber Transcriber, a speech recognition-based messaging system and dictation service used over the telephone and Internet.

With the Popeye technology, Cyber Transcriber would allow users to read, access, respond to and send E-mail via a phone call. They would dictate a message via a phone or record an audio file on the Internet or select hand-held devices. The message is then automatically transcribed and E-mailed.

The technology could be used in medical transcription, the largest category of transcription, with doctors dictating into existing systems. It would create ahighly accurate first draft, enhancing the productivity of transcription companies.

Gaston Bastiaens, CEO of Lernout & Hauspie, said in the statement, ``This partnership should allow us to penetrate even deeper into the multi-billion dollar medical transcription market and lay the groundwork for expansion into other markets, such as telecommunications and general business.''