Could Nokia Hit $6.00?

I don’t think so. Relative Strength is Bearish and Shares in Nokia (NYSE:NOK) are stuck around $3.52 this week.  Once the darling of the mobile handset space the Company is believed to be near its breaking point.  As consumers to increase the adoption of smart phones, Nokia has been working on platforms and technologies that many wireless customers seem to have little interest in.

The release of the Company’s flagship product, the Lumia 900 through AT&T was plagued with a glitch that led to the Company offering a $100 credit on their AT&T wireless bills to anyone that purchases the phone until April 21.  The phone is the first result of the Nokia and Microsoft collaboration to produce products using the Windows mobile operating system.  With a on-contract price of $99, it would seem both parties are counting on this to be the mass market success they’ve sorely needed.

Two mobile operating systems now hold the bulk of the smartphone market. The iPhone, with iOS, controls the high end of the market cornered with its cutting edge handsets and a large catalogue of apps. Google’s  Android is the global leader, and has been making solid strides in the upper end of the spectrum as well with solid devices built by Samsung, HTC and LG finding their way into tech concious consumer’s hands.

Before the Microsoft deal, Nokia was struggling in support of a fledgling non-Android smartphone operating system — MeeGo, a Linux-based open-source platform. Nokia was the only major player backing it; now, it’s unsupported. Nokia also had Symbian, which commanded a sliver of the market. Both paths were dead ends, and the company had to decide if it wanted to take billions of dollars from Microsoft to go all in on Windows Phone, or join everybody else in the Android sandlot.

Instead of trying to compete with Samsung, HTC, and Motorola in the fast moving field of Android devices, Nokia moved to work with the one Company that has been seeking the “splash” product to put it’s new operating system on the map, with the Microsoft deal.

Moody’s downgraded Nokia’s debt grade to near-junk status earlier this week. The move came after Nokia’s warning late last week conceding to investors that its business isn’t doing so well. After years of profitability, analysts see Nokia posting a small deficit on an 11% decline in revenue last year. Those same pros see the company bouncing back into the black next year, but Wall Street’s long-term views of Nokia have been too generous in the past.

Nokia and Microsoft need a hit badly.  Every quarter more consumers are joining their competitors “ecosystems” and research has shown that the average wireless consumer tends to use what they are familiar with.  This places continued pressure on the Company to get things right, or risk becoming another large tech relic, much like 3DFx.