Nokia Goes After Pre-Kindergarten Market

Shares of Nokia Corp. (NYSE: NOK) hit a new 52-week low of $2.00 last Thursday and have continued to slide since then. Shares are down -8% just before noon this morning, even after the company announced a new deal with Genius Brands International Inc. (OTC: GNUS), makers of Baby Genius music and educational products and characters.

The deal involves using the Windows Phone software from Microsoft Corp. (NASDAQ: MSFT) to create “exclusive” mobile apps for Nokia’s Lumia line of smartphones. If this all seems a little weird, here’s what the CEO of Genius Brands had to say:

Smartphones can be used in very productive ways to provide entertainment, education and meaningful interaction between parents and their young children. It is truly exciting to make Baby Genius(R) a part of a growth platform that we believe will be a success in partnership with such industry giants as Microsoft and Nokia.

There you have it. Nokia’s stock can’t stop falling and the company’s only response is to chase the pre-kindergarten market. Maybe smartphones are a great way to help parents of small children, but how that will translate into more smartphone sales is pretty easy to predict: it won’t.

Sure, this is probably no big deal for either Nokia or Microsoft, but it looks like an act of desperation. Nokia can’t sell its existing products because they’re not upgradeable to the coming release of Windows Phone 8. The new hardware and mobile OS are still a few months away and it’s hard to see how either will make a big dent in a market currently owned by Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG). Does Nokia really expect Baby Genius apps to fix any of those problems?

Shares of Nokia are trading at $1.86, after posting a new 52-week low this morning of $1.84. The previous 52-week range (from Friday) was $2.00-$7.38.

Paul Ausick