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Is Nokia Corporation (NOK) A Life Saver for Zynga Inc. (ZNGA) or Sinking Ship?

With Nokia Corporation (NYSE:NOK) seemingly teetering on the edge of the irrelevance abyss when it comes to mobile phone handsets – and smartphones, more specifically – despite its recent spate of good news and signs of a recovery – it seems interesting that online game maker Zynga Inc. (NASDAQ:ZNGA), which in itself drowning under its own precipitous drop in market share, would come up with a stronger relationship in the hopes of reviving both companies with the impending launch of Windows Phone 8 by Microsoft Corporation (NASDAQ:MSFT) this fall.

Nokia Corporation (ADR) (NYSE:NOK)

Is this a whole-is-better-than-the-sum-of-parts scenario? It might have to be, since Nokia Corporation (NYSE:NOK) has made no bones that it is banking its future recovery and revival on the success of Microsoft’s new Windows Phone operating system. And now with reports out that Nokia is strengthening its relationship with Zynga Inc. (NASDAQ:ZNGA) by offering two of Zynga’s most popular games, Draw Something and Zynga Poker, as no-cost downloads from the Nokia Store this quarter on most Asha model phones – about 100 million of them, according to a press release.

While Nokia Corporation (NYSE:NOK) is preparing its new Lumia phones to operate with Windows 8 Phone this fall, the company has lost overall market share in the mobile-phone market, though it has been doing well in emerging markets and still-developing countries, where consumers are generally very low income. These demographics have served Nokia well, as its cheaper Asha handsets have deep penetration int these markets, and the partnership with Zynga Inc. (NASDAQ:ZYNGA) in providing popular games for free to Asha users may help stem a tide of moving away from Nokia to embrace devices that run the Android operating system by Google Inc. (NASDAQ:GOOG).

Zynga Inc. (NASDAQ:ZNGA) has seen its online game market share plummet, not only with increased competition from such companies as Electronic Arts Inc. (NASDAQ:EA), but also the drop can be traced back to the time when Facebook Inc. (NASDAQ:FB) changed its user page format to “Timeline,” which pushed the game app menu virtually out of sight of users. Most of the success of Zynga Inc. (NASDAQ:ZNGA) came from its partnership with Facebook and the many users having access to games like FarmVille and Bejeweled.

This partnership may be critical to both companies in their attempts at survival. Zynga Inc. (NASDAQ:ZNGA) would be exposed to 100 million more potential gamers, while Nokia Corporation (NYSE:NOK) may see an opportunity to keep users from defecting t other phones, which thus might help Nokia as it eventually transitions its entire lines of phones from its old Symbian OS to Windows 8. There likely will be more than a couple hedge funds who will be watching this closely – especially Nokia Corporation (NYSE:NOK) investors like Jim Simons of Renaissance Technologies and Zynga Inc. (NASDAQ:ZNGA) stakeholders like Steven Cohen of SAC Capital Advisors.

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