Novice Investing - Barbies Don't Sell

Date: Monday 01st 2008f December 2008 05:31:54 PM

Barbies Don't Sell - 10/18/2005

By: Novice Investing Staff

Mattel Inc (MAT), the maker of Barbie dolls among other, fell 4.5% on Monday as it reported earnings that missed expectation. Barbie led the decline, with sales plunging 30% in the US market. It faced stiff competition from Bratz dolls made by privately held MGA Entertainment Inc.

Revenue of Mattel's educational toy division, Fischer-Price, grew 6 % from a year ago to $ 727.4 Million. Fischer-Price is the direct competitors of our portfolio pick Leapfrog Enterprises Inc. (LF). Obviously, MAT has a bigger share of the educational toy market. Leapfrog's revenue for all of 2004 was $ 640 M, which is less than Fischer-Price's quarterly revenue.

The market for educational toy are clearly growing. Mattel can still grow its Fischer-Price revenue division despite its Barbie's trouble. This bode well for Leapfrog as it launched its new pentop computer on Monday. Early indication shows strength on pre-sales activity.

Mattel is profitable and has decent balance sheet. It is not going anywhere anytime soon. For now, Mattel needs to turn things around. Oil price has certainly played a part. Mattel planned to raise price in early 2006 to offset the rise in cost. At the time being, however, Mattel shareholder has to be content with weak result.

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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Mattel Inc. (MAT) or any other securities.

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