In Focus

Aside From Barbie's Chest,
Mattel's A Great Place To Invest\

All this week the Chicks' Eye View, we'll look at kid-related companies... from Toys R Us to Limited Too. It's a Chicklette Week!

I have a problem with Barbie. I'm one of those people who can't stand Barbie's measurements. Yes, it's true. I'm jealous of those measurements. I've tried the Atkins Diet, Suzanne Somers and Jenny Craig striving for her waist and inquired about plastic surgery for her breasts. I'm no different than most women who gripe about the look simply because we can't have the look. But hey, I'm honest about it.

So when my daughters started noticing Barbie, I panicked. That was exactly what I didn't want. I could see their eyes fixated on the television, thinking Barbie was the most marvelous sight they'd seen. Before I knew it, I was having Barbie birthday parties complete with Barbie napkins, plates, cups, hats, cake, motorbike, regular bike; you name it we had it. So what happened? Reality happened. You know how it goes, the more you say "no" the more the kids want it. Barbie won, I lost. Then the light dawned, and as quickly as a 4-year old can strip Barbie naked I was online seeing if Barbie was worth all that cash.

At first glance, I was pretty disturbed by their numbers. Barbie is huge (I'm not just referring to her boobs) and Mattel is listed on the S & P 500. So why do they seem to be struggling? Here's the deal. A while back Mattel bought an educational software company called the Learning Company for $3.5B. It's been nothing but a major flop. Even though the other areas of Mattel have done quite well, this acquisition has been a big thorn in their side. Recently they opted to sell The Learning Company to a turnaround specialist, The Gores Technology Group. There is no money in the deal for Mattel right now, but they'll certainly feel the relief of the non-stop losses they've been experiencing. Also, they'll receive a portion of any profits the company will make, should this turnaround company be successful.

Problem number two has to do with a shortage of the chips manufactured and required to operate an enormous number of Mattel toys. The third quarter sales did meet analysts expectations, however certain segments were definitely affected, including infant and preschool product sales.

Let me tell you what I think is the most promising aspect of Mattel at this point.  Mattel took a huge step earlier this year by accepting the "resignation" of Jill Barad the former Chmn/CEO. She helped get Barbie back out there, but failed miserably at every other aspect of the business. Mattel was fortunate enough to hire Robert Eckert to replace her. He is the wonderful, wonderful man from Kraft (former Chmn/CEO) who pretty much invented Lunchables (I LOVE Lunchables!). Eckert is highly respected and has a terrific management style and reputation for being extremely approachable. He's a family man who thought the next best thing to Velveeta was Barbie,  and saw this terrific opportunity to bring Mattel to heights it's never known. He joined the Mattel team enthusiastically. Since he's been there (only recently) Merrill Lynch and others are upping their recommendations for buying Mattel. I think we're going to see some great things with this company in the near future.

Let's discuss some of Eckert's plans for Mattel.

1. Selling The Learning Company to a turnaround company. To reiterate, it means they'll no longer be responsible for its losses, however, should they begin to be profitable, they can start to recoup some of the losses already incurred.

2. Cutting costs in manufacturing and production, layoffs (ouch), and limiting royalties associated with licensing contracts.

3. The aforementioned steps should allow the company to recognize about $200 million in pretax savings over a three-year period.

Ultimately, some will not view Mr. Eckert's changes in the finest light. But he wasn't hired to win a popularity contest. He was hired to take a company with huge potential and get them back on the right track. This is exactly the kind of man you want running your business. He may be considered the Grinch to some, but to others, as the head of a major toy company, a certain jolly old elf comes to mind.