Mattel board to meet Thurs. to decide CEO's fate
By Sarah Tippit
LOS ANGELES, Feb. 3 (Reuters) - The board of embattled toy giant Mattel Inc
(NYSE:MAT - news). will hold an emergency meeting Thursday in New York to discuss the fate of
Chief Executive Jill Barad, who may be pressured to step down after a series of disappointing quarters,
a source inside the company told Reuters late Wednesday.
Mattel, the maker of Barbie and Hot Wheels, is expected to report fourth quarter earnings next Tuesday
most likely below Wall Street's expectations, the source said. A shortfall, which would mark the
company's third disappointing quarter in a row, could spell the end of Barad's two-year rule over the
company.
The Mattel source said a likely Barad successor -- whose name has been widely circulated within Mattel
over the last few days -- is 41-year-old Matt Bousquette, a rising star who is in charge of the boys' toy
and entertainment division. Bousquette, who works at the company's El Segundo, California
headquarters, has been with Mattel about eight years and rose quickly through the ranks of senior
management, the source said.
Meanwhile on Thursday the Wall Street Journal reported that Mattel had sought help from a search firm
to fill its chief operating officer position, vacated by Bruce Stein who left last year.
The Journal quoted a source familiar with the search as saying that Mattel had made it clear the spot
could become a chief executive officer assignment.
One of the country's most prominent woman executives, who joined Mattel in 1981 as a $38,000-a-year
product manager and eventually rose to CEO in 1997, Barad has been under fire for months ever since
Mattel's $3.5 billion acquisition of The Learning Co., last year went sour.
The unit, maker of educational and entertainment software programs, CD-ROMs and interactive games
such as ``Sesame Street,' ``Where in the World is Carmen Sandiego?' and ``Myst' had been touted as a
way to help stem sales declines in Barbie dolls and other traditional toys.
Rather than stellar 30 percent sales growth and 20 percent margins that were expected, the unit produced
a disastrous and unexpected loss of $105 million in the third quarter as software was returned by
distributors and the unit lost a major licensing agreement.
Last October Barad, amid calls for her ouster by angry shareholders and investors, blamed the losses on
discrepancies not uncovered during due diligence. She assured the board that problems would be
controlled and losses stemmed.
Last month, Mattel's chief financial officer, Harry Pearce, said he would retire in March, becoming the
third senior executive to leave Mattel since its problems became apparent in October. Analysts said that
senior management positions were unlikely to be filled until the fate of Barad was decided.
Last Tuesday, senior executives flew to New York for the start of a series of emergency meetings, the
Mattel source said. Thursday's meeting is expected to include discussion of the fate of Barad's position
at the helm of the company, the source said.
``It wouldn't surprise me if they said they needed some fresh leadership,' said Collins & Co. analyst
Bruce Raabe. He said the timing would be right to make a management change announcement in
conjunction with fourth quarter earnings reports. ``Investors aren't happy,' he said. ``Certainly they
haven't been able to convince financial markets they are doing better. The Learning Co. purchase is
being questioned altogether. People are saying the price paid was excessive. I don't know how you fix
that company.'
It was unclear whether a management change would occur immediately but after plummeting from a
high of $46 to just above $10 the stock on Wednesday rose 13 percent as rumors circulated on Wall
Street and the Internet as to Barad's fate. At the close of trading Wednesday the stock was up $1-7/16 at
$11-3/4.
A Mattel spokesman declined to comment Wednesday afternoon.
Mattel is expected to present a new line of toys at the annual toy fair in New York City Feb. 12. It was
unclear whether Barad would be addressing investors at the fair. |
