An intriguing news report from the Galoob Toys thread (q.v.):
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Date: Fri, 21 Feb 1997 21:21:20 -0800 (PST)
News Alert from San Fransisco Business Times via Quote.com
Topic: Galoob Toys Inc
Quote.com News Item #2129210
Headline: Toy-maker Galoob A Casualty of Star Wars Film Tycoon Lucas Set To Pull Plug on Lucrative Licensing Deal
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The empire has struck back at Galoob Toys Inc., and the blow has
already been felt on Wall Street.
Shares in the South San Francisco toy maker dropped near a 52-week
low recently when Lucasfilm, producer of the Star Wars movie series,
announced that it is considering new partners to produce toys based
on the suddenly sizzling science-fiction trilogy. Galoob and Hasbro
currently split the market for Star Wars toys under exclusive
contracts with Lucasfilm, with Galoob holding the rights to
miniature-action figures of Luke Skywalker, Han Solo, Princess Leia,
Darth Vader and the rest of the gang.
The Star Wars toy market has generated more than $2 billion in
sales over the last two decades. With the movies back in re-release,
sales are expected to hit $500 million this year alone, and remain
strong into 1998.
To take advantage of that windfall, Lucasfilm has asked other
companies, including Mattel Inc. and Playmates Toys, to bid for
contracts to produce the toys beginning next year. Lucasfilm
reportedly wants a large upfront payment for rights to the series,
as well as new terms for royalties.
Galoob's contract runs out at the end of this year. Lucasfilm's
talks with toy-industry giants suggest to toy industry observers
that it is looking to replace rather than supplement its existing
partners. Even if Galoob retains a share of the Star Wars business,
it is certain to be on less favorable terms than under its current
contract.
Galoob does not break out sales for its Star Wars line. But it is
the company's most successful line, and sales have skyrocketed since
Star Wars was re-released, said CFO Roger Kowalsky. "The Star Wars
line is doing exceptionally well, and we have expanded the line
significantly," he said.
"I can't say whether we are on the same footing as anybody else
for the new contracts," Kowalsky added. "Lucasfilm is in charge of
this, and we are all doing the best we can."
Since falling $4 a share to $13.13 immediately after the Lucasfilm
announcement, Galoob's stock recovered slightly to close at $14.50 a
share on Feb. 19. But that still represents more than a 50 percent
slump since late December, when it shot as high as $33 a share after
Galoob raised approximately $60 million in a stock offering at
$28.50 a share.
Finis |
