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Non-Tech : MAT - Mattel - toysRthem -- Ignore unavailable to you. Want to Upgrade?

To: Bid daddy who wrote (253)	10/12/1999 9:55:00 AM
From: Spirochete	Respond to of 706

Any opinions on the class action lawsuits stemming from the acquisition of the Learning Company?

To: Bid daddy who wrote (253)	10/12/1999 2:18:00 PM
From: Zoltan!	Read Replies (1) \| Respond to of 706

Why I bought Barbie last week: Dow Jones Newswires -- October 12, 1999 SMARTMONEY.COM: Bombed By Barbie By Mark McLaughlin Smartmoney. NEW YORK (Dow Jones)--Mattel's (MAT) announcement last week that it would miss earnings by a mile hit mutual fund managers like a Hot Wheels crash. But most are hanging on, hoping that the company can recover like its Crashers cars, whose dents disappear at the touch of a button. "To be blindsided by this Learning Company issue is very frustrating," says Erik Gustafson, who manages four Stein Roe funds with top-10 positions in Mattel, the country's largest toy maker. "We had been in close contact with management, and up until a week before [the Oct. 4 announcement], everything was great." Mattel, the creator of Barbie, will lose 30 to 40 cents a share in the third quarter, due to revenue shortfalls at the recently acquired Learning Company. The toy maker blamed the problems on a licensing agreement that fell through and higher-than-expected product returns. Gustafson, manager of Stein Roe Growth Stock (SRFSX), Young Investor (SRYIX), Capital Opportunities (SRFCX) and Growth Investor (SRGIX), is guessing that the Learning Company was overly creative in its bookkeeping, "None of the institutional investors liked [the deal] from the very beginning because of the Learning Company's history of aggressive accounting." Fund managers, among others, are expecting a full explanation of the negative surprise when Mattel reports results Oct. 21, and what they hear from CEO Jill Barad will go a long way in determining whether the stock remains in their funds. Neither Gustafson nor Val Jensen, manager of the Jensen Portfolio (JENSX) fund, which has a 4.7% stake in Mattel, knows nearly enough right now to make an informed trading decision. "Given a satisfactory explanation, I would add to [my position]. We're asking for a complete explanation of what happened, but I doubt that we will get it," says Jensen, adding that a management shakeup would send a positive signal to shareholders. Jensen finds it strange that Mattel management didn't suspect anything was amiss at the Learning Company after its top two executives, Michael Perik and Kevin O'Leary, both sold nearly $6 million in Mattel stock in August at $23.78 a share. As it stands now around just a dollar above its 52-week low of $11.68, the toy maker is being viewed as a bargain. At least one fund, Trent Equity, has taken advantage of the 38% drop in Mattel stock this month by going shopping. Manager Robert May increased his position by 50% in the last week, scooping up shares around $12 apiece to push Mattel into a top 10 holding at 2.7% of assets. May likes the core toy business and says it can generate normalized earnings of $1 a share. That math would give Mattel a current P/E of around 13, compared to an industry average of 40. Assigning the Learning Company a value of zero, Gustafson says Mattel is still worth close to $30 a share, and he is ready to wait three to four quarters to see a turnaround. 'At some point management has to create value for shareholders, not take value away," he says. 'There is going to be money to be made. It's just going to take a while longer." interactive.wsj.com