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Strategies & Market Trends : Stock Watcher's Thread / Pix of the Week (POW) -- Ignore unavailable to you. Want to Upgrade?

To: StkProfit$ who wrote (17067)	10/20/1999 4:33:00 PM
From: Stock Watcher	Read Replies (2) \| Respond to of 52051

reminds me of the taco-sauce in Sasalito; here's something to GRIN about: Tuesday, October 19, 1999 New lease on life for Grand Toys Diversification: Pokemon's hot streak given at least another year Kathryn Leger Financial Post Canada News Wire The next chapter in the Pokemon phenomenon is now available on Game Boy Color. Pokemon Yellow Version: Special Pikachu Edition features Pokemon characters in enhanced colour. The suggested retail price of the game is $39.95. MONTREAL - Stephen Altro, chief executive of Grand Toys International, Inc., boasts that he feels just like a Tom Cruise double these days. The 61-year-old founder of Canada's largest independent toy distributor isn't referring to the results of his workout regime. Energy levels at the company he founded 38 years ago are high because Grand Toys holds an exclusive Canadian manufacturing licence from Japan's Nintendo for Pokemon products, one of the hottest toys in the world right now. Mr. Altro is also fired up from executing a major shift in strategic direction for Grand Toys with plans for greater geographic, product and customer diversification. He finds himself in the comfortable position of virtually no corporate debt, a $12-million acquisition fund and promising earnings potential from the Pokemon connection -- not to mention a related blaze of market recognition. Grand Toy shares (GRIN/NASDAQ) jumped to a 52-week high of $30 1/4 (all figures in U.S. dollars) in August amid a market craze over companies with deals to distribute Pokemon products. They include everything from trading cards, lollipops and action figures to videos, an animated television series and a movie. Since its ascent into the stratosphere, Grand Toy shares have settled in the $13 range after several media reports blaming Internet chat hype and excessive short selling for the fast rise of stocks linked to Pokemon. At their close yesterday of $13 7/8, the shares are still way above the 52-week low of $1 7/8. Industry analysts expect the Pokemon phenomenon will get hotter and stay hot at least for another year. That would mean a steady cash flow for Grand Toys in the year 2000. But they also point out that the toy business has always been volatile and that growth in the industry has been slowing. "It's definitely a mature industry that has levelled off a lot," says Maureen Carini, toy analyst for Standard & Poor's in New York. Demand for traditional toys has shown very little growth, she says, because of the rise of digital entertainment. "Kids are getting older, younger," turning to electronic diversions by at least age seven rather than 10, as in the past. Grand Toys has already taken action to ensure that its business mix is diversified. What started as a company specializing in posters and pin-ups with some Disney licences had $33-million in sales last year from such product categories as electronics (40.5% of sales), action figures and accessories (23.2%), dolls and accessories (13.4%) and the newly introduced licensed fashion (9.9%). Grand Toys is also moving toward owning -- and manufacturing -- more of the children's products it distributes. The acquisition earlier this year of ARK Foundations LLC, a manufacturer of foam puzzles using proprietary manufacturing technology, was the first step in this direction. "We're moving ahead on many things," says Mr. Altro, "not just hit-and-run licences," but products that will offset the industry's seasonality and volatility and "will sell years from now." Saying "if we want to be a large company we have to sell to the world," he notes that one of three acquisition targets Grand Toys is talking with sells to 50 countries from its U.S. base. Mattel Inc. and Hasbro Inc. control less than 50% of industry sales, meaning there are many smaller companies doing business.