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

To: David who wrote (511)	3/29/2000 8:14:00 AM
From: John Finley	Read Replies (1) \| Respond to of 706

I don't know why I feel compelled to say this but: What else could go wrong? <VBG> JF

To: David who wrote (511)	3/30/2000 1:14:00 AM
From: Tom Caruthers	Read Replies (1) \| Respond to of 706

Hi David, Sounds like you've gotten a little roughed up. If you go back to their last couple of earnings statements, you'll see that their core business is in pretty good shape. It is only the TLC business that has dragged them down. Interestingly, TLC was bought for $4 billion....roughly the whole value of Mattel right now. Buying TLC was an egregious mistake because TLC was already a money losing proposition at the time. Mattel's desire to get properties like Reader Rabbit and the production/ distribution capabilities for new MAT titles seduced them into overpaying for poorly run company. But I feel that Jill Barad had the right idea...the toy industry has been getting beat up by the video gaming industry and her idea to leverage Mattel brands in interactive entertainment was, IMO, brilliant. Look at the popularity of the Barbie series of computer titles. For the first time, the girls market was primed and tapped in a big way. This has never been as successfully done even by software giants like ERTS, Havas or Microsoft. But that was Mattel Interactive...not TLC. Look at the interactive gaming industry and you'll see the broken shells of many a former great games maker....Microprose, Broderbund, GT Interactive, etc. Certainly it is not easy to make money in this business. In fact, only a few companies do this successfully...Havas, Electronic Arts, Activision, THQ, among others. My personal opinion of TLC execs, Perik and Oleary, are that they were mediocre managers. To leave TLC for them to run was Barad's biggest mistake. MAT needs stronger management to make this work. Anyway... On a value level, Mattel core brands are worth much more than the $4 billion that the market prices them at. Tyco Toys alone was $800 milllion in a buyout, and Tyco, although the third largest toymaker, was an admittedly lower class citizen. The Mattel, Barbie and Fisher-Price brand names have incredible prestige value. You notice how Coke, Disney, Mattel and McDonalds all work together. These are the prestige brands as opposed to Pepsi, Burger King, Hasbro...which are good, but don't exude that same quality. New management will cut a lot of the fat and make MAT more profitable. Also, it will be a psychological boost to shareholders. The Disney buyout rumor is a viable possibility. There is a lot of synergy between the two companies. If not them, then someone else. This will put a floor in the stock price. Heavy insider buying... Technically, I see a lot of interest in Mattel...people ready to buy once the chart declares an upward trend. This should carry MAT up very swiftly. I think we have seen the bottom. Buy MAT now when everybody hates it. Downside risk is about 20%, but I see upside of 100-200% from here in the next 1-2 years. MAT looks to me like it is planning a move upwards and I want to be in to ride it up. I can see how averaging down for you would be painful, but you may want to consider it. Given weakness in tech stocks, that money is going to go somewhere and my bet is that it will go into the hated and unloved dirt cheap companies...already we see a return of some of the pharmaceutical companies....HAS is also moving higher. MAT will follow. Sooner than later. Like I said in a previous post...down to $10, perhaps $9 1/2 but up from there. Tom