To: esecurities(tm) who wrote (2903 ) 12/14/1998 1:41:00 PM From: esecurities(tm) Read Replies (3) | Respond to
Consolidation: cont. "Mattel Buys TLC For $3.8 Billion""...The families of Barbie and Reader Rabbit want to move in together. "We are excited about the opportunity to build The Learning Company's international business through our global marketing organization," said Jill E. Barad, CEO and chairman of Mattel. "The combined company has a hidden strategic asset." Toy giant Mattel announced Monday it would buy The Learning Company in a $3.8 billion stock swap. Under the deal, each share of TLC would be traded for $33 of Mattel stock. TLC claims market leadership in three software niches, with a 42 percent share in education, 42 percent in home productivity, and 41 percent in reference programs. Adding TLC's software stable -- including Reader Rabbit, Carmen Sandiego, Riven, Myst, and The Oregon Trail -- will put Mattel's software business to the $1 billion mark, with more than 50 million units sold next year, the companies said. Mattel's Barbie Riding Club and Barbie Nail Designer are listed in the top 10 selling CD-ROMs for Windows, according to Reston, Va., researcher PC Data. TLC has Printmaster Premier 7.0 and Rugrats Movie Activity Challenge also listed as top 10 titles in terms of sales. With the purchase, Mattel becomes the largest publisher of education, personal productivity, and reference software, said Roger Lanctot, research director at PC Data. The three categories account for one-third of consumer software sales. "The software division has become more and more important to Mattel," said Lactot. "All of a sudden, they are a lot bigger with a lot more clout in the retail market." Mattel needs the help, judging by its concurrent announcement Monday. The company said its fourth quarter and year-end results would disappoint, with 1998 sales taking a $350 million hit as toy retailers slashed inventory. And because the industry is moving to just-in-time [<http://img.cmpnet.com/tw/general/dingbats/define.gif>] <http://www.techweb.com/encyclopedia/defineterm.cgi?sstring=just-in-time+compiler> inventory management, $150 million of Mattel goods that normally would have shipped in December will instead go out in the first half of next year, the company said. Given that combined $500 million pounding, Mattel will report 1998 earnings of $1.20 a share, 33 percent lower than the company previously expected. So it's not surprising that Mattel is looking at software as a growth driver, said Michael Wallace, an analyst with Warburg Dillon Read.
