From the editor’s keyboard: Déjà vu?

By Maria Weiskott -- Playthings, 10/21/2005 8:52:00 AM

NEW YORK—Here we go again (long sigh): buzz about Mattel buying Hasbro—one of the biggest non-stories in the business for years—being reported in local and national news.

The latest iteration sprung to life from the notes of a financial analyst about a week or so ago. In his report, A.G. Edwards Tim Conder stated: “we do feel given the difficulty of generating sustainable organic sales and earnings growth, there is an increasing probability that MAT (for the stock-market-challenged, MAT is Mattel’s trading symbol) could look to use its strong cash flow and balance sheet to purchase another toy company, with Hasbro making the most sense in our opinion, as a means of jump-starting earnings with cost synergies (manufacturing/distribution/overhead)."

Of course, our fingers flew to the telephone dial. “Hey, Tim. What’s this about Mattel buying Hasbro? You know something we don’t?” we asked.

“No,” Conder told us.

“Then what’s with the report?” we plied.

Turns out it’s about speculation and probability. (That’s what analysts do, after all, right?)

But Conder had some valid speculation and probability points based on the recent financial performance of toy companies in general.

“Step back and think about it,” he said, adding, “both companies have to do something at some point. And Eckert is a buyer of brands. Historically, December is the worst month to be a toy stock. Why not do it at year end?” he mused rhetorically. “The timing makes sense,” Conder opined.

Actually, Robert Eckert, Mattel CEO, has done “something.” He’s not only a buyer of brands, he’s a manager who’s obviously in touch with the issues challenging Mattel’s financial performance. Last week, he announced the newly consolidated global brands division and tapped Fisher-Price star Neil Friedman to head it.

Of course, the reorganization might have been made in preparation for a buy. (Whoops! Right…we are not in the business of speculation and probability.)

But, come to think of it…Eckert did address an acquisition question during a session with analysts recently, stating that a buy would only happen if it was the right company at the right time at the right place.

Or did he address the question?

Of course, no one at either Mattel or Hasbro will comment on the “news” report in New York’s bastion of tabloids, The New York Post. No surprise there.

Other industry pundits have been willing to comment, however.

One analyst reportedly said that “Everybody wishes Mattel would buy Hasbro," (especially those of us who have been just dying for a Barbie-GI Joe nuptial), he said, adding, "but that probably won’t happen.”

Again, we get a “probably.” We told you that’s what analysts do.

Meanwhile, one self-annointed toy business guru has even gone so far as to speculate on what companies Mattel should buy. Yikes, we say!

Some have even doomed the acquisition from the get-go, stating antitrust violations. Together, the companies would own some 29 percent of the $20-plus billion toy market.

Obviously, some have not been paying attention to the climate in the nation’s capital during the current Administration.

Last year, video game chain GameStop bought its rival, Electronics Boutique, and now owns about 25 percent of an even smaller market universe, an approximately $10 billion market.

Stay tuned.