Investors Have Hard Time Taking Toy Firm Seriously.DESPITE a string of popular products and continuing good earnings, Jakks Pacific JAKKS Pacific, Inc. NASDAQ: JAKK is is a multi-brand company that designs and markets a broad range of toys and consumer products and is based in Malibu, California. Its product categories include action figures, art activity kits, stationery, writing instruments, performance Inc. is still trying to get off the mat after being body slammed by Wall Street. The Malibu-based toy maker is one of the country's fastest-growing companies and has become a force in its industry, thanks largely to a profitable partnership with the World Wrestling Federation for action figures and more recently video games See video game console. . But a less-than-monster holiday season is expected by retailers this year, and Jakks' stock has suffered as a result. The company's share price plummeted in late September when it announced that third-quarter earnings would not meet previous expectations, due in part to slower sales of WWF See Windows Workflow Foundation. toys. The stock price fell from around $19 a share to as low as $7. Last week, the stock was trading at around $9. The downturn has come despite third-quarter earnings being quite good. The company reported net income of $9.8 million (48 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share), up 28 percent from $7.6 million (44 cents a share) in the same period a year earlier. Revenue was $91.8 million vs. $60.2 million, representing a 53 percent increase. It was the 17th consecutive quarter of year-on-year earnings growth, an impressive record for a company that only got its start in 1995. But it was not enough to pull the stock price back up. "The third quarter was pretty good on a relative basis, but compared with expectations it was soft," said Bret Jordan, director of consumer product research with Advest Inc. in Boston. "And nobody's expecting too much from the Christmas season." Indeed, Jakks is suffering in part because there aren't any big-ticket toys expected to lure parents through the doors of toy stores A toy store, or toy shop, is a retail business specializing in the services of selling toys. No longer held to the limitations of the brick and mortar outlet, the toy store has successfully created a presence within the e-commerce industry. this year. The closest thing to a sure bet was supposed to be the introduction of Sony Inc.'s PlayStation 2 game/Internet console, but the Japanese manufacturer's well-chronicled problems with building the machines fast enough has thrown cold water on the entire toy industry. "Overall, it's been a pretty dull Christmas season," said Robert Delean, an analyst with Morgan Keegan. "You can't buy a PlayStation 2 because you can't find one. There are no traditional drivers. The other thing is that toy stocks typically peak around Nov. 15, even in good years. (Investors) bought (Jakks) as a Christmas play, but we're getting near the end of the catalyst of the season, so they think, 'What's next?' and sell." This kind of reasoning is hardly music to the ears of Jakks' executives, who insist that their strategy of finding good niches and steadily growing profits will continue to serve them well, even if Wall Street doesn't recognize it. "We're disappointed in our stock price, but as long as we perform, we believe the stock price will follow," said company President Stephen Berman. Berman points out that his company, despite its solid earnings growth, has been affected by the woes of the two largest toy makers in the country, Mattel Inc. and Hasbro Inc. Hasbro's third-quarter profits plummeted, while Mattel, still hampered by its now-divested acquisition of The Learning Co., posted a net loss of $337 million in its third quarter. Analysts agree that with the Big Two on the ropes, it's hard for anyone else to build much investor interest. "Jakks is in better shape than those two, but in a related tough market," Advest's Jordan said. Analysts praise the company's efforts to diversify. While Jakks doesn't break out the numbers itself, Jordan estimates that WWF-related toys once comprised upwards of 60 percent of its business but now hovers at around 35 percent. In its place are items ranging from plush toys to large educational foam puzzle pieces with numbers or letters, along with tie-ins with the Cartoon Network's Power Puff Girls and action figures based on the hit "Charlie's Angels" movie. "Our business isn't based on home runs," Berman said. "Our business is based on singles and doubles, and if we get a triple or a home run, that's great. But we're looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. evergreens," in other words Adv. 1. in other words - otherwise stated; "in other words, we are broke" put differently continuous money-makers. One such evergreen looks to be Jakks' joint venture with another West L.A. company, THQ THQ Toy Headquarters THQ Territorial Headquarters THQ Tehsil Headquarters (Pakistan) THQ The Holy Quran THQ Theater Headquarters Inc., concerning WWF-related video games. While demand for the wrestling action figures has waned, the same cannot be said for the game titles. "Kids are not going to stop playing these video games," analyst Delean said. On another front, Jakks recently acquired pen and school stationery maker Pentech, helping generate back-to-school revenue. Jakks is folding Pentech into another acquisition, lunch box maker flying Colors Noun 1. flying colors - complete success; "they passed inspection with flying colors" flying colours success - an attainment that is successful; "his success in the marathon was unexpected"; "his new play was a great success" , which will produce what could be a real money maker for the company -- arts and crafts arts and crafts, term for that general field of applied design in which hand fabrication is dominant. The term was coined in England in the late 19th cent. as a label for the then-current movement directed toward the revivifying of the decorative arts. products tied into the upcoming film based on the popular Harry Potter character. SUMMARY Business: Toy manufacturer Headquarters: Malibu CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. : Jack Friedman Market Cap:$160.7 million Total Liabilities: $70.3 million Long-Term Debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. : $1.1 million Dividend Yield: N/A [*] P/E Ratio P/E ratio Current stock price divided by trailing annual earnings per share or expected annual earnings per share. Assume XYZ Co. sells for $25.50 per share and has earned $2.55 per share this year; $25.50 = 10 times $2.55. XYZ stock sells for ten times earnings. : 5.56 (*.) Jakks Pacific does not pay dividends. |
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