NOT ALL FUN AND GAMES JAKKS SUED OVER WRESTLING TOYS.Byline: Brent Hopkins Staff Writer MALIBU - Hours after reporting third quarter earnings more than doubled, Jakks Pacific Inc. was body-slammed Tuesday with a bribery lawsuit from its longtime partner World Wrestling Entertainment World Wrestling Entertainment, Inc. (WWE) is a publicly traded, privately controlled integrated media (focusing in television, Internet, and live events), and sports entertainment company dealing primarily in the professional wrestling industry, with major revenue sources Inc. and its stock plummeted more than 20 percent. The toy maker reported sales climbed 128 percent to $206.1 million from $90.3 million in the same period a year ago. Excluding one-time charges, earnings increased to $23.8 million, 88 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , from $9.6 million, 39 cents per share, in the same period a year ago. Just a day after its larger rivals Mattel Inc. and Hasbro Inc. announced that third quarter sales for both fell 2 percent and painted a dismal picture for the fourth quarter, Jakks upped its guidance for the full year by $60 million to $500 million and its earnings per share target to the range $1.85 to $1.90 per share. But after that burst of good news, WWE WWE World Wrestling Entertainment, Inc. (formerly World Wrestling Federation) WWE Witwe (German: Widow) WWE William Webb Ellis (inventor of rugby) WWE World Wide Education WWE Well Woman Exam , which has licensed its characters to Jakks since 1995, filed suit in United States District Court United States District Court In the U.S., any of the 94 trial courts of general jurisdiction in the federal judicial system. Each state, as well as the District of Columbia and the Commonwealth of Puerto Rico, has at least one federal district court. in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of alleging Jakks' foreign subsidiaries had illegally paid the wrestling company's former licensing consultant to obtain a new deal. A grand jury is also investigating federal criminal charges against the consultant, Stanley Shenker, and James Bell, WWE's former senior vice president of licensing and merchandising, according to The Associated Press. The suit, which seeks to nullify nul·li·fy tr.v. nul·li·fied, nul·li·fy·ing, nul·li·fies 1. To make null; invalidate. 2. To counteract the force or effectiveness of. a 1998 agreement that extended Jakks' deal to make toys and video games with its partner THQ THQ Toy Headquarters THQ Territorial Headquarters THQ Tehsil Headquarters (Pakistan) THQ The Holy Quran THQ Theater Headquarters Inc. until 2009, names Chairman and Chief Executive Officer Jack Friedman, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. Stephen Berman and Chief Financial Officer Joel Bennett. Friedman and Berman were scheduled to ring in today's Nasdaq trading session in New York. Though Jakks has acquired other businesses and grown into a diverse company that no longer has to rely as heavily on its wrestling license, analyst Dennis McAlpine said the cloud of a legal dispute could hurt the company. ``If this gets carried through and it gets into a nasty court fight, it could hurt their relationship with other licenses,'' he said. ``You'd think, if they really did this to WWE, why would I want to do business with them? If I were a competitor of Jakks, I'd use this against them.'' Jakks executives declined comment on the suit, though the company said in a press release that it was in talks with WWE to restructure the 1998 agreement. In the statement, it denied any wrongdoing wrong·do·er n. One who does wrong, especially morally or ethically. wrong  do .
``If the discussions with WWE and THQ are not satisfactorily concluded, the company anticipates that litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. is likely to be commenced by WWE challenging the validity of the licenses and seeking compensatory and punitive damages Monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses and that is intended to punish the wrongdoer. ,'' the statement read, ``in which event the company intends to vigorously defend itself against claims which it believes are without merit.'' WWE alleges that the company used two Hong Kong-based subsidiaries, Road Champs Ltd. and Jakks Pacific Hong Kong, to pay $100,000 to its former licensing consultant Shenker in 1998 to secure the rights for an 11-year deal to produce more toys and video games. Though THQ is named in the suit, WWE attorney Jerry McDevitt said the company was not alleging that the Calabasas-based video game publisher had been involved in the payment, just that as Jakks' partner it was equally liable. He said WWE would ask for substantial damages and seeks to dissolve the agreement that brought Jakks more than $41 million in its first five years. ``It's not about money for us,'' McDevitt said. ``It's the integrity of the licensing process.'' THQ declined to comment. The news spooked investors, who knocked Jakks' stock down 22 percent in trading Tuesday. Shares shed $5.34 cents to close at $18.81. THQ shares lost 54 cents to close at $18.12. Both saw additional losses in after-hours trading after-hours trading The trading of securities after the exchanges are closed. After-hours trading often refers to trading a listed security in the over-the-counter market after the exchanges have been closed for the day. . Brent Hopkins, (818) 713-3738 brent.hopkins(at)dailynews.com CAPTION(S): 2 photos Photo: (1 -- color) Jakks Pacific Inc. President and Chief Operating Officer Stephen Berman shows off some of the firm's new toys. (2 -- color) A lawsuit from World Wrestling Entertainment Inc. seeks to nullify a 1998 agreement with Jakks to make licensed toys and games until 2009. David Sprague/Staff Photographer |
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