LeapFrog Enterprises (NYSE: LF) is a toy company which competes with Hasbro (NYSE: HAS), Mattel (NYSE: MAT), and JAKKS Pacific (NASDAQ: JAKK). At least, it tries to compete with those other companies.
According to LeapFrog's latest earnings report, the amphibious one hasn't jumped over to the black lily pad just yet. For the fourth quarter, revenue was flat at $181.3 million and the loss was 51 cents per share compared with a loss of 73 cents in the year-ago period. For the full year, revenue decreased 12% to $442.3 million, and the loss was $1.60 per share versus $2.31 in 2006.
Yeah, the losses may be narrowing, and the gross margins may be improving, but the company had negative operational cash flow, and it experienced write-offs for its major Fly Fusion brand. These are bad things, but the company has a few good plot points to its toy story: no debt, a good set of licensed products for its Leapster brand, and something called the Tag reading system, which Zack Miller covered back in January.
This one seems to be a no-brainer to me: LeapFrog just isn't worth one's investment dollars. Sure, it may come back at a later date on the heels of an innovative product launch, but it is a low-priced equity (currently trading in the area of $6 a stub as of this writing) that is losing money in a sector where better ideas exist. Don't leap into this one, folks! (Please tell me I didn't just write that...).
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Reader Comments (Page 1 of 1)
5-13-2008 @ 6:47PM
B Jaynes said...
I would say that there is a good reason for leapfrog being in the red. They don't support the pentop computer . They use stalll tactics and by the time you get to talk to a person your warranty has ran out according to them and then you have a piece of junk that you pruchase and you can't get you money back or a replacement either. I would not recommend this product to anyone due to the way they support the product . I purchased a pen top and I have not been able to get it to install into my desktop from day one. So I have several hundred dollars of sofware and supplies as well as a pen top computer that I am unable to use. So if you ask me they should be in the red for selling a infrearer product that they will not stand behind on.