JAKKS Pacific (NASDAQ: JAKK), which competes with fellow toymakers Hasbro (NYSE: HAS) and Mattel (NYSE: MAT) for the attention span of all the kids out there, reported a very unattractive first quarter. JAKKS said it lost $0.40 per share. According to this source, JAKKS was expected to lose four pennies less.

Whoa! That is very unattractive indeed. I mean, last year at this time, JAKKS Pacific had earned $0.03 per share. I know we're out of the Christmas season and all, but come on, that's a huge difference. If you look at the earnings release, you'll see that it's readily apparent that consumers didn't take too kindly to the company's current product mix. The company said that closeout sales exerted a negative effect. Also, acquisition costs bruised the bottom line a bit.

I was looking at The Hollywood Reporter the other day and came across an item about Hasbro (NYSE: HAS) and an innocent little DVD deal it made that involved some animated product, including old episodes of the cartoon version of Transformers. That reminded me that the Transformers sequel, Transformers: Revenge of the Fallen, is due out at the end of June. That further reminded me that it might be time to take a look at the stock of Mattel's (NYSE: MAT) archrival.

Hasbro had a rough time last Christmas. When I covered the toy maker's earnings in February, I noted that they experienced a significant drop and that they missed analyst expectations. But I also noted something else: the company's shares rallied on the bad earnings release. That gave me pause. Could this be an interesting indication about Hasbro's future? Was the stock a buy?

Hasbro (NYSE: HAS), a toy maker that competes with Mattel (NYSE: MAT) and JAKKS Pacific (NASDAQ: JAKK), reported a steep drop in quarterly earnings on Monday. Net income was $0.62 per share in the fourth quarter, compared to $0.84 per share in the year-ago period. Net sales pulled back by 5%, given the effects of currency translation. According to Stocks in the News, analysts were hoping for something along the lines of $0.74 per share.

Walt Disney Co. (NYSE: DIS) will begin to safety test toys made based on its characters. The move is novel because Disney had until now relied on manufacturers such as Mattel Inc. (NYSE: MAT) to make sure that the products its licenses were safe.

Disney, though, can no longer afford to count on others to defend its brands and reputation.

The move is deeply humiliating, especially to Mattel because it sends the signal that Disney cannot trust the large toy company. The New York Times was told by Andy Mooney, the chairman of Disney's consumer products division that "It sends the message that we are looking over their shoulders." Disney's tests will focus on about 2,000 toy makers and 65,000 products each year.

The Disney testing may turn out to be no more than window dressing to get its shareholders and customers to believe that it can police a huge industry which involves factories all over the world, especially in China, and tens of thousands of retail outlets.

But Disney feels it need to do something to protect its brands, even if it is almost entirely symbolic.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Click here for Mattel toy recall news

Peter Cohan: Is China hurting Disney's (DIS) reputation?
Sarah Gilbert: Mattel's third toy recall: Parents response ho-hum, could Barbie survive?
Zac Bissonnette: Toys 'R' Us joins the recall club -- and how you can capitalize
Brian White: Mattel toy recall: Wal-Mart (WMT) steps up toy inspection efforts
Michael Fowlkes: More children's products join the Chinese recall list
Beth Gaston Moon: Mattel (MAT): Looking into the latest recall
Michael Fowlkes: Chinese executive found hanged following Mattel (MAT) toy recalls
Hilary Kramer: Mattel, Inc. (MAT): Buy or sell after recall?
Tom Taulli: Mattel toy recall: Lessons for business owners