This post is part of a feature on companies and products that our bloggers think are in need of a makeover. See all 26.

Founded in 1945 in a garage workshop in southern California, Mattel Inc. (NYSE: MAT) is now the world's biggest toy maker, with a market cap of about $5.2 billion. Number two Hasbro Inc. (NYSE: HAS) has a market cap of about $4.2 billion. Mattel produces from everything Barbie and American Girl, to Hot Wheels, Fisher Price toys, Scrabble, and the Magic 8 Ball, as well as tie-ins with Pixar, the Dark Knight, Harry Potter, and Nickelodeon. However, in 2002 Mattel shut its last factory in the United States, and since then most of its products have been produced in China.

That decision came back to bite Mattel when, beginning in the summer of 2007, it was forced to issue a series of recalls of Chinese-made toys that contained lead paint. The company is still reeling from that PR disaster, which for some reason included an apology from Mattel to the Chinese people. The situation prompted BloggingStocks contributor Tom Barlow a year ago to suggest (tongue in cheek) that Mattel merge with Waste Management Inc. (NYSE: WMI) so that toxic toys could go directly where they belonged, bypassing the middleman (i.e., the children). That would be one way to make over the company, I guess.

As Christmas of 2007 approached, it looked like the worst might be behind Mattel. The year-end numbers were respectable, and some investors were beginning to eye Mattel again. But first quarter 2008 results were disappointing, and by mid year, expectations were very low. The share price has continued to slide since the recalls, reaching a multi-year low recently. While there was a copyright infringement lawsuit settled in Mattel's favor (though they didn't get as much out of it as they wanted), and they are no doubt hoping for the Dark Knight and other tie-in merchandise to help boost what otherwise looks like it could be dismal holiday season for retailers, the newest thing Mattel has to contend with is claims by some parents that one of its dolls secretly promotes Islam, which Mattel denies.

Continue reading Makeover needed: Mattel

Makeover needed: Mattel originally appeared on BloggingStocks on Sat, 25 Oct 2008 09:10:00 EST. Please see our terms for use of feeds.