Costs, Weak Sales Hurt Jakks’ QuarterTuesday, October 23, 2012
Jakks-Pacific Inc. on Tuesday reported a 13 percent drop in third-quarter profit as the toymaker was hurt by a decline in sales and higher expenses from fighting off a take-over attempt.
The Malibu company reported net income of $30.4 million ($1.10 a share), compared with $34.8 million ($1.10) in the same period a year earlier, which included a higher
number of outstanding shares. Excluding legal expenses and other one-time items, adjusted net income was $1.13 a share, lower than analysts’ expectations of $1.16.
Revenue fell more than 5 percent to less than $315 million, lower than the Wall Street consensus of $321 million.
Jakks, which mostly makes licensed toys based on properties such as Hello Kitty, Pokemon and Cabbage Patch Kids, said it spent about $1 million in legal costs related to a takeover attempt by downtown Los Angeles private equity firm Oaktree Capital.
Jakks said it still expects full-year net sales to range between $690 million and $700 million, with adjusted earnings in the range of 68 cents to 74 cents a share. The Wall Street consensus is for revenue of more than $684 million and profit of 67 cents a share.
Chief Executive Stephen Berman said the company has been receiving positive feedback from retailers, licensors and other partners at industry events about the company's new DreamPlay "smart toy" joint venture with billionaire Dr. Patrick Soon-Shiong, who owns a company that provides some of the key technology.
"We believe that our DreamPlay technology positions Jakks to be a leader in interactivity and augmented reality play for children, and will put Jakks in the forefront of new trends with smart phones and other devices being used more and more each day by children of all ages," Berman said in a statement.
Shares closed down 23 cents, or less than 2 percent, to $12.98 on the Nasdaq.