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Mattel profit rises; Elmo and Barbie rule

By Justin Grant
Reuters
Monday, January 29, 2007; 2:53 PM

NEW YORK (Reuters) - Mattel Inc. (MAT.N), the largest U.S. toymaker, posted a higher-than-expected fourth-quarter profit on Monday on strong holiday sales of its T.M.X. Elmo and Barbie lines.

Mattel, also known for its American Girl dolls, said net income rose to $286.4 million, or 75 cents a share, from $279.2 million, or 69 cents, a year earlier.

Analysts polled by Reuters expected the El Segundo, California-based company to earn 66 cents a share.

Sales increased to $2.11 billion from $1.84 billion, topping analysts' average estimate of $1.97 billion.

"They showed strength across the board. Every division looks strong," said Gerrick Johnson, an analyst with BMO Capital Markets. "There's particular strength with the car property, Dora the Explorer and Elmo," said Johnson, who has an "outperform" rating on Mattel's stock.

Gross sales of its Barbie line rose 3 percent both domestically and worldwide during the quarter.

For the past few years, Barbie has faced a stiff challenge from privately held MGA Entertainment's Bratz dolls, but Barbie sales should continue to rise, and Bratz sales appear to have peaked, Johnson said.

Barbie, which has been on the market since 1959, has been revitalized in part by Mattel's introduction of new products, such as its Dancing Princesses line.

But the modest increase in sales represents a mere stabilization, not a full turnaround, of the iconic doll, Citigroup analyst Elizabeth Osur said in a research note.

"Clearly, all eyes will be on the 2007 Barbie line at Toy Fair 2007 to gauge for the potential success," she wrote.

"Without having seen this line, we find it difficult to forecast Barbie sales in 2007," wrote Osur, who has a "hold" rating on Mattel stock.

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