Where the Toys Aren't

It's been a bad week to play games.

Shares of JAKKS Pacific (NASDAQ: JAKK  ) shed roughly a third of their value today after the company posted disappointing quarterly results and nixed its quarterly dividend.

Net sales fell 27% to $106.2 million, and things get worse on the way down to the bottom line as it triggered $14.1 million in license minimum guarantee shortfalls and another $12.2 million in inventory impairment items.

It gets worse. As a result of deteriorating business conditions, JAKKS is suspending its dividend and exploring restructuring alternatives.

The scene wasn't as problematic at Mattel (NASDAQ: MAT  ) yesterday, but the world's largest toymaker still took a 7% hit on its heaviest trading volume in a year after serving up a crummy quarter itself.

Mattel's results were merely flat -- and it simply earned less than analysts were targeting instead of shocking the pros with a deficit -- but these gloomy reports can't be comforting for Hasbro (NASDAQ: HAS  ) investors.

Wall Street's holding out for flattish results out of Hasbro with revenue slipping 2% and earnings per share clocking in 3% higher, but if Mattel isn't selling Barbies and JAKKS Pacific isn't moving its licensed playthings, it wouldn't be a shock to see Hasbro call in sick come Monday.

LeapFrog (NYSE: LF  ) reports two weeks from today. There won't be the same kind of correlation there that Hasbro has with Mattel and JAKKS Pacific. It makes electronic learning toys, and weakness for the makers of traditional games doesn't necessarily mean that parents aren't buying more LeapFrog game cartridges or learning tablets.

However, if the bad news at Mattel and JAKKS Pacific is that parents aren't splurging as much on their children despite the seemingly improving economy, it may be hard to remain confidence in any of the industry's players.

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