Why Shares of LeapFrog Enterprises Inc. Popped

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What: Shares of LeapFrog Enterprises  (NYSE: LF  ) were moving up to the next level today, gaining as much as 12% after reporting earnings last night.

So what: The educational-toy maker saw sales tumble during the quarter, but results were still better than expected. In the seasonally weak first quarter, LeapFrog posted a per-share loss of $0.16, ahead of estimates of a $0.21 loss, as revenue plummeted 31% to $56.9 million, but still managed to beat expectations of $49 million. CEO John Barbour noted that challenges including the shift in the Easter holiday, high levels of retail carryover inventory after a weak holiday season, and a "continued challenging retail environment in our major markets."

Now what: With a forgettable first-quarter now out of the way, LeapFrog promised "major new product launches" in the second half of the year, which will include the recently announced LeapBand, the first fitness tracker for kids, available this summer. In the fall, the company also expects to release its new LeapTV platform, a video-game console designed to get children's "minds and bodies moving." Despite the new product innovations, LeapFrog maintained its full-year guidance with revenue of $554 million to $580 million and EPS of $0.18 to $0.25, both in line with estimates, and said current retail trends are tracking toward the low end of guidance.

While 2014 still looks like a difficult year for LeapFrog, the new product releases give some hope that the company can return to meaningful growth and profitability. Shares have been beaten down over the past year, so there is plenty of room for recovery.

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