In this segment of the Motley Fool Money podcast, host Chris Hill is joined by Million Dollar Portfolio's Jason Moser, Hidden Gems Canada's David Kretzmann, and Total Income's Ron Gross to reflect on last week's business and economic news.
Now, it's not news that the toy industry has been experiencing a rough patch for years, thanks in part to changing tastes and kids spending ever more time on electronic devices. But perhaps just how bad it was at Mattel (MAT 2.94%) came as a bit of a surprise to its now-departing CEO, Margo Georgiadis. She wasn't pushed out -- she jumped. So where does the company go from here?
A full transcript follows the video.
This video was recorded on April 20, 2018.
Chris Hill: On Friday, shares of Mattel hit their lowest point in more than nine years after CEO Margo Georgiadis left the company after just over one year in charge. And let's be clear, Jason, she was not pushed. She jumped. That tells me she got there, looked around and decided, "This thing might be going to zero."
Jason Moser: Yeah, this thing is just the worst. Losing that Disney deal, looking back now, that really was, I think, the beginning of the end for Mattel. It's amazing to think about this. This is a company that probably played a role in all of our childhoods at one point or another, and we're sitting here debating it now 45, 50 years later, it's just amazing to think about. But, I cannot overstate how much trouble this company is in. And honestly, they need a deal. They need a deal and they need it now, because their balance sheet is becoming a big-time liability, and I think that the dynamics of the toy market are not going to change back. That window just continues to get smaller as kids move on to devices and whatnot at younger ages. Mattel is in a big, big bind here.
David Kretzmann: The man that they named to take over as CEO, in the past, he's sold a couple of his companies to Disney. I think him stepping in as CEO, and the situation that Mattel is in, this really raises the likelihood that they'll sell out to Hasbro, Disney, some other company, but, I think they're looking for an acquisition at this point.
Hill: Jason, you mentioned in regard to Wells Fargo, you don't want to be a shareholder of companies that are getting these types of fines. In terms of Mattel, I think maybe a corollary of that is, if you have four CEOs in four years, you might have a problem.
Moser: [laughs] That's a good observation.