Is it too late to change the name of Mattel's (NYSE:MAT) Hot Wheels line of diecast racing cars? I’m thinking the new name could be something like Tepid Wheels.

The toymaker had a dreadful holiday quarter, betrayed by its own iconic playthings. When Barbie sales take a 21% tumble worldwide -- and Hot Wheels decelerates by 22% -- you know it's going to be a blue Christmas.

Net sales fell by 11% to $1.94 billion. Unfavorable currency movements ate into the company's results, but it was still a global disaster. Domestic sales still fell by 6%.

Despite a bit of overhead slicing and the accretive impact of buying back shares, earnings took a bigger hit per share than the company's top line. Fourth-quarter net income clocked in at $0.49 a share, well off the $0.76 a share that Mattel earned a year ago (before a $0.13-a-share tax benefit). Wall Street was somehow expecting a profit of $0.72 a share.

Mattel is now far enough removed from its embarrassing string of product recalls in 2007 to blame these results on customer apprehension about the Mattel brand. It also wasn't a complete failure during the holidays. The company's American Girl doll line grew by 5% during the period. However, at $254 million in net sales for the period -- or 13% of the revenue-mix pie -- one healthy line can't save Mattel.

We knew this was going to be a crummy holiday season. A Harris Interactive poll released in November showed that 44% of those surveyed who would be buying toys would be spending less this year (with 18% spending far less). 

Another red flag came earlier this year, when traditional retailers stunk up the joint with sluggish holiday comps as video game specialist GameStop (NYSE:GME) delivered double-digit gains. That's great news for video game publishers like Activision Blizzard (NASDAQ:ATVI) with hot titles to move, but it's horrible for traditional toysmiths like Mattel and Hasbro (NYSE:HAS), which likely lost market share in the toy chest. Hasbro reports next week. LeapFrog (NYSE:LF) and JAKKS Pacific (NASDAQ:JAKK) will complete the ugly portrait later this month, though at least JAKKS had at least one hit toy over the holidays with its infrared goggles.

That should have been the third red flag. When online retailers had video games and infrared goggles topping their bestseller lists, you knew Mattel wasn't going to be sitting pretty with yesterday's report.

A blue Christmas is unavoidable when you have so many red flags.

Let's play a game with some more recent headlines:

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Longtime Fool contributor Rick Munarriz wonders who will have the hot toys for the 2009 holiday season. Too soon? He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy that is harmful only if it's not swallowed.