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J'accuse.

Fisher-Price recalls Laugh & Learn Bunny toys

Some half million "Laugh and Learn" Learning Bunny Toys are being recalled because of a potential choking danger.

The Consumer Product Safety Commission says the pink pom-pom nose (Alcohol? Coke??) on the toys can come off, posing a danger to young children. The recall does not cover Learning Bunny Toys with noses that are flat or embroidered.

The yellow toy bunny is ten inches high. One ear's green, the other orange, and it has musical and counting sound effects.

Fisher-Price is owned by Mattel (MAT), which is a stock that’s been catching my eye lately.

First, some background. Shares of Mattel plunged over 80% in 1998 and 1999. The company was nearly ruined by its former CEO, Jill Barad, who led Mattel through the horrible idea of acquiring The Learning Company. Barad finally resigned (not without a very large severance package), and the new CEO, Robert Eckert, has engineered an impressive turnaround.

Despite this little rabbit-killing-kids issue, it’s actually Barbie that’s responsible for 30% of Mattel’s profits. That probably led the company to get a female CEO in the first place. When Barad was first hired, I’ve rarely seen a CEO get better press. Fortunately, female CEOs are more common now than when she got the top job.

In the past year, the stock has nearly doubled. In November, the company raised its dividend by 30% (50 cents a share to 65 cents a share). For the fourth-quarter, the company earned 75 cents a share, eight cents more than expectations. I am concerned about the high level of debt, though. Mattel’s long-term debt is more than twice last year’s profit. I’d like to see that come down some. But there is value here. Shares of MAT now go for about 16 times 2008’s earnings.

Posted by edelfenbein at February 15, 2007 12:49 PM