2 Top Execs Leave Mattel Education Software Unit
The two top executives at Mattel Inc.’s Learning Co. unit have left their jobs less than a month after the world’s largest toy maker said profit will suffer because of slow sales at the educational software unit.
Mattel declined to elaborate on the departure of Learning Co. Chairman Michael Perik and President Kevin O’Leary. “We’re not commenting beyond saying that they’ve left,” said Mattel spokesman Glenn Bozarth. “We’ve named three strong executives [to succeed them] and we’re searching for a new leader.”
Mattel said that Francesca Luzuriaga, most recently an executive vice president, has been named chief operating officer of Mattel Interactive, the unit that includes Learning Co., Mattel Media and a joint venture with Intel Corp. A search is underway for a replacement for Perik, who in October took over as chairman of Mattel Interactive, Bozarth said.
The departures are the latest in a yearlong string of unsettling events at Mattel that have dragged down Mattel’s share price and sparked grumbling among investors about the company’s progress under Chairwoman and Chief Executive Jill E. Barad.
“It’s a good first step in starting to remedy the problems at Mattel,” said Eric Gustafson, a senior portfolio manager at Stein Roe & Farnham, which earlier this year held 3.77 million Mattel shares. “Clearly, these two fellows sold Mattel a bill of goods and now they’ve been removed from their positions.”
Whether the departures were orchestrated by Barad or the company’s board of directors was uncertain Wednesday. “I have no knowledge of who was pushing [the departures], but I suspect it was Jill Barad,” Gustafson said. “She was not too pleased with being blindsided by Learning Co.”
Also uncertain is whether Learning Co., which Mattel acquired earlier this year for $3.5 billion, faces more changes. “It’s not uncommon to see departures after an acquisition, particularly when short-term objectives aren’t being met,” said Brian L. Eisenbarth, a San Francisco-based industry analyst with Collins & Co. “But you also don’t know if these are the only departures, or if there will be others.”
Barad stunned investors early in October when she said that Mattel’s third-quarter profit would fall by 42% because of an unexpectedly high loss at Learning Co., which Mattel has characterized as a solid foundation for its increasingly important software business.
The shortfall was another in a series of events that has pulled down Mattel’s share price from $39.94 last November. Mattel’s shares gained 13 cents to close at $13.88 on Wednesday in New York Stock Exchange trading.
Mattel’s problems surfaced in 1998 when anticipated holiday orders from retail giant Toys R Us failed to materialize. Mattel early this year eliminated 3,000 jobs worldwide in a companywide restructuring. And in March, former No. 2 executive Bruce Stein departed.
Analysts said that Learning Co. isn’t the toy manufacturer’s only problem. Such important lines as Barbie and Fisher-Price preschool toys are registering solid gains in the domestic market, but the company has acknowledged that overseas sales haven’t been strong across the board.
“I think the issues at Mattel are farther reaching than Learning Co.,” analyst Anthony Gikas of U.S. Bancorp Piper Jaffray told Bloomberg News. He, along with at least seven other analysts, maintains a “buy” rating on Mattel, however. “I’m not sure that Mattel management is taking responsibility for the issues at Mattel.”
In a related announcement, Mattel said that Amy Boylan has been named senior vice president of entertainment and Cindy Hudson has been named senior vice president of productivity/learning. Luzuriaga, Boylan and Hudson will report to Barad until a new leader is named for the Mattel Interactive business.
