Hasbro Expects Loss, Plans to Sell 2 Units
Hasbro Inc. said Wednesday that it might have a loss this year because of sluggish sales of trading-card games and toys, and said it plans to increase the number of jobs it will cut by about 50%.
The world’s second-largest toy maker also agreed to sell its money-losing Hasbro Interactive and Games.com units to French game publisher Infogrames Entertainment for $100 million in cash and stock.
Pawtucket, R.I.-based Hasbro also cut its quarterly dividend to 3 cents a share from 6 cents to reduce costs. The change is expected to save $21 million a year.
The company said that, at best, it might break even this year or have a loss of 10 cents to 20 cents a share. Sales of Pokemon trading-card games have declined and inventory at its Wizards of the Coast division is higher than forecast, it said.
The maker of Monopoly games, Tonka trucks and Play-Doh increased the number of jobs it will eliminate to 750, from the 500 to 550 it estimated in October, to cut costs.
Analysts had expected Hasbro to earn 43 cents, according to the average estimate of those surveyed by First Call/Thomson Financial. Last year, Hasbro earned $1.42 a share.
Shares in the toy maker fell 19 cents to close at $11.56 on the New York Stock Exchange. The news was released after the close of regular U.S. markets.
Standard & Poor’s cut Hasbro’s corporate credit rating to “BBB-” and Moody’s Investors Service cut Hasbro’s long-term rating to “Baa3,” the lowest investment-grade rating at the two agencies. The companies said they might further reduce Hasbro’s rating to junk-bond status.
Hasbro said it was “too aggressive” in its forecast for Pokemon trading-card game sales, which are falling. The company will take a $75-million provision for “inventory obsolescence” because of high inventory levels at its Wizards of the Coast division.
The company also will write down about $35 million for the sale of its Hasbro Interactive and Games.com businesses. Hasbro is selling these units to focus on its traditional toy brands.
The sale of the interactive and Internet businesses follows a similar move by larger rival Mattel Inc. El Segundo-based Mattel sold its Learning Co. software business in September for virtually nothing.
Hasbro started its interactive unit in 1995 to make games for the Internet, personal computers and video-game consoles such as Nintendo Co.’s Nintendo64 and Sony Corp.’s PlayStation. The interactive and online businesses aimed to help Hasbro meet growing demand for electronic games by kids and young teenagers who were shunning traditional dolls and toys.
While titles such as “Roller Coaster Tycoon” have made Hasbro the No. 3 U.S. computer-game maker, sales of its games for consoles have lagged expectations.
