Toy Maker Mattel Begins Layoffs in Troubled Children’s Software Unit

Struggling toy giant Mattel Inc. began a restructuring of its interactive unit Wednesday by quietly laying off the first of hundreds of employees who will lose their jobs in a shake-up of its troubled computer and media division.

By the end of the first quarter, Mattel said it expects to lay off about a third of the division’s staff, centered in the Bay Area and made up mostly of the company’s money-losing children’s software unit Learning Co.

That translates into firing more than 500 employees and closing more than 15 of Mattel Interactive’s 20 facilities, as part of what the company said last month would be a $75-million to $100-million charge in the first quarter.

Mattel, based in El Segundo, said in February that its once-heralded software acquisition lost $183 million in its fourth quarter on top of a $100-million loss during its third quarter.

Those losses also cost the company’s chief executive, Jill Barad, her job last month after Mattel released its poor financial results for the holiday selling season.

Barad had directed the 1998 purchase of Learning Co. for $3.5 billion, then one of the nation’s largest software makers and creator of such popular titles as “Carmen San Diego.” At the time, many analysts then warned that Mattel had overpaid.