Shares of LeapFrog Fall 16% After Disappointing Outlook

Shares of LeapFrog Enterprises Inc., a maker of electronic educational toys, dropped 16% on Tuesday -- their largest decline ever -- after the Bay Area firm said profit this year would trail some analysts’ estimates.

The shares fell $3.95 to $20.60 in New York Stock Exchange trading.

The stock had risen 89% since the Emeryville, Calif.-based company, backed by Oracle Corp. Chief Executive Larry Ellison and former junk bond king Michael Milken, first sold shares to the public in July.

LeapFrog, the maker of the LeapPad electronic learning book that teaches reading, math and other skills, said it expected full-year profit to rise to 91 cents to $1.02 a share this year from 86 cents last year.

The company had been forecast to earn 94 cents, according to earnings tracker Thomson First Call.

“People were disappointed with the number the company gave,” said Anthony Gikas of U.S. Bancorp Piper Jaffray, who has a “buy” rating on the stock and said he didn’t own it.

Gikas, saying LeapFrog has been conservative with its forecasts, raised his forecast to $1.10 a share from $1.02 after the company’s announcement.

LeapFrog said Monday that fourth-quarter profit more than doubled to $29.4 million from $11.5 million a year earlier.