Barbie may be the reigning queen of toyland, but this wasn't her best year. In 1996, the Holiday Barbie had sold out by Dec. 10. But in late January this year, the dolls are still weighing down shelves--despite price cuts. And Mattel saw its $99 Talk With Me Barbie, whose embedded microchip lets her talk about a range of topics, not even make the top-sellers list.

Not that her maker, Mattel, is in trouble. Hot Wheels, Winnie the Pooh, and Tyco Sesame Street characters such as Sing & Snore Ernie sold well. In 1998, Mattel's earnings, before merger charges, should rise 36%, on a 6.6% sales increase.

Still, Barbie, which kicks in 40% of Mattel's sales and 55% of profits, shows signs of age. Sales, which have grown 15% a year since 1990, will be up 11% in 1997. And analyst Gary Jacobsen expects growth of only 5% in 1998.

But this may be something that a little surgery can fix. New, anatomically more realistic Barbies will be on the market this spring. And versions with an updated face are already out.

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