Toymaker On A Teeter Totter

To get an idea of how skilled Hasbro is, consider the syndrome afflicting South San Francisco's Lewis Galoob Toys Inc. Baby Talk dolls pushed it to $111 million in sales and a stock high of 18 3/4 in 1986, but sales plunged to $67 million in 1987. Next, Micro Machines miniature vehicles propelled sales to $228 million in 1989 before crashing last year, for a $32 million loss on sales of $127 million. Recent stock price: 5 1/4.

In June, the company's board accepted the resignation of CEO David Galoob, 42, son of the founders. Analysts speculate about a palace coup, citing David Galoob's reputation as a free spender on product development and marketing. He brushes aside such talk, saying the parting was "amicable." But his departure takes another toy company out of a family's hands and entrusts it to a professional chief--in this case, Mark D. Goldman, a 40-year-old MBA from the University of Chicago who until June was No. 2 man at Galoob.

ROLE MODEL. Goldman takes over at an uncertain moment. In January, the board hired Bear, Stearns & Co. to find a buyer or a partner. So far, none has turned up, and none probably will until the business stabilizes, says John G. Taylor, an analyst at L. H. Alton & Co.

Goldman's model for stability is Hasbro: "It was created methodically over a decade," he says. "With discipline, you can grow a smaller, volatile company into a larger, stable one." So Goldman wants some perennial lines of his own to produce $30 million to $60 million in annual revenues each. He is reorganizing Micro Machines, for example, around lines kids can collect, such as antique cars. And Baby Face dolls, with different facial expressions, will probably get some relatives.

The stock recently rose after a judge ruled the company could sell Game Genie, a device to enhance a player's moves in Nintendo games. The market for 8-bit Nintendo machines is dwindling, but Goldman thinks Genie is still good for well over $10 million in sales this year. Hardly a blockbuster--but then Goldman would be happy with a few profitable plodders, not just successes that fall as fast as they rise.

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