LeapFrog (LF) released results and it appears that despite the dismal retail environment out there, the made very good progress over 2006.
“LeapFrog’s sales for the 2007 fourth quarter were approximately equal to last year, and brought the full year sales to $445 million, a decline of 11%, which was in line with our expectations,” said LeapFrog president and chief executive officer Jeffrey G. Katz.
He continued, “Our overall results were affected by the widely publicized economic concerns facing U.S. consumers which caused retailers to order cautiously for many items. This impacted some of our products, of course, including our newly introduced FLY Fusion Pentop Computer. Fly Fusion hardware was nearly sold out in stores by year-end, but retailers ordered fewer units than originally forecasted. In spite of these issues, there were some bright spots over the holiday season, including ClickStart My First Computer, which performed well at retail, our Learn & Groove toy line, and the Leapster gaming system and software, which continued to lead the educational gaming market and sold strongly.”
Chief Financial Officer Bill Chiasson said,”We ended 2007 with a strong balance sheet and improved inventory positions at both Leap Frog and at retailers. Cash and investments totaled approximately $105 million at year-end. Inventories were approximately $53 million, down almost 30% from year ago levels. Inventories of LeapFrog products held at retailers were also down sharply from last year.”
LeapFrog is a minute .5% of the portfolio and is a pick i made cause the kids like the products and I believe in both Katz and the products they have coming out. the fact that they are still on track and in better shape now then they were at this time last year means they are doing a great job.
In no way did I expect the company to turn a profit in 2007 and they did accomplish what I was looking for. The new products are VERY exciting and will be good sellers, cash levels are good, inventories are way down and debt levels are good. In short 2007 was about getting things inline and now that it has been done, time to execute.
That being said, I will hold my shares. I may look to add more but seeing as 3/4 of all sales for the company come in Q4, I will not consider doing anything until late summer at the earliest.
Disclosure (“none” means no position):Long LF
