Wednesday, December 8, 1999
Hasbro Reorganizes to Home In on High-Tech
From Associated Press
PROVIDENCE, R.I.--Hasbro Inc. on Tuesday announced a broad reorganization
designed to allow the world's No. 2 toy maker to expand its offerings of
high-tech toys and its popular core brands, including Furby and Pokemon.
Hasbro will cut 2,200 jobs, or 19% of its work force, close two plants
in Mexico and England and shift much of its manufacturing to Asia. It will
also discontinue some of its underperforming toys.
Pawtucket, R.I.-based Hasbro will take a pre-tax charge of $141 million
in the fourth quarter to cover restructuring costs.
Like many toy companies in recent years, Hasbro has been stepping up
its high-tech offerings to make playtime more entertaining and challenging
for today's computer-literate kids.
Hasbro, which trails No. 1 toy maker Mattel by a narrow margin, has
seen tremendous growth in its interactive division, which produces computer
and video games, as well as play-sets that connect with PCs.
Hasbro said it will focus on building its interactive offerings and
extending its best-selling brands, such as "Star Wars," Pokemon, Furby,
Tonka, and Easy Bake Oven.
"They're moving into a whole kids entertainment company . . . it's the
way the toy industry has to go," said Chris Byrne, editor of the New
York-based Toy Report and an industry consultant.
But Cliff Annicelli, managing editor of Playthings Magazine in New
York, said Hasbro's reorganization moves the company into a "high profile,
higher risk area" of toy making.
He said the areas Hasbro plans to streamline--preschool, creative play
and girls' toys--"are pretty stable categories I thought were part of the
base the company was built on."
Investors on Wall Street wavered on the Hasbro announcement. The stock
was down 19 cents to $21.25 on the New York Stock Exchange, but fell as much
$1.50 earlier in the day.
Under the reorganization, Hasbro will close plants in Tijuana and in
Ashford, England. Of the 2,200 jobs that will be cut, about 1,850 will be
manufacturing positions.
About 300 jobs will be cut in the United States.
Hasbro also plans to discontinue some toys, including Formula One
racing toys, some of its large dolls and a flight simulator.
Hasbro expects that its fourth-quarter and year-end earnings will
remain in line with Wall Street analysts' expectations. The company said it
expects the restructuring to generate savings of $16 million next year and
$23 million a year thereafter.
The company also announced a $500-million stock repurchase program.