Los Angeles Business Journal

Soon-Shiong Forms Toy Venture with Jakks

By Deborah Crowe Tuesday, July 17, 2012

Jakks Pacific Inc. has attracted the attention of L.A. biotech billionaire Dr. Patrick Soon-Shiong, who wants to partner with the Malibu toymaker to create interactive toys.

Jakks said Tuesday that the DreamPlay Toys joint venture with Soon-Shiong’s NantWorks LLC holding company will incorporate NantWorks’ proprietary image recognition technology. NantWorks startups are employing the technology to create mobile applications that assist the blind.

The NantWorks platform is designed to enable connections between physical toys, video, posters, books, games and all other forms of media, the companies said. Children will be able to interact with the new Jakks toys using smart phones or tablet devices.

“The most interesting things happen when experts from different industries come together to rethink their worlds,” said Soon-Shiong in a statement. “This is what we are doing with DreamPlay. Toy experts and technology experts are combining to create a whole new world of possibilities for children, and indeed for consumers generally.”

Jakks, which primarily makes licensed toys based on Hello Kitty, Pokemon, and other popular characters, hopes to unveil the first products at L.A.’s International Toy Fair in October.

“Jakks, through its partnership with Dr. Soon-Shiong and NantWorks, has made the commitment to become a leading toy consumer products technology company that will take recognition technologies and interactivity in products and play to new heights,” Chief Executive Stephen Berman said in a statement.

Also Tuesday, Jakks reported second-quarter net income of $214,000 (1 cent a share) compared with $4.2 million (16 cents) in the same period a year earlier. Excluding financial and legal expenses related to fending off a hostile takeover, net income was 6 cents a share. Analysts were expecting adjusted earnings of 11 cents, according to a FactSet poll of analysts.

Revenue rose 10 percent to a better than expected $145 million, as the company boosted sales of its proprietary Monsuno action figures, and launched a new line of licensed dolls and tricycles.

The company said the results were affected by $1.7 million in costs related to an unsolicited buyout offer from downtown L.A. investment firm Oaktree Capital Management. Oaktree offered $20 per share last fall to take the company private, which Jakks rejected. Talks between the two companies broke down last month.

Jakks shares closed down 10 cents, or less than 1 percent, to $15.91 on the Nasdaq.