After five years at the helm of toymaker Mattel Inc., Bob Eckert still faces an uphill battle turning around sales of its flagship Barbie brand at a time when video games and electronics are attracting children at increasingly younger ages.


For more than a year now, analysts have been expecting a turnaround at Mattel that never materialized. The company's stock has been a lackluster performer, falling 19 percent in the past year to $15.50 a share.


Analysts now concede that Mattel's much-hyped "World of Barbie" marketing strategy hasn't translated into stronger sales this year. Barbie has proven to be a dismal performer for Mattel yet again, dragging down the company's otherwise solid performance from other brands. In the third quarter alone, worldwide sales of Barbie fell 18 percent and in the U.S., sales dropped a substantial 30 percent, making a quick comeback for the largest toymaker all but impossible.


"It doesn't appear likely that we're going to see a turnaround in Barbie in 2006," said Anthony Gikas, a senior research analyst at Piper Jaffray & Co., who said he thought Mattel "made a good attempt" to stabilize Barbie's sales with the introduction of fantasy story lines such as Cinderella and Rapunzal. Girls apparently thought otherwise.


Though Mattel has segued the Barbie brand into CDs and movies, it has been a laggard in creating electronic toys compared with No. 2 toymaker Hasbro.


Analysts admit that toy companies have been slow to recognize that kids want toys with some form of technology embedded in them.


"That's been one of the biggest issues for traditional toy companies," said Gikas. "They've been losing share to video games and other electronic categories over the last 10 years."


Despite the fact that Barbie dolls typically sell to a younger audience, analysts attribute much of the sales declines to the attraction of video games and electronics. Children at younger ages are increasingly opting for adult electronics including TV sets, video games, DVDs, iPods and computers. Video games now account for $6.9 billion of the $20.1 billion domestic toy industry, double its market share a decade ago, according to data research firm NPD Group.


On the one hand, the drop in Barbie sales could be a bright spot for investors in the long run because its importance will diminish for Mattel's overall business. Barbie, still the largest toy brand in the world, now accounts for 23 percent of Mattel's total sales of $5.1 billion last year, down from 35 percent to 40 percent of total sales a decade ago, Gikas said.


On the other hand, analysts say Mattel will be unable to get its stock moving soon without a significant reversal of Barbie's fortunes.


As its star product drifts along, Mattel's other brands including Fisher-Price, American Girls and Dora the Explorer are expected to throw off solid results for the fourth quarter and year, a tough feat for traditional toy retailers.


"It's a little like saying that other than the hole in the side of the boat, the ship is doing fine," said Sean McGowan, managing director and senior research analyst at Harris Nesbitt Corp. "There are problems at Mattel because Barbie is not working, but they're having tremendous success in their other brands."


A spokeswoman for Mattel declined to comment citing the so-called quiet period before the company's upcoming earnings release at the end of January.


Still, few companies have experienced the kind of management turmoil that has rocked the El Segundo-based Mattel since the ouster in 1999 of its former chief executive Jill Barad. Analysts admit that Eckert failed to respond quickly to the updated and urban Bratz dolls, which were created by a former Mattel designer Carter Bryant.


The company also has drawn the ire of investors and corporate governance experts after agreeing last month to pay 17-year Mattel veteran Matthew Bousquette a severance of $6.9 million. Bousquette, the former head of Mattel Brands, had resigned in October after the company reported significant declines in Barbie sales, though analysts say it was unclear what impact Bousquette had on the Barbie brand.


With his ouster, Eckert merged the Mattel and Fisher-Price brands into one unit under former Fisher-Price president Neil Friedman, who created Tickle Me Elmo.


"A change needed to be made," said McGowan, who credits Friedman for the strong results at Fisher-Price, which is expected to have a record year. "This is not a case of a company sitting back and not trying anything new. They still have the most profitable product in the industry, but it's tough to meet expectations."

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