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Fisher-Price's 'secret weapon' helps boost profit at Mattel T.M.X Elmo doll was a huge success

The world's largest toymaker, Mattel Inc., beat analysts' estimates with a fourth-quarter profit rise of 2.6 percent that followed high sales of Barbie dolls, Elmo dolls and a plastic digital camera with a viewfinder for each eye by the East Aurora Fisher-Price division.

"One of our secret weapons is our balanced portfolio," said Tina Zinter-Chahin, senior vice president of research and development in East Aurora. "You're appealing to so many segments of the toy buying public."

Another popular toy, the T.M.X Elmo came from the Fisher-Price office in New York City, which handles toys made from licensed characters. The fuzzy red doll that can fall to the floor laughing, debuted in September after a "top secret" publicity campaign, was so successful it was scarce during the holidays.

"I didn't really know about it. My peer in New York was sworn to secrecy," Zinter-Chahin said. "They pulled it off."

Mattel's income increased to $286.4 million, or 75 cents a share, from $279.2 million, or 69 cents, a year earlier, the El Segundo, Calif.-based company said Monday. Revenue climbed 14 percent to $2.11 billion from $1.84 billion.

Global Barbie sales rose for a second straight quarter. Barbie had fallen for three years because of competition from MGA Entertainment Inc.'s Bratz dolls. Fisher-Price preschool toys including the T.M.X. Elmo stuffed doll and the Kid-Tough Digital Camera helped lift revenue in the fourth quarter, which accounts for more than one third of the annual total.

"Santa stopped in El Segundo before making his rounds for Christmas," said Anthony Lombardi, who helps manage $150 billion at Delaware Investment Management in Philadelphia. "There's been a pretty nice progression on Barbie sales improvement." The firm owned 10.3 million Mattel shares as of Sept. 30.

Shares of Mattel closed up 1 cent Monday, at $23.97. The stock surged 43 percent in 2006, the biggest annual gain in 11 years.

Global Barbie sales rose 3 percent in the fourth quarter. In the U.S., Barbie sales gained for the fourth consecutive quarter. About 20 percent of Mattel's sales and 35 percent of profit comes from Barbie, according to Bob Goldsborough, who helps manage $16 billion in assets at Ariel Capital Management LLC in Chicago. The firm owns 6.8 million Mattel shares.

"It was a perfect quarter," helped by sales of Barbie and toy cars such as Matchbox, Johnson wrote Monday in an e-mail. He has an "outperform" Mattel rating, and doesn't own any.

Chief Executive Officer Bob Eckert in 2005 combined the Mattel and Fisher-Price units and promoted Fisher-Price President Neil Friedman to lead the division. Mattel last year offered fantasy-themed Barbies such as the 12 Dancing Princesses line for younger girls and more realistic Fashion Fever.

Mattel Girls & Boys Brands sales, which includes Barbie, increased 17 percent to $1.24 billion in the fourth quarter. This includes revenue from Radica Games Ltd., which Mattel acquired during the period, of $62.5 million.

Sales of other girls' toys such as Polly Pocket and Pixel Chix climbed 8 percent in the quarter. Wheels sales, which includes Matchbox and Hot Wheels cars, gained 5 percent. Entertainment sales, which includes games and puzzles, jumped 62 percent, helped by Radica games such as handheld poker and blackjack.

Fisher-Price toys, which include T.M.X. Elmo, a digital camera, MP3 music player for preschoolers and Dora the Explorer products from the Nickelodeon children's television show, increased 16 percent to $805.9 million.

Mattel introduced T.M.X. Elmo on Sept. 19 to commemorate the 10th anniversary of the original Tickle Me doll. Sean McGowan, an analyst at Wedbush Morgan Securities, said he never saw T.M.X. Elmo in stores during the holiday season. The fuzzy red Muppet from the "Sesame Street" children's television show falls over after being tickled on his chin, tummy or toe. T.M.X.'s popularity helped sell other versions of Elmo, McGowan said. The Kid-Tough Digital Camera and Dora the Explorer line also sold well, he said.

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