Tinkering Around; Mattel & Hasbro Taken Out by the Tot Tablet

It has certainly been a bumpy quarter for toy companies across the nation. As Hasbro (NASDAQ: HAS) worked furiously to sell out its excess inventory, Mattel (NASDAQ: MAT) was in the midst of completing a costly acquisition. As 1Q12 comes to a close, these rivalries are striving to leap ahead of the competition with Mattel in the lead.Throughout the holiday season, Hasbro was struggling to mark its territory amongst the leading toy retailers. Even with Mattel facing added costs from its HIT Entertainment acquisition, the company still managed to pull ahead of Hasbro in sales.“During the holiday season, we observed significantly fewer sell-outs of Hasbro toys relative to Mattel, and we believe MAT's momentum has carried into 2012. Our recent checks at retail uncovered greater promotions for HAS products than for MAT,” Sterne Agee said in a research report today.As a result of the difficulties Hasbro was up against, including the “boys” business facing problematic comparisons and extreme promotions, the company's Q1 results are expected to fall short of consensus. In contrast, Mattel's Q1 results may see a slight upside due to warm weather, an early Easter and floundering competition.“We expect Mattel will take integration and other acquisition related costs in Q1 in connection with the recent HIT Entertainment acquisition completed in February. These costs were expected to result in HIT being neutral to the bottom line in 2012 but following Q1, some earnings accretion may follow,” Sterne Agee said this morning. As G.I. Joe continues to get pummeled by Batman and, unfortunately for him, Cinderella, LeapFrog Enterprises (NYSE: LF) has seen nothing but strong results and Buy ratings. This begs the question, are young children beginning to ditch their Barbie's and Potato Heads to be more technologically advanced like their parents? It would definitely appear that way.Last month, Ascendiant commented on the new-age toy distributor's success, along with what the future holds. LeapFrog is set to present fresh tablet designs to the media throughout April, May and June. If all goes as planned, these improved products will be available for purchase by holiday 2012. In the meantime, sales are expected to remain robust.“After a strong holidays (where the product was sold out at most stores), demand remains high while supply is still low. We estimate that 800,000 units were sold in 2011, and have modeled sales of 1.5 million units in 2012, which we believe is conservative. We note that supply has improved recently at retailers (notably at Wal-Mart and Target this week), but is overall still in short supply. The company acknowledged that demand may outstrip supply through Q2,” Ascendiant said.With products that usually tend to sell steadily across the year, it may be disheartening to see classic toy retailers being edged out by innovative tech mimics. However, all is fair in love and toys, and retailers must battle to find what niche they fill in this day and age.HAS is currently trading at $35.88, up +12.51% YTD, while MAT is currently trading at $33.48, up 20.61%. Comparatively, LF is currently trading at $8.02, up 43.29% YTD.