Home » Blogs » Bridge Street's blog

Bridge Street Journal, Vol. 3.7: Greenspan Cries for Attention; Mattel Cries About Attention

By Bridge Street on Tue, 2007-11-06 17:03
  • CNN Money cites Alan Greenspan’s comments that the way out of the current problems in the financial markets is to get rid of excess housing inventory.  Specifically, a 200,000 to 300,000 cut in inventory would be just what’s needed, according to Greenspan.  Regardless of whether he’s right or not, these comments are terribly funny when one considers that Greenspan himself is largely responsible for the 200K – 300K “excess units” in question.  Recall that Greenspan & Co.’s series of rate cuts following the dot-com blowup provided the cheap debt that fueled the current conflagration.  Creating problems and then offering solutions from the sidelines when you have no skin in the game is pretty good work if you can get it.  For further analysis of Fed behavior see Jim Jubak’s recent column on MSN Money.
  • MSN Money reports that Mattel, which has apparently gone into the business of issuing recalls, is recalling 155,000 Mexican-made toys because of a choking hazard.  The toys, called “Laugh & Learn” (perhaps because your laughter at the toy causes you to suck a piece down your throat and learn the hard way that everything that’s fun isn’t necessarily safe), are the latest in a series of public relations disasters for Mattel.  The last recall dealt with Chinese-made toys, and ended with Mattel officials going to China, hat in hand, to pretend they were wrong about the recall and apologize on national TV.  This, presumably after China reminded Mattel that the company would be hard pressed to sell toys if the country quit making them.  This, and other recall stories, bring up some interesting issues.  First, we get to peek behind the scenes and see just how much power foreign companies and governments have over some U.S. corporations.  Second, the shares of companies like Mattel become more interesting as prices fall, but the incredible brand portfolio remains intact.
George on Tue, 2007-11-06 23:21
Title: Mattel

Any one looking at Mattel as a potential value play? I'd like to see the price drop a bit more so that the PE falls to around 10. Of course there is some real danger that the liabilities associated with any actual widespread health impacts could really impact long term free cash flows, but at this point I don't think the long term liabilities are that great yet.

sdesai on Wed, 2007-11-07 17:46
Title: look at jakks pacific

Mattel is good, but they are too big now and lead times are getting shorter and shorter .Also, as they grew too big they have become more beurocratic which is not good for this industry.Other weak thing(that's according to me-somebody can disagree) structurally not that efficient since they own lots of their plants to make their products(which by the way they are saying is good due to low cost then companies who are outsourcing their manufacturing like jakks pac!). They have some legacy cost too(pension and all) since they are one of the oldest. Jakks is better in all these.. let me know what you think..