Published Online: February 28, 2006
Published in Print: March 1, 2006, as ‘Pen Top’ Computer Propels LeapFrog

Education Inc.

‘Pen Top’ Computer Propels LeapFrog

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LeapFrog Enterprises Inc., an Emeryville, Calif.-based maker of electronic learning products, reported a quarterly profit last month, reversing a loss from a year earlier.

The company attributed the turnaround in part to its new Fly “pen top” computer, an educational toy being piloted in schools. LeapFrog also makes book-based LeapPad learning products and the screen-based Leapster line.

“We’ve been very focused on diversifying our offerings in homes and in schools, and last year we were very successful in doing that,” said Cherie Stewart, a company spokeswoman. The company reported fourth-quarter earnings in 2005 of $14.4 million, or 23 cents a share. In the fourth quarter of 2004, the company reported a loss of $7.5 million, or 12 cents a share.

LeapFrog also announced that Jerome J. Perez was resigning as president, and that his duties and title would be added to those of Chief Executive Officer Thomas J. Kalinske, who has served as CEO for two years.

During a Feb. 16 conference call with analysts, Mr. Kalinske chalked up the company’s gains to staffing cutbacks, product diversification, and greater investments in research, development, and marketing, as well as the Fly. “The Fly Pentop computer was LeapFrog’s most successful product-line launch ever in terms of revenue shipped in and sold through,” he said, according to a transcript of the call.

The battery-powered Fly computer, released in October, recently won the Toy Industry Association’s Toy of the Year Award. The device works through character-recognition software and other technologies, including a tiny camera embedded near its ballpoint tip that reads what it writes on specially coded paper. It can help students with math, spelling, and Spanish, as well as play music and games. ("‘Pen Top’ Computer Promoted as Tool for Learning," Oct. 26, 2005.)

An interactive Web site, www.flypentop.com, which demonstrates the different functions of the Fly, is a finalist for the “People’s Choice” award at the South by Southwest Interactive Festival later this month.

Vol. 25, Issue 25, Page 10

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