Education Inc.

Software Struggle

LeapFrog Company Falls Below Forecast

Article Tools
  • PrintPrinter-Friendly
  • EmailEmail Article
  • ReprintReprints

The educational software and toy company LeapFrog Enterprises Inc. is treading in rough financial waters, and industry watchers are keeping a close eye on the former dot-com darling to see whether it will sink or swim.

In mid-December, company officials adjusted LeapFrog’s 2004 net sales to be “significantly below” its October forecast of between $680 million and $710 million.

“The uncertainty of the retail industry this [holiday] season, and the inherent volatility of the toy industry,” are two big reasons for adjusting the company’s outlook, said Bill Chiasson, the chief financial officer of LeapFrog, in a Dec. 16 conference call with analysts.

Lackluster sales and higher operating and logistical expenses resulted in a 40 percent drop in net income in the third quarter of 2004, compared with the third quarter of 2003, for LeapFrog.

Shares on the New York Stock Exchange on Jan. 26 traded at $12.71, down almost 60 percent from the preceding 52-week high of $31.40 a share.

LeapFrog is in the world of “edutainment,” one that combines education and entertainment, said J. Mark Jackson, a senior analyst at Eduventures, a Boston-based market-research firm that tracks the education industry.

“It’s an incredibly tough industry,” he said, “and any slippage is going to reflect on them.”

The company needs another hit product to climb out of its slump, such as its popular LeapPad laptop device that teaches spelling and reading, said Kirsten Edwards, a vice president and analyst with Think Equity Partners, an investment bank based in San Francisco.

In fact, LeapFrog is trying to do just that, with the unveiling last month of the FLY Pen Top Computer, a “talking” digital pen that can translate an English word into Spanish, or draw a piano keyboard on special paper and then play the virtual piano. The $99 device, which is being marketed to 8- to 14-year-olds, will be sold beginning in the fall.

So-called “tweens,” which marketers define as children ages 8 to 14, spend $38 billion of their own money each year on a variety of purchases, according to the Rockville, Md.-based MarketResearch.com.

“It’s definitely a gamble for them,” Ms. Edwards said of LeapFrog’s FLY Pen Top Computer. “There’s a lot of money in this market, but it’s hard to target that market.”

However, both analysts looked favorably on LeapFrog’s recent partnership with Baltimore-based Educate Inc. to open up to 20 retail learning centers in Wal-Mart stores.

“We expect to see more of this [type of partnership] in the future,” said Mr. Jackson.

Vol. 24, Issue 21, Page 8

Published in Print: February 2, 2005, as Software Struggle

Back to Top Back to Top

Most Popular Stories

Viewed

Emailed

Recommended

Commented

Sponsor Insights

Free Ebook: How to Implement a Coding Program in Schools

Successful Intervention Builds Student Success

Effective Ways to Support Students with Dyslexia

Stop cobbling together your EdTech

Integrate Science and ELA with Informational Text

Can self-efficacy impact growth for ELLs?

Disruptive Tech Integration for Meaningful Learning

Building Community for Social Good

5 Resources on the Power of Interoperability from Unified Edtech

New campaign for UN World Teachers Day

5 Game-Changers in Today’s Digital Learning Platforms

Hiding in Plain Sight - 7 Common Signs of Dyslexia in the Classroom

The research: Reading Benchmark Assessments

Shifting Mindsets: A Guide for Training Paraeducators to Think Differently About Challenging Behavior

All Students Are Language Learners: The Imagine Learning Language Advantage™

Shifting Mindsets: A Guide for Training Paraeducators to Think Differently About Challenging Behavior

How to Support All Students with Equitable Pathways

2019 K-12 Digital Content Report

3-D Learning & Assessment for K–5 Science

Climate Change, LGBTQ Issues, Politics & Race: Instructional Materials for Teaching Complex Topics

Closing the Science Achievement Gap

Evidence-based Coaching: Key Driver(s) of Scalable Improvement District-Wide

Advancing Literacy with Large Print

Research Sheds New Light on the Reading Brain

Tips for Supporting English Learners Through Personalized Approaches

Response to Intervention Centered on Student Learning

The Nonnegotiable Attributes of Effective Feedback

SEE MORE Insights >