Mattel, the world's largest toymaker, released its first quarter earnings report, which saw profits drop from $32.8 million in Q1 2003 to $9 million this year.  Sales for Mattel's premier franchise, Barbie, were down some 15% in the U.S., while sales of Matchbox toys and other Mattel 'wheels' brands dropped 8% for the quarter.  The lone bright spot was the 'Entertainment' or 'licensed' category, which posted a 16% gain largely due to increased sales for Batman and JLA toys.  In the wake of the lackluster earnings report Mattel's stock hit an 18-month low on Tuesday, and though it did rebound somewhat, it finished the day 1.72% lower.


Mattel Chairman and CEO Robert Eckert does not expect a major boost from the release of the third Harry Potter film this summer.  Mattel sold $160 million worth of HP merchandise in association with the first film, $130 million with the second and $20 million last year with no movie, but Eckert feels that the summer release of Harry Potter 3 will make it difficult to come anywhere close to matching the merchandise totals associated with the first two movies, which were released late in the toy-friendly fourth quarter. 
Eckert also indicated a slight decline in sales of Yu-Gi-Oh and Spongebob Squarepants toys.  Though he expects the release of a Yu-Gi-Oh film in late summer and a Spongebob movie in the fall will help sales, Eckert said the same thing about both properties--that at the end of the year it will be clear that best days of both of these properties (in terms of toy sales at least) will be behind them.