The Associated Press have released the following article covering the sucess of the Transformers Movie and it's effect on Hasbro's profit and loss figures.
Like one of its Transformers, Hasbro Inc. has spent the last few years trying to change from a toy company to a business that creates the ideas behind movies, shows and games.
Investors hope to see a payoff from that strategy.
Last month, investors got an early taste of success when the company reported a 62 percent increase in net income. Analysts say those results bode well for the holiday shopping season, which accounted for nearly half of Hasbro's profits in 2006.
Part of what's driving expectations is the two-decade-old Transformers toy line. "Transformers" the movie was released in the United States on July 3, just after the quarter began, and has helped make Transformers products among the most sought-after toys for the coming holiday season.
The movie was the first step in what Hasbro hopes to be a long and fruitful relationship with Hollywood: Hasbro supplies the characters and story lines from its toys - household names such as G.I. Joe and Monopoly. Hollywood turns the ideas into big-budget movies or successful TV shows. Then Hasbro reaps the benefits. A Transformers animated TV show is coming in the spring, and Hasbro is also planning a "Transformers" sequel, a G.I. Joe movie and at least one TV game show.
Hasbro, the world's second-largest toy maker behind Mattel Inc., has made movie-related toys for years, but it did not own some of the most popular brands, such as Spider-Man, and had to pay royalties. A few years ago it struggled with an overreliance on fads, including Furby, and movie-related toys and was forced to cut hundreds of jobs as it lost $144 million.
These days, the company's strategy is to look at the time-tested brands it already owns - Trivial Pursuit, Battleship, Littlest Pet Shop and Mr. Potato Head, for example - and turn those into new products such as movies, TV shows, games or online experiences, said Brian Goldner, Hasbro's chief operating officer.
"Our goal is to create that immersive experience that allows consumers to enjoy our brand anywhere - in any format they want - when they want," Goldner said.
Hasbro has had several good quarters, and investors responded by driving Hasbro's share price up 56 percent in the last two years. Still, in a note to investors last month, Gerrick L. Johnson of BMO Capital Markets Corp. cautioned that the entire toy industry could see fallout from a slowing economy and concerns about toy safety. Although Hasbro has not been involved in the most high-profile toy recalls this year for lead paint, Johnson wrote that sluggish sales could cause retailers to put off buying any more toys in the quarter.
In a separate note, he said he expected Transformers sales could drop off next year because of the lack of a new movie in 2008.
The "Transformers" movie has made about $700 million worldwide since it was released in summer and about $316 million domestically. Hasbro does not share significantly in the box office - something Goldner said it agreed to forgo because it did not invest in the movie's production cost. But it shares in the success in other ways.
It made money by licensing about 230 Transformers products, including cell phone games, video games, even a jacket that transforms to a backpack and a pillow and sells for about $500.
Goldner would not comment specifically on sales of Transformers toys ahead of the earnings report. Jim Silver, editor-in-chief of the trade magazine Toy Wishes, said retailers tell him Transformers sell out as soon as they're put on the shelf.
"These toys, the way they transform and the things that they do, they're really fun," Silver said. "It's the hottest thing in the boys' category."
A new Transformers animated series is scheduled for TV this spring, the movie DVD hit stores last month, and Hasbro is again working with DreamWorks-Paramount on a sequel, tentatively scheduled to be released in June 2009, Goldner said.
Also in development for a tentative 2009 release is a G.I. Joe movie, based on the 1980s comic books and animated series and pitting the G.I. Joe team against the evil forces of Cobra, Goldner said. Stephen Sommers of "The Mummy" movies signed up to direct, along with Stuart Beattie, who wrote the first "Pirates of the Caribbean" movie.
As with the "Transformers" movies, Hasbro would not share significantly in the box office, Goldner said. The company said it would make new toys based on the G.I. Joe movie, but it would not give details.
Silver said he was excited to see how Hasbro updates the toy line.
"I'm sure G.I. Joe's going to have a lot of cool accessories," he said.