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Mattel unit sale may be near
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April 19, 2000: 11:31 a.m. ET
Learning Co. lags behind, but overall Mattel losses are less than expected
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NEW YORK (CNNfn) - No. 1 toy maker Mattel is close to a deal to sell its money-losing software unit, The Learning Co., probably to French computer game manufacturer Havas Interactive, an analyst said Wednesday.
Ron Loeb, Mattel's chief executive, declined to discuss progress on either the sale of The Learning Co., or the search for a new CEO to replace Jill Barad, who oversaw the El Segundo, Calif.-based Barbie maker's acquisition of the Learning Co. last year, during a conference call with analysts Wednesday.
But Sean McGowan, an analyst with Gerard Klauer Mattison & Co., said that Mattel was near an agreement, and that it would likely be Havas, although Michael Milkin's Knowledge Universe reportedly is also still in the running to snatch up the company.
A Havas spokeswoman confirmed earlier in the week that the Paris-based company is interested in The Learning Co., but said it is "just looking" at this point.
Others who were initially interested when Mattel first announced the news included Microsoft and Time Warner, parent company of CNNfn.
Analysts expect The Learning Co., which posted a $126 million first-quarter loss Wednesday, and a $185 million fourth-quarter loss, will fetch less than the $3.5 billion Mattel paid for it in 1999.
The Learning Co., which produces such educational software titles as "Reader Rabbit" and "Where in the World is Carmen Sandiego?" has been beset by weak sales, discount pricing and inventory management problems.
The news comes on the same day that Mattel reported a narrower-than-expected first-quarter loss, as a slight sales increase in its Fisher-Price line for young children partly mitigated losses tied to its software unit.
Mattel, maker of Barbie and Hot Wheels, has been beset by several top executive vacancies. The company said it incurred charges related to the planned sale of The Learning Co. unit.
Excluding one-time items, Mattel reported a loss of $6.2 million, or 1 cent a share, compared with a loss of $12.6 million, or 3 cents a share, in the year-earlier quarter. Analysts polled by earnings tracker First Call/Thomson Financial had expected a loss of 3 cents a share.
The company's net loss of $171.2 million, or 40 cents a share, includes $38.4 million in after-tax severance expenses related to the resignations of several executives and employees -- including former CEO Jill Barad -- and a $126.6 million, or 30-cent-a-share, loss tied to Learning Company. A year earlier, Mattel posted net income of $3.1 million, or 1 cent a share.
Net sales for the quarter rose 1 percent to $693.3 million.
 The software unit's $185 million in fourth-quarter losses resulted in the ouster of Barad, who oversaw the acquisition. The company is still searching for her full-time replacement.
The company's core Fisher-Price infant and preschool unit reported a 29 percent sales increase, which helped to offset declines in other parts of the infant and preschool category. But the brand recorded a 5 percent decline in overseas markets.
Barbie sales rose 14 percent in the United States, but declined 5 percent overseas.
Sales of Hot Wheels, Matchbox and Tyco R/C slipped 4 percent worldwide. U.S. sales fell 7 percent, but sales overseas grew 4 percent.
Shares of Mattel (MAT: Research, Estimates) gained 5/16 to 12-1/16 in Wednesday afternoon trading. 
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