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$21.68 0.64 (3.04%)
7/8/2008 4:00 PM

JAKKS Pacific, Inc. (JAKK)

CAPS Rating:
****

The Company is a multi-line, multi-brand toy company that designs, produces and markets toys and related products, writing instruments and related products, pet toys, treats and related products and other consumer products.

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5

Avatar NetscribeEntnmnt (37.00) Submitted: 12/19/06 6:21 AM : Outperform Start Price: $22.38 JAKK Score: 6.93

Jakks Pacific, Inc. develops and markets a broad range of toys, dolls, writing instruments, water guns, sports balls, and pet products across the world including the U.S., Europe, Canada, and Hong Kong. Walmart is the company’s largest customer contributing about 24% to its sales. Moreover, around 90% of the company’s revenue is generated from the sale of traditional toys.

Jakks Pacific has an exclusive toy license with popular toy brands like Mickey Mouse, WWE, Nickelodeon, and others. About 70% of its revenue comes from licensed products with continuous demand from WWE action figures. The company witnessed its topline shooting especially in the North American region due to the acquisition of Creative Designs International - a marketer of dress-up and role play toys. Additionally, considering the factors that the U.S. is the largest toy market in the world and the purchasing power of the American kids is estimated to reach $21.4 billion by 2010 from $18 billion in 2005, there is hope for the company in terms of increasing sales.

Upcoming product launches such as Speed Stacks, Fly Wheels, and Vmigo along with a steady demand for key brands like Doodle Bear and Cabbage Patch could drive company’s revenues in the future. Moreover, the new line of Snoop Dogg branded pet products is expected to be available for pre-order on Amazon.com before it hits mass retailers in spring 2007. Jakks has also signed a licensing deal with Hasbro, Inc. to develop and market craft and activity items for the North American market.

However, the only concern to Jakks’ story is the ongoing legal battle of WWE with THQ/JAKK joint venture. Yet, looking at the prospects of the toy industry and initiatives taken by the company, Jakks Pacific is expected to outperform in the near future.

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Avatar NetscribeEntnmnt (37.00) Submitted: 6/05/07 5:52 AM

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This is the typical sluggish period in the American toy stores considering the absence of holiday season. However, afresh, Jakks Pacific (JAKK) continued to capitalize on the recuperating US toy market aided by its strong product line up that includes TV Games, ‘Pokemon’ and ‘Speed Stacks’ to name a few. Revenues of the company in the first quarter of fiscal 2007 surged 15.7 percent powered by rising sales for the company's role-play and dress-up games and strong demand for its television and movie-based toys. The newly launched TV game based on the show ‘Deal or No Deal’ has also worked wonders for the company.

Going forward, JAKK is likely to benefit from some of the popular brands like ‘Dora the Explorer’ and Disney "tween" sensations as it is incorporating them in its toy offerings. Buoyed by the prior success of licensing deals, the company has plans to secure additional character and product licenses, which could aid its future growth prospects. In order to benefit from the flourishing gaming industry, lately, JAKK has extended its licensing agreement with ‘NAMCO BANDAI Games’ under which the former will develop TV Games products based on the top-selling Namco arcade classic video games.

JAKK offers WWE action figure games and interestingly the famous ‘WWE Smack Down vs. Raw 2008 series’ is likely to be compatible on multiple gaming platforms, which includes Nintendo and Xbox 360. This could benefit JAKK considering the wider audience reach and enhanced video game experience. Also, toy developers like JAKK could benefit in future as a slew of motion pictures are expected to ignite sales of movie-related toys. Considering all these factors, JAKK makes a good bet at the prevailing price levels.

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