Hasbro (HAS)

Third quarter earnings show once again that Hasbro is doing exceedingly better during the economic downturn than Mattel. Hasbro's Q3 2009 net sales fell 2%, but if foreign exchange losses due to the strong dollar are ignored, the company's net sales actually increased 1%. Regardless, Mattel's net sales during this time fell 8%, even though it sold more toys than Hasbro. The bottom line also showed that Hasbro's earnings rose 11% while Mattel's fell 3%.

Hasbro has been reaping the benefits from its newest entertainment and licensing segments. The company's two summer blockbusters Transformers: Revenge of the Fallen and G.I. Joe: The Rise of Cobra boosted summer revenues as toys related to the movies sold extremely well. Rumors have it that Hasbro may become the next Marvel and start capitalizing on movie franchises; Transformers was the #1 grossing film worldwide this summer. The company has already announced that a squeal to the G.I. Joe movie is already in the works.

A wide range of internationally recognized brands presents a great opportunity to expand into digital media, such as internet video games. Many of these digital applications of brands could be key in securing market share in the "tween" demographic.

A wide range of internationally recognized brands presents a great opportunity to expand into digital media, such as internet video games. Many of these digital applications of brands could be key in securing market share in the "tween" demographic.

Summer blockbuster movies such as Spider-Man 3 and Transformers should propel sales of the corresponding toy lines to high levels. Sales of Star Wars merchandise remain strong long after the 2005 release of the last Star Wars movie.

In recent years Hasbro has shown a knack for identifying toy crazes such as Pokemon and negotiating potentially lucrative licensing agreements to supplement sales of its myriad popular brands and products.