Mattel had morale, creative issues before Bratz: CEO

2/07/2008 - 23:44

By Gina Keating

RIVERSIDE, California (Reuters) - Mattel Inc Chief Executive Bob Eckert believed morale was at an all-time low and the stock price "wasn't far behind" when he joined the company in mid-2000, a year before rival MGA Entertainment Inc launched the Bratz doll, he testified on Wednesday in a trial to decide which company owns the hit doll franchise.

Under questioning from MGA attorney Thomas Nolan, Eckert testified, "There were certainly morale issues at the company ... but I was pleasantly surprised in my first days of talking to employees how they felt about the company."

But in a 2001 article he wrote for the Harvard Business Review, which was shown to the jury in U.S. District Court in Riverside, California, on Wednesday, Eckert painted a different picture.

"Mattel had lost its focus," Eckert wrote. "It was losing up to a million dollars a day on the Learning Company, a software firm acquired during my predecessor's reign. Mattel was borrowing money to stay afloat and several top managers ... had left."

Initially, Eckert denied that he had believed Mattel suffered from a creativity problem, but backtracked after Nolan showed jurors an interview in which the CEO said the "struggling" company "needed to focus on creativity."

Mattel is battling for ownership of the original Bratz drawings, which it claims were created by a former Barbie designer while he was under contract to Mattel.

Sales of the pouty lipped, big-headed, urban chic Bratz dolls surpassed $1 billion last year and have cut into sales of Mattel's iconic Barbies.

According to MGA, Bratz designer Carter Bryant made the drawings during an eight-month break in his employment with Mattel. It accuses larger rival Mattel of trying to acquire through litigation what it could not produce itself.

Mattel is seeking ownership of the original Bratz designs as well as damages. MGA wants the jury to find that it owns the drawings.

MGA has also filed counterclaims against Mattel for allegedly knocking off Bratz with its Flava and My Scene dolls.

Eckert testified on Tuesday that Mattel introduced the My Scene and Flava dolls a year or more after Bratz launched but have since stopped making them.

MGA attorneys hope to rest their case this week.

Last month, MGA Chief Executive Isaac Larian said he expects its upcoming line of Bratz dolls to generate retail sales of between $150 million and $200 million by the end of the year, pushing 2008 retail sales for the Bratz franchise to more than $1 billion.

In April, Mattel said first-quarter U.S. sales of Barbie dolls were down 12 percent.

(Editing by Jeffrey Benkoe)

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