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Re JAKKS Pacific Inc JAKK - Value with a catalyst or value trap

February 24, 2012



OK, this is senseless. You are just making up numbers so you can make up more numbers to arrive at values like you are creating a CDO. First, Jakks is nothing like the other toy companies in the group. Jakk's doesn't have any brands which is why their margins are much lower. No Barbie. No Ken. No copyrights. They license everything they sell. Without disclosing this core fact all other analysis becomes pointless.

So what is Jakks? Jakks is outsourced manufacturing and distribution for copyright holders. The don't invent Mickey but they make him in Asia and negotiate with Walmart to sell him in the US. The reason Jakks does this is big brands like Disney don't want to burden their organization with these jobs so they give it to Jakks, take a guarantee and a percentage, and force Jacks margins lower. Jacks takes the risk and does the hard work.

And revenue isn't falling its plummeting. It is not open for question whether young kids are using electronics and the Internet, they are now and will only do more so in the future. You should have started the article with the ending where you say you wouldn't invest in Jakks. It would have saved everyone some reading.

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