LeapFrog shares jump on 1st-quarter results

Associated Press

EMERYVILLE, Calif. (AP) — Shares of LeapFrog Enterprises Inc. jumped on Friday after the education toy maker reported much better-than-expected first-quarter results and raised its full-year guidance.

The Emeryville, Calif.-based company on Thursday reported a net loss of $9.5 million, or 14 cents per share. That compares with a net loss of $22.2 million, or 34 cents per share, last year. Analysts expected a larger loss of 26 cents per share, according to FactSet.

Revenue rose 82 percent to $72 million from $39.7 million last year, greater than the $51.1 million analysts expected.

Lower retail inventory led to selling more items at full price during the quarter. An earlier Easter and better-than-expected sales of LeapFrog's LeapPad tablet-like device for children, along with its accessories and content, also helped results, said CEO John Barbour.

The company raised its guidance on the results. For 2012, it now expects net income of 52 cents to 57 cents, from a prior forecast of 40 cents to 45 cents per share.

It expects revenue to rise 10 percent to 13 percent, from prior expectations of a 6 percent to 8 percent rise. That implies revenue of $500.7 million to $514.3 million.

Before Thursday's guidance increase, analysts had expected 2012 net income of 51 cents per share on revenue of $503.9 million.

For the second quarter LeapFrog expects net loss of 18 cents to 20 cents per share, on a revenue increase of 17 percent to 22 percent. That implies revenue of $63.7 million to $66.4 million. Analysts expect a net loss of 18 cents per share on revenue of $65.9 million.

BMO Capital Markets analyst Gerrick Johnson reiterated his "Outperform" rating on the stock and said the company is his top pick of the smaller toy companies.

"Even with recent stock momentum generated by the success of the LeapPad, we still believe the market is undervaluing the long-term value of the LeapFrog brand, its quality products, and the goodwill generated by the LeapPad," he wrote in a note to investors.

Shares rose $1.46, or 16.3 percent, to $10.44 in afternoon trading. The stock had been up 61 percent since the beginning of the year.