LeapFrog Is Not Green
By Rick Aristotle Munarriz
March 2, 2007

http://www.fool.com/investing/general/2007/03/02/leapfrog-is-not-green.aspx

Now let me tell you why I think things are going to get better: I like CEO Jeffrey Katz.

Sorry Rick, being well liked does little to add merit to one's managerial talent. LeapFrog's problems run deeper than the top brass.

New products are on the way later this year, including a second shot at redemption for the FLY with the FLY Fusion PenTop Computer.

While I can appreciate management's desire to challenge "if at first you don't succeed...", but a less expensive, higher storage FLY Fusion will still suffer the same fate as its predecessor: it's a narrow niche product that lacks an immediately discernible advantage. Mom and dad are going to skip this in favor of a Nintendo DS and brain games.

It may just take one more hit product to send shares climbing again, and the pipeline is never dry at LeapFrog.

While innovative ideas are never scarce, LeapFrog suffers from scarcity of resources. They've lost too many experienced workers out of R&D over the last several years, most of whom developed the company's flagship products. Will they be able to fill the gap in the ultra-competitive technology market that is the San Francisco Bay Area? There are simply too many better opportunities for developers elsewhere, including at companies growing their balance sheet and market cap.

Bill