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'Menace' toy sales soar despite critics

By Richard Morgan

NEW YORK (Variety) - Any disappointment in ``The Phantom Menace' as a movie, story or box office phenomenon hasn't affected a licensing program producing tons of ``Star Wars' merchandise and generating auction bids topping retail prices by hundreds of dollars.

``Factories are working overtime trying to keep up with demand,' Burnham Securities toy analyst David Leibowitz reported Tuesday.

``The number of consumers who are buying everything in pairs -- one to put away as a collectible, the other for the family's toy-playing member -- is raising eyebrows, despite very high expectations in the first place,' he said.

Leibowitz added that he hasn't heard a single ``down-in-the-mouth statement' about ``Phantom's' performance from anybody in the licensing community.

The upbeat appraisal extends to tie-ins as well.

Pepsi-Cola spokesman Jon Harris said its ``Phantom Menace' campaign, which began last week with the introduction of ``Star Warsian' character Marfalump, couldn't be going better.

``Early indications spell success,' he said of the May-September effort that will include the release of new cans every two to four weeks.

Harris also promised that ``Phantom' fans will see a lot more of Marfalump, the spokesalien created expressly for the Pepsi campaign by ad agency BBDO-New York and ``Star Wars' creator George Lucas' Industrial Light and Magic.

Slated to air later this week, for example, is the campaign's second commercial, in which Marfalump attempts to wow a date by acting out lines from the movie.

Anecdotal evidence from Tricon Global Restaurants -- the KFC, Pizza Hut and Taco Bell chain spun off from PepsiCo two years ago -- suggest its ``Defeat the Dark Side' effort is off to an equally fast start.

The $50 million campaign, which began May 12, is intended to get fast-food consumers to visit all three chains for a variety of premiums and prizes.

The ambitious objective, said Mitch Litvak of the L.A. Office, a consultancy specializing in entertainment promotions, is to get incremental sales. And based on his field research, in which Taco Bell loyalists are being spotted at KFC and vice-versa, that's exactly what the campaign is doing.
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Will the soaring sales result in a rising price for the Hasbro stock?
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Soaring sales should indeed increase share prices. I joined you all today, as I bought in at 28 3/4. Hey, I tried to help you all out.... I expect to hold these for the next several years, barring obvious trading opportunities....

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>> Will the soaring sales result in a rising price for the Hasbro stock? <<

Who can predict what the market will really think? But in general, if the market believes that the soaring sales are sustainable and/or point to a strong business model as HAS, and they believe that this additional information makes HAS seem undervalued at current prices, then one would expect the price to go up. At a P/E of 20, I think they're on the somewhat undervalued side at present (I'm sure there are plenty out there who would say the opposite, of course).

I think the current stock performance is somewhat reflective of people who jumped on board solely on Star Wars hype, got disapointed that HAS didn't perform like a 'net stock overnight, and then dumped it at a loss...

Barring a significant economic downturn I think people are still going to buy more toys and games every year.
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