I refuse to believe that movie existed.
I thought it was a touching story of US/Japanese reconciliation in the face of global doom.
And a warning to anyone else who ever wanted to try it again
'Battleship' Disaster Scuttles Hasbro's Plans For Board Games
Hasbro charted the course of its board games business by way of the movie theatre. Now, after
Battleship sank in its U.S. opening, Hasbro seems a bit dead in the water. Investors would do well to steer clear.
Battleship, which pitted Earth's military against an onslaught of aliens that looked like moles, took in a paltry $25.3 million and received a wide shelling by critics. Salon.com's Andrew O'Hehir called it "profoundly stupid."
The New York Times likened its plot to a macaroni dinner—familiar fare but not particularly nutritious. "It's loud, it's large, it's stupid," writes the
San Francisco Chronicle's Amy Biancolli, "and its best gag involves a chicken burrito."
Hasbro
(HAS, $34.24) was never on the hook for the film's budget. The world's second biggest toymaker licensed the 45-year-old game to Universal, a
General Electric company, and collected the fee. Bankrolling the movie fell to the studio, and in all, it cost some where far north of $209 million to make and market. The film may not plunge Universal into red ink, though, thanks to a smart decision to roll it out overseas before American critics could torpedo it.
Battleship grossed $215 million by the time it opened this past weekend, making its Stateside flop a touch more tolerable.
Still, the film's box-office folly means it won't buoy the sales of the actual board game as hoped. Moreover, it casts doubt on Hasbro's plans to make film versions of some remaining games in its toy box—classics like Candyland, Ouija, Clue and Monopoly. Anticipation for both the tie-in revenues and the actual films has run high. (Rumors placed Oscar-winning director Ridley Scott in talks to helm the Monopoly film. Other speculation centered on whether Clue would indeed receive a remake.) Had
Battleship steamed through theaters, Hasbro's fortunes would appear quite brighter. But why make more films when the tentpole production floundered so noticeably? The failure leaves a lot of money on the table, piled up like penalty cash on Free Parking. Revenue that would come with bringing Gum Drop Mountain and Mr. Boddy's mansion to the big screen is in jeopardy.
The idea for these movies started when Hasbro's Transformers toys became three blockbuster films. The movies boosted sales in its boys division, which includes Transformers and other toys like G.I. Joe, and its entertainment and licensing business. Hasbro then rolled the dice, hoping that films could also boost the sagging sales of its board games, its second largest business by revenue. Board game sales have experienced six straight quarters of year-over-year declines. Annual sales have dropped 13% in two years to barely $1.2 billion in 2011.
Further, both Mr. Boddy and Mr. Moneybags seem quite the elderly gentleman. Analysts have criticized Hasbro for its slow movement into digital games. Without Hasbro's Scrabble, there is no Words With Friends. But today, Words with Friends attracts 17.6 million active users each month, according to Appdata.com. Scrabble sees fewer than 1 million.
Investors may be lured into Hasbro because of its valuation. At 10.9 times forward earnings, Hasbro is significantly below both its five-year average P/E and the industry average. Remember though that the stock has lost nearly 28% in the last year, and dropped 5% in the past month. Investors should see a red flare in that alone. Chief rival
Mattel goes for just a hair more, at 11.8 times forward earnings, and has outperformed lately, climbing 12% during the past 12 months. Another competitor, Jakks Pacific, is more expensive, 14 times forward earnings, after shares jumped 32% this year on takeover talk.
Others buyers see Hasbro as a smart dividend play. Certainly, it's a frequent holding in many dividend funds. It pays out a 4.2% yield, more than double the benchmark 10-year Treasury yield. It ended 2011 with $642 million in cash, about $5 a share. Still, Hasbro's free cash flow is far from recent highs and fluctuated quite a bit: It went from $476 million in 2008 to $297 million last year.
Jumping ship on Hasbro seems the savviest move.
The failure leaves a lot of money on the table, piled up like penalty cash on Free Parking.
www.forbes.com
