The biggest toymaker in the world, California-based Mattel, has announced massive losses in Q4. The company blamed slumping consumer spending resulting in low sales for popular Mattel products including Barbie dolls and Hot Wheels. Total net sales were down 11% worldwide year over year to $1.94 billion. Net income was $176.4 million ($0.49 per share), down from $328.5 million ($0.89 per share) year over year. Mattel CEO Robert Eckert said Mattel would cut costs and spending in 2009 to curb the losses. Mattel previously announced in November 2008 it would cut about 1,000 jobs as part of a cost cutting move. 2009 will probably also prove to be a difficult year as spending further decreases. It is also important to note that the world’s second biggest toymaker Hasbro Inc. saw its profits up 14% in 2008.

GM is burning cash every month and needs some serious cash to fund operations. That is why it could have really used the $10 million loan from the Fed it was seeking that never materialized. That money GM could have also used to acquire Chrysler. GM still remains as the most likely choice for a Chrysler merger, which would significantly benefit GM because Chrysler actually has a lot of cash on hand. Despite the loan being turned down, GM is now likely trying to be classified as a Bank Holding company so that it can purchase commercial paper from the Federal Reserve’s $700 billion bailout fund.

As world economic volatility and the credit crisis remain active, GM is tightening various restrictions including new financial restrictions from its “captive arm” that is suppose to help dealers financially to sell vehicles. Because of the credit crisis, GMAC (wholly owned subsidiary of Chrysler & GM, 51% and 49%, stake respectively) lost $2.5 billion in Q3 of which $194 million was from auto financing. As GM tries to get cash, it has introduced new GMAC terms that will likely have very negative consequences for dealers and lead to closures. Under the new terms, GMAC will only approve loans from people with a credit score of >700 and it will fund less of the principal meaning buyers will have to put up higher down payments. In addition, GMAC is demanding dealers begin immediate repayment car loans, even on 2007 vehicles that are still on the lot. The biggest concern here is as GM vehicles become more expensive (and people are not spending their cash), sales for dealers will dramatically drop, and dealers could become insolvent because of the new loan repayment terms.

Adding further global economic fears, there are yet more job losses. Toymaker giant Mattel has announced it is reducing its management and professional staff by 8%, or by 1,000 people. Mattel’s sales have increased by 6% to $1.95 billion in Q3, though the toy maker is facing increases costs including recent Read the full story