LeapFrog forecasts weaker Q3

Firm says its full year revenue is likely to drop by at least ten per cent
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LeapFrog expects to report net sales of $143 million for the Q3, when it formally announces its results on November 1st.

The firm says it is likely to report cash and investments of about $95 million and inventories excluding allowances of about $110 million for the quarter which ended on September 30th.

LeapFrog president and CEO Jeffrey Katz said the decline in legacy products had weakened its sales performance more than expected.

“Reported weakness in the retail economy and lingering bad news regarding the toy sector certainly hasn't helped. However, we are seeing good results with several new products, such as ClickStart My First Computer, and our Leapster handheld educational gaming business continues to perform well”.

Katz said the new Fly Fusion Pentop Computer had performed to plan for the quarter and expects shipments to increase with advertising.

He added: "Fourth quarter is typically our strongest and we expect to see sales improve from third quarter levels. Nevertheless, due to third quarter weakness, we expect that full year 2007 revenues will be down by approximately 10% to 15% compared to 2006.As we've said before, 2007 is a 'Reload' year and we are on track to roll out a substantially new product line next year as planned.

“We will host our first-ever Investor and Analyst Day on Thursday, November 8 and we hope investors will see for themselves the progress we've made and the implications for next year and beyond".

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