Analysts Say Head of Family Toy Business Forced to Resign
SAN JOSE, Calif. (AP) _ David Galoob resigned Friday as head of money-losing Lewis Galoob Toys, Inc., the company his parents founded and he took over at age 21 when his father died.
Analysts say Galoob was asked to step down as chairman, president and chief executive because of differences with the company’s board. His resignation was announced at its annual meeting in South San Francisco.
The board unanimously elected Mark Goldman to take Galoob’s place as president and chief executive officer of the company, which has about 275 employees worldwide.
Neither the company nor Galoob would reveal the story behind his leaving the company that Lewis and Barbara Galoob began in 1957 as a San Francisco storefront with six workers. He also resigned from the board of directors.
″Contractually, I can’t say anything about it, but it was amicable,″ Galoob said in a telephone interview from his Hillsborough home. ″I’m excited, though, because I’ve got a lot of options open to me now.″
Galoob, 41, will remain as a creative consultant to the toy company for another year.
Analysts watching the up-and-down fortunes of the toy manufacturer, dubbed the ″king of the toy car″ for its popular Micro Machines, said Galoob’s strategy clashed with the board’s wish to narrow the company’s focus to a few profitable products.
″The new management philosophy is to do a few things well instead of throwing a bunch of products out there and see what sticks,″ said one analyst who spoke on condition of anonymity. ″David was into a more risky approach of developing new promotional toys every year.″
Goldman, 40, formerly executive vice president and chief operating officer, joined Galoob in 1987. He previously was an executive with Mattel Inc. and with Ages Entertainment Software, a Paramount company.
″It is with regret that we accept the resignation of David Galoob from the company his family founded and to which he has devoted so many years of energy and invention,″ board member Martin Nussbaum said in a statement. ″We applaud David’s achievements in building this company over the years. We wish David great success in his new ventures.″
John Taylor, a toy industry analyst for L.H. Alton and Co., in San Francisco, said Galoob executives ″want to bring in more bean counters instead of product guys, which is something they need to do.″
″David’s leaving will be a loss because he’s very creative, but the toy world is different now. They need to focus,″ Taylor said. ″They’re a small company playing in the land of giants so they have to develop a niche.″
The company’s stock is currently trading at around $4 per share and has ranged from $2.62 1/2 to $6.12 1/2 this year.
Galoob is likely to report a loss for the second quarter, which ends Sunday, analysts said. During the first quarter, Galoob reported a net earnings loss of $3.1 million, or 34 cents a share, on $27.3 million in sales.
During fiscal year 1990, Galoob reported a loss of $32.4 million, or $3.48 per share, on sales of $126.9 million.
The company’s last profitable year was in 1989 when Galoob posted $18.9 million in earnings, or $1.95 per share, on sales of $227.7 million.
Much of that revenue came from Micro Machines, a collection of tiny vehicles ranging from fancy Rolls Royces to souped-up Dodge vans, ambulances, fire engines, trucks, boats, tanks, planes and trains.