Hasbro Reorganizes to Home In on High-Tech

Hasbro Inc. on Tuesday announced a broad reorganization designed to allow the world’s No. 2 toy maker to expand its offerings of high-tech toys and its popular core brands, including Furby and Pokemon.

Hasbro will cut 2,200 jobs, or 19% of its work force, close two plants in Mexico and England and shift much of its manufacturing to Asia. It will also discontinue some of its underperforming toys.

Pawtucket, R.I.-based Hasbro will take a pre-tax charge of $141 million in the fourth quarter to cover restructuring costs.

Like many toy companies in recent years, Hasbro has been stepping up its high-tech offerings to make playtime more entertaining and challenging for today’s computer-literate kids.

Hasbro, which trails No. 1 toy maker Mattel by a narrow margin, has seen tremendous growth in its interactive division, which produces computer and video games, as well as play-sets that connect with PCs.

Hasbro said it will focus on building its interactive offerings and extending its best-selling brands, such as “Star Wars,” Pokemon, Furby, Tonka, and Easy Bake Oven.

“They’re moving into a whole kids entertainment company . . . it’s the way the toy industry has to go,” said Chris Byrne, editor of the New York-based Toy Report and an industry consultant.

But Cliff Annicelli, managing editor of Playthings Magazine in New York, said Hasbro’s reorganization moves the company into a “high profile, higher risk area” of toy making.

He said the areas Hasbro plans to streamline--preschool, creative play and girls’ toys--”are pretty stable categories I thought were part of the base the company was built on.”

Investors on Wall Street wavered on the Hasbro announcement. The stock was down 19 cents to $21.25 on the New York Stock Exchange, but fell as much $1.50 earlier in the day.

Under the reorganization, Hasbro will close plants in Tijuana and in Ashford, England. Of the 2,200 jobs that will be cut, about 1,850 will be manufacturing positions.

About 300 jobs will be cut in the United States.

Hasbro also plans to discontinue some toys, including Formula One racing toys, some of its large dolls and a flight simulator.

Hasbro expects that its fourth-quarter and year-end earnings will remain in line with Wall Street analysts’ expectations. The company said it expects the restructuring to generate savings of $16 million next year and $23 million a year thereafter.

The company also announced a $500-million stock repurchase program.