Is Lego in trouble?

[john cleese]

well I was just doing that exaggerating thing phes does with his pirates. Besides someone has to put a new "twist" on the forums.

And time twisters is a great theme and might i just regress into a little three year old as i say la la la la la im no-ot listening la la la la la la

[Mithrandir]

Unfortunately I remember reading somewhere that Megablocks got the POTC Liscence... sorry to be the bearer of horrifyingly bad news...

LA LA LA LA LA LA I CAN'T HEAR YOU LA LA LA LA LA LA LA LA LA

*sheds tear*

I think that anyone who complains about juniorization should be pointed towards Megabloks and be told "Hey, when Lego starts to look like that, THEN you can complain!". I saw their "Pyrates" line at TRU the other day, and out of sheer morbid curiosity I decided to look at the boxes in more detail. Man, it's pathetic that they can put out a 95-piece pirate ship (oh wait, sorry, "PYRATE"). 95 pieces?!! Egads! That's it?!

In other depressing news, MegaBloks bought RoseArt (The Magnetix people), closed down all the US jobs, and moved them all to China. Guess I won't be buying Magnetix anymore (I was already headed on the way out with them anyways, recently their sets have been falling apart more easily).

[blueandwhite]

I think that anyone who complains about juniorization should be pointed towards Megabloks and be told "Hey, when Lego starts to look like that, THEN you can complain!". I saw their "Pyrates" line at TRU the other day, and out of sheer morbid curiosity I decided to look at the boxes in more detail. Man, it's pathetic that they can put out a 95-piece pirate ship (oh wait, sorry, "PYRATE"). 95 pieces?!! Egads! That's it?!

I'd rather complain before things get that bad (I certainly won't be buying LEGO if they do). The juniorization of LEGO has nothing to do with Mega Bloks and their vastly inferior product. Fortunately, there are alot of sets on the market right now that aren't suffering from any serious form of juniorization at the moment (compared to say, the late 1990s).

Later.

[gylman]

I think that anyone who complains about juniorization should be pointed towards Megabloks and be told "Hey, when Lego starts to look like that, THEN you can complain!". I saw their "Pyrates" line at TRU the other day, and out of sheer morbid curiosity I decided to look at the boxes in more detail. Man, it's pathetic that they can put out a 95-piece pirate ship (oh wait, sorry, "PYRATE"). 95 pieces?!! Egads! That's it?!

I'd rather complain before things get that bad (I certainly won't be buying LEGO if they do). The juniorization of LEGO has nothing to do with Mega Bloks and their vastly inferior product. Fortunately, there are alot of sets on the market right now that aren't suffering from any serious form of juniorization at the moment (compared to say, the late 1990s).

Later.

Totally agree. The last 2-3 years have seen an outstanding improvement in the quality of Lego sets. Juniorization is almost gone as a real issue. It's just a buzzword now.

[natelite]

Well I just checked lego's financials and news on bloomberg. They lost money from 2000 to 2004. huge numbers. They only started to return to the blacks in 2005, posting a modest 450 mil kro.

I think as many have said lego is just not producing cheaply. They should really charge cheaper sets. They and brio were losing money because they can't compete on price. Let's face it, nobody can really afford high priced toys unless you wish to cater to collectors. Most parents buy toys with the view that kids will grow out of it in a few years. Buying expensive $100-$200 sets is unheard of. Megablocks trumped lego in that they provide cheap, *I wanted to say that this set contains a lot of big pieces but didn't want to take the time to write it all, so I used the word "<insert that tiresome argument>" instead* yet popular versions

[Mithrandir]

Most parents buy toys with the view that kids will grow out of it in a few years. Buying expensive $100-$200 sets is unheard of.

I don't neccessarily agree with this. While it's true with a lot of things, like action figures and such, most people I know of hold Lego in high regard. My parents always told me that the Lego pieces were very high quality and should last forever, even down to my grandkids (assuming I ever have any kids first :P). I think most people recognize the longevity of Lego; is there any other toy out there that has as large of an adult following as Lego does? I doubt it.

In my opinion, I think they should move production lines to china or india. Definitely cut down on the cost to produce the pieces. Hire good designers to develop new product lines. Listen to fans who give ideas either in the lego forums or from fansites.

OH GOD NO. If Lego ever moved production to China or India I would immediately stop buying them. Stuff made in China is crap; the companies in China have no respect for quality control whatsoever. They have one motivation: create the crappiest piece of crap product possible, and charge as much for it as possible. They abuse their workers to the point where the workers are practically slaves and have no pride in their workmanship whatsoever... ugh.

[phoinix]

in my previous posts i complained about the lego shelf space and variety in greece..

Well the news is that they are making a BIG come back

as from today lego takes up 3 times the shelf space than it used to and is a better place in the store..

a huge variety of themes and boxes are now availiable!

they even brought some new SW and HP after i was told that we wouldnt see any more of that here!!

Yes this is a happy happy happy day!!! X-D X-D X-D

and to top that there are 2 LEGO tv ads now on TV!!!

seems like lego has decided to open up to new markets!!!

(did i say i was happy?)

:-) phoinix

[natelite]

This is where our opinions differ. If this was 10 years ago I would agree that the workmanship was poor. These days however we are seeing good top quality products from china. In fact, I believe QC/QA is ultimately determined by the investor, not the producer. Who cares where it comes from as long as it meets the standard demanded of them? In fact, TLG doesn't even need to invest. They merely need to contract out the production to several companies which can produce the blocks to their required standards. Absolutely no risk to them. If a company doesn't produce to the required standards, fire and find another contractor. Only the key processes need to remain within the original company to maintain its competitive advantage. I believe with TLG, the key processes are product line designing, market research, and advertising. They shouldn't really keep the production process in-house.

If you really feel the mass engineers that china is producing are still subpar, there're hongkong and singapore as potential alternatives. I know of quite a few firms that produce industrial grade high precision plastics. As for worker's comp issue, while I do think $100 a month is very low compared to the US standards, $100 in china is a lot of purchasing power. It wouldn't be fair to compare what we are used to vs what the situation is over there. It's like comparing a worker in montana vs one in new york city. Obviously a nyc worker will be paid 2 or even 3 times more just because the cost of living is so much higher in nyc. If the wages were that bad, I doubt many chinese farmers would have migrated to the cities to seek jobs.

[gylman]

Well I just checked lego's financials and news on bloomberg. They lost money from 2000 to 2004. huge numbers. They only started to return to the blacks in 2005, posting a modest 450 mil kro.

Time will tell, but it seems to me that the turnaround was quite spectacular, and based on fundamental changes such as reducing operating costs, and growth in a shrinking market.

Megablocks trumped lego in that they provide cheap, *I wanted to say that this set contains a lot of big pieces but didn't want to take the time to write it all, so I used the word "*I wanted to say that this set contains a lot of big pieces but didn't want to take the time to write it all, so I used the word "*I wanted to say that this set contains a lot of big pieces but didn't want to take the time to write it all, so I used the word "*I wanted to say that this set contains a lot of big pieces but didn't want to take the time to write it all, so I used the word "*I wanted to say that this set contains a lot of big pieces but didn't want to take the time to write it all, so I used the word "<insert that tiresome argument>" instead*" instead*" instead*" instead*" instead* yet popular versions

[Hobbes]

Well I just checked lego's financials and news on bloomberg. They lost money from 2000 to 2004. huge numbers. They only started to return to the blacks in 2005, posting a modest 450 mil kro.

I already asked that before in this thread, I'm asking it again:

Can anybody confirm that TLG is in the black, or are they "just" posting annual profits?

I ask this because those are two totally different things. Public financial reports are usually annual reports. They show the result of one financial year - not the overall financial situation!

If you're $1000 in the red and make an annual profit of $500 the next year, you're still missing $500. Know what I mean?

I can't really translate all those links and sources on the net in a language I understand. All I do know is that those reports are usually annual reports.

So, it'd be nice if someone could clarify that or post an understandable link ;-) Until that I "only" believe that TLC makes annual profits...

[natelite]

I already asked that before in this thread, I'm asking it again:

Can anybody confirm that TLG is in the black, or are they "just" posting annual profits?

I ask this because those are two totally different things. Public financial reports are usually annual reports. They show the result of one financial year - not the overall financial situation!

If you're $1000 in the red and make an annual profit of $500 the next year, you're still missing $500. Know what I mean?

I can't really translate all those links and sources on the net in a language I understand. All I do know is that those reports are usually annual reports.

So, it'd be nice if someone could clarify that or post an understandable link ;-) Until that I "only" believe that TLC makes annual profits...

they have been in the business for 51 years now, the net equity will always be positive unless they are approaching bankruptcy. so even having suffered 3-4 years of losses, usually a company doesn't go under. lego is a private company so the financials are not listed.

i just realized that danish tax rate is like 65%+. that's not very conducive to businesses. no wonder it is hard for lego to outmaneuver mega bloks. on the other hand, losses aren't as bad either. you end up having lots of tax credits for future profits, so you dont have to pay as much in taxes in the future.

[gylman]

You mean Hobbes.... do they owe the bank money?

Say they got 1 billion$ in debt over the 200-2004 years. Then they make a profit of 100 million, by your method they would still owe 900 million and would be 900 million "in the red".

And.... of course the company itself (assets) is undoubtedly worth more than they owe, like Natelite says, if they even owe anything, otherwise they would be bankrupt. No one would lend them money.

If that's what you mean.... I think that you are thinking like a regular person with debts and income. Not like a corporation, or a country, which is more applicable. I don't think corporations work that way. They may have debt,wiht interest they have to service, but those interest costs are part of their operating expenses. As long as the debt is not growing, or there is a realistic prospect for paying it off, it is not a concern.

Heck, when a company issues stock, they are in effect borrowing money from every person who bought the stock. That's why they do it.. to raise money for expansion and improvement, yet they are going into "debt".

TLC owns itself, which is a huge advantage in many ways. as long as the management is sound. Right now I think the management is sound.

I really don't understand though, why some people are so negative about TLCs prospects. I don't things could be any clearer:

-they used to lose money, now they make it (granted, only one year... that's the main issue - how consistent can they be

-they cut costs even though they gained 8% in sales, and this during a time when the overall toy market shrank

-anyone who has been around for 5 years can see the vast improvement in all aspects of the company, from communication to product to web presence.

[snefroe]

if i'm not mistaken, even on annual reports there is a booking of costs/profits from the year before. the reports are online so you can easily look for it ...

i don't think going to china or india is going to solve anything. the costs are no longer wages of people working in the factory. the lego production room is highly automated; it's all the others that increase costs: administration, designers, marketeers, customer's service,... most of those people are very well educated with rather good contracts... If there wasn't such a strong link with the billund community and denmark in general, they'd probably be moving to great britain or Eastern europe all together, but the far east is too far off. You can't run your largest market from china or india... besides, relocation to far east is too expensive and lego can't afford it right now to set up a new plant. they've even closed one in Korea i think... i think they should just continue the strategy they're following now: increase eficiency, cut costs where you can without going too far. Exo force is a perfect example: prices are low, it's popular because of good quality: it sells...

lego's situation is not that great, Gyl. if you have to sell your crown jewels (legoland parks) then you're in serious trouble! don't forget, they had major cash flow problem last year, banks refusing new loans AND a shrinking toy market... nono, it's been pretty bad, especially if you see what they've done so far to get back on track: closing down of plants in switzerland and korea; lay off 100's of people,... that's crisis management... But it was after all, bad management that brought them into trouble in the first place, not bad sales... and it's good management that's bringing them back. you can clearly see in the balance sheets that revenues for 2005 are down compared to 2004, but they've cut so many costs and had extra money coming in (sale of property, shares,...) that turned it around. in fact, they themselves say 2006 will not be as good as 2005...

[natelite]

i took the time to read the words on the boxes and guess what? they are making some parts in china. 8-

[Mithrandir]

i took the time to read the words on the boxes and guess what? they are making some parts in china. 8-

[Sir Dillon]

i took the time to read the words on the boxes and guess what? they are making some parts in china. 8-

[JoeMI6]

Yeah, in my local area we seem to have barely anything. I've been speaking to my good friend Thrawn and he says the TRU which is some way out of town still has a good selection. But there are only two shops on my local high street which stock lego. One is Woolies, which has barely anything, the best they've got is Piraka and Exo-Force. The other is Riders, a small toy store, which has a corner dedicated to lego, and they have quite a bit. When they get their orders in, they order in bulk. Which is good, but it usually flies off the shelves quickly.

[Mithrandir]

Well the local TRU has started its stock liquidization.

I haven't been there in two weeks, so I went by it this weekend and saw a huge "70% OFF EVERYTHING!!!" banner outside, so I ran inside...

And all the Lego was already gone.

D'oh. Sonofa...

Oh well.

So now I'm down to Wal*Mart, Target, K-Mart, and KBToys. All four carry 50% Bionicle, 30% Star Wars, and the rest is a mixture of the smaller Batman and Exo-Force sets.

NONE of them carry any technic, ever.

This is sad.

[Dino_Bot]

HAHAHA, I wish LEgo made Clone Troop packs. That'd be so schweet.

And, I attribute the fault of toy selling losses to videogames, scourge of our generation. MY generation.

Yes, I play videogames, but, picture this. You have a 30$ set, or a 30$ videogame. Which do you think a kid is gunna like the best? The videogame!

I don't like it, but it is so. No one wants to build, they want to destroy, or to just spend an entire day staring at a TV. Lego is so much better than a videogame IMHO.