Tough Lesson In Education Market Leaves Mattel In No Mood To Play.(A)(COMPANY IN THE NEWS)

Byline: Chris Woodard

Mattel Inc. would probably like to forget its 1999 acquisition of The Learning Co. But the deal almost certainly will live on at business schools as a textbook disaster.

Desperate for the glamour and fast growth of the software world, the El Segundo, Calif.-based toy maker paid a whopping $3.6 billion for a company that collapsed like a house of cards. Mattel took hundreds of millions of dollars in charges -- and its shares plunged from around 40 to less than 10.

See company chart on A10

"It's going to be a classic as far as acquisition debacles," said M. Eric Johnson, a management professor at Dartmouth College. "We'll be teaching that case for the next 10 years. When you eradicate that much shareholder value, you become famous in a way you don't want to be."

But if Robert Eckert has his way, the Mattel case study will have an upbeat ending.

Since taking over as the firm's chairman and chief executive in May 2000, the former CEO of Kraft Foods Inc. has taken a back-to-basics approach that's praised for putting Mattel back on track.