LeapFrog Gets In The Apple

LeapFrog Enterprises (LF) has announced the first of several new products developed for use on Apple, Inc. (AAPL) platforms - specifically iPhone and iPod. The game is the Number Rumble math game and is designed for six-to-ten year-olds, and sells at the Apple App Store for $2.99.

LeapFrog is a designer, developer and marketer of educational products for young children, usually in the three-to-ten age groups. The company has many games on several platforms, such as LeapFrog, LeapPad, Leapster, Tag, Didj, and Quantum Leap.

Management has phased out the unprofitable LeapPad line and transitioned to the relatively new Tag, Leapster 2, and Didj educational gaming systems. Now, the company has begun to provide products for Apple platforms.

The Number Rumble game helps children memorize numbers and mathematical operations (addition, subtraction, multiplication or division). Through quizzes and/or challenging friends, they can learn and improve their math skills.

Despite the difficult retail environment, management continues to target investments in the company’s core product lines, namely reading, educational gaming, content, and lower price learning toys. 2008 was expected to be a turnaround year, driven by the introduction of new products on new platforms; however, economic weakness in the fourth quarter derailed the plan, primarily due to the drop in consumer discretionary spending.

As a result, the company reported its third consecutive year of negative earnings. With the majority of negative developments already discounted in the stock’s price, the rating was upgraded to a Hold in February 2009.

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