Mattel is losing money as manufacturing costs in China rise, according to Bloomberg:
Sales of Barbie fell 12 percent in the U.S. as the 49-year- old doll faced competition from Hannah Montana and Ganz’s Webkinz. Mattel, which recalled more than 21 million Chinese-made products in 2007, expects Chinese manufacturing costs to rise further. The yuan has climbed 10 percent against the dollar over the past 12 months, and inflation in China is near an 11-year high.
Also mentioned were the costs that Mattel incurred due to their lead and magnet recalls:
The recalls of Sesame Street vehicles with paint containing excessive amounts of lead and Polly Pocket dolls with magnets that may detach and get swallowed by children cost Mattel $110 million in 2007 for toy returns and legal, advertising and testing expenses.
Mattel Posts Loss as Chinese Production Costs Rise (Update4) [Bloomberg]