Mattel, Inc. (NASDAQ:MAT), the world’s largest toy maker, posted a 17 percent drop in its fourth quarter earnings, though its net sales climbed. The toy maker reported a net profit of $306.5 million or 87 cents per share, down from $370.6 million or $1.07 per share in the same period a year ago. The company booked $137.8 million in litigation charges related to copyright claims brought up by MGA Entertainment Inc.


Without litigation charges, earnings stood at $1.12 a share. Revenues for the quarter jumped 5 percent to $2.26 billion. Analysts polled by FactSet were expecting $2.3 billion in revenues with earnings of $1.15 per share.

Global sales of Barbie and Hot Wheels unit surged 5 percent to $1.41 billion, while sales of Fisher-Price brands increased by 6 percent. Mattel’s entertainment unit posted a 13 percent decline in revenues as the demand for its “Cars 2” movie-themed toys slowed. International sales rose 8 percent, while sales in North America went up by 5 percent.

Toy makers are facing tough times amid uneven economic recovery in the United States and poor European markets. Another cause of worry is that parents and kids are increasingly turning towards electronic gadgets like smartphones and tablets. The November-December holiday period is crucial for toy makers as it makes up to 40 percent of their sales during the quarter.

Hasbro Inc. (NASDAQ:HAS), a competitor of Mattel Inc. (NASDAQ:MAT), warned a few days ago that its fourth quarter sales could be far lower than analysts’ expectations amid weaker demand of toys in the biggest selling season of the year. Other toy sellers like Wal-Mart Stores, Inc. (NYSE:WMT) have been cautious about ordering inventory.

The only strength of Mattel, Inc. (NASDAQ:MAT) is its great exposure in a doll market that remains resilient. Investors are bullish about its Monster High lines of dolls, which posted 55 percent increase in sales.

The company also announced a 36 cents per share dividend for the first quarter, up 16 percent from the same period last year. The dividend is payable on March 8 to shareholders of record on February 22. Mattel, Inc. (NASDAQ:MAT) shares plunged 1.67 percent in pre-market trading to $37.