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During the past year, Mattel like Intersect Investments faced a trust issue with their customers and internal audiences. Beginning in June 2007, the United States Consumer Products Safety Commission identified certain toys made in China as unsafe due to lead paint. By August 2007 Mattel Toy Manufacturers faced a trust issue with their customers. On August 2, 2007, Mattel recalled over 1.5 million toys made in China. News sources questioned why if lead paint was discovered in June, why did it take Mattel until August 2 to recall the toys. The toys were recalled the same day that the “New York Times ran an article about Mattel’s toy safety procedures” (Story, New York Times, August 2, 2007). Mattel responded that although they became aware of the lead in July, they had to investigate which factories and which toys were involved in the lead. That same day Mattel contacted their chief suppliers Wal-Mart and Target and asked them to pull the recalled products from the shelf. The remainder of the time was spent determining the exact extent of the problem and the procedures for recall. At the time of recall they had phone lines, web sites and procedures in place for recall procedures (Story, New York Times, August 2, 2007).
Although after a recall of 1.5 million toys, Mattel stock did not drop in 2007. In fact, although the United States had a slow Holiday Season, Mattel’s 2007 Annual Report showed a profit for the Fourth Quarter. For the Fourth Quarter, the time of the recall, Mattel reported a net income of $328.5 million, or $.89 per share. This compared to the 2006 Fourth Quarter of $286.4 million, or $.75 per share. The profit and sales were from international rather than United States dome ...