Tablet Competition Bad For LeapFrog

LeapFrog Enterprises Inc. (NYSE: LF) had been looking like a great story in the spending dollars for learning based toys in the childrens market. If you have children, you have probably run across LeapFrog's toys. You have probably also run across their tablet device designed exclusively for children under the LeapPad name. A smaller iPad from Apple Inc. (NASDAQ: AAPL) and new offerings from Amazon.com (NASDAQ: AMZN) have been ongoing threats. Now new competition from Toys R Us is hitting the stock.

Toys R Us became the latest entrant into a tablet designed exclusively for kids with the debut of its Tabeo tablet. It will be available this holiday season starting on October 21 and it can be pre-ordered now.

The new wi-fi tablet is 7-inches and comes with 50 free preinstalled apps and with a 4GB storage. The cost is being set at $149.99.

While this is just one more bit of competition for LeapFrog, the LeapPad 1 Explorer sells for $79.99 and bundled versions of the LeapPad 2 start at $129.00 and $99.99 for just the tablets. The LeapPad was deemed to be a huge hit last year as it was sold out over the holiday season in 2011, and LeapFrog sells its toys through Toys R Us.

Last year's holiday success has helped this stock run from under $4 late last year to as high ar $12 this summer. The problem is that shares fell almost 10% last Friday to close at $9.15 and shares were down almost 8% more at $8.45 in late afternoon trading on Monday.

More competition is rarely a good thing. That being said, LeapFrog may still have some spring left in it. Unfortunately there is still a huge open-ended question here for investors. It could go either way. The end result will depend upon which tablet the kids end up liking more after the reviews start coming out.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Consumer Electronics Tagged: AAPL, AMZN, LF