A toy maker with character - and it's anything but Mickey Mouse

Forget Tamagotchis and Teletubbies - the new blockbuster toy could be a PC accessory

A COMPUTER mouse with a Mickey Mouse face, complete with clicking ears, caused the biggest buzz at last week's International Toy & Hobby Fair, where the 399 exhibitors showed what the UK's pounds 1.6bn toy market can look forward to this year.

The mouse is made by Character Group, Britain's biggest toy distributor, which is currently also taking the stock market by storm. Its shares have climbed almost 57 per cent in the past year, adding 11 per cent in January alone.

The mouse is part of a new range of computer accessories, including floppy disks, mouse mats and screensavers, which the company plans to sell around the world this year after teaming up with Disney Interactive on production. The Christmas market is a particular target.

"The growing importance of personal computer literacy for children is an accepted fact," said chairman Richard King, who intends to sell the mouse for about pounds 30. "The whole idea is to inject some fun, colour and imagination into products that, whilst very necessary, are currently rather drab."

Hamleys, Toys 'R' Us and Woolworths have already placed orders. "I suspect this could be something quite big," said Peter Jones, an analyst at Peel Hunt who is recommending the stock. "Even though it'll only hit the market in March, they're right to think this could be significant. It could even outdo toys."

Last year Character, which was voted toy company of the year by the British Association of Toy Retailers at the fair, won exclusive distribution rights for the official Spice Girls dolls in the UK and Ireland. The previous year, it had exclusive rights for the Buzz Lightyear figure from the film Toy Story, the best-selling toy of 1996.

"Obviously the Spice Girls dolls were a major coup," said Mr King. "But what is going to boost our share price is the strength of our line - we've got some very exciting things happening."

This year, the company is focusing on toys that attract the computer generation, including Virtual Mickey, a pocket-sized mini-computer pet that thrives on attention but doesn't mess, fall ill or die. Virtual Mickey is a pet with a difference. Based on the Walt Disney character, it is also a watch and a calendar that can tell the difference between a school day and a holiday.

The first electronic cyberpet was the Tamagotchi, developed by Bandai of Japan. It was voted most innovative toy of 1997. "The strength of video games and other PC software is cutting into demand for other toys," said Sean McGowan, an analyst at Gerard Klauer Mattison in New York.

Character Group's earnings per share for the year to 31 August 1997 grew by 22 per cent to 15.08p, on a 36 per cent rise in sales to pounds 41.3m. While analysts estimate eps could grow by a further 25 to 30 per cent in the current fiscal year, Mr King said those estimates "could turn out to be conservative".

Copyright: IOS & Bloomberg