The recall of toys, including Sesame Street dolls, that may contain excessive lead levels will cut $30 million from Mattel's previously reported operating income of $63.5 million. The company didn't say what the impact on net income would be.
The lead discovery might force Mattel to find new sources of low-cost goods and may further damage China's reputation as an exporter, following a recall of ``Thomas & Friends'' toys, a U.S. ban on Chinese toothpaste and scandals involving tainted cooking oil and diseased pork.
``Mattel has for many years been a leader in product safety,'' said Sean McGowan, an analyst at Wedbush Morgan Securities in New York. ``This serves as a reminder that even the most diligent companies are vulnerable to the materials that get supplied to their factories.''