The world's largest toymaker is expected to report another round of disappointing earnings on Thursday and has been hit by a flurry of shareholder lawsuits. Chief Executive Jill Barad is under pressure due to unexpected losses at The Learning Co, the educational software concern Mattel bought earlier this year for $3.5 billion, and even Barbie has lost some of her luster.

Mattel stunned Wall Street earlier this month with a warning that its third-quarter earnings would fall far below expectations due to large losses at The Learning Co.

Wall Street analysts now expect the company to post earnings per share of 31 cents, according to First Call/Thomson Financial, less than half the consensus estimate of 67 cents before the October 4 profit warning.

Meanwhile, Wall Street analysts are anxiously awaiting an explanation in Thursday's earnings announcement. "Anything could happen," Salomon Smith Barney analyst Jill Krutick said. Mattel had no comment on its various problems. "Everyone is very focused on the business," spokesman Glenn Bozarth said. "Jill Barad has the company's full support."

Barad is not speaking to the press. She has relinquished her seat on software king Microsoft Corp's board and has sold more than $7 million of her Microsoft stock, according to a Securities and Exchange Commission filing. A Mattel spokesman said she was completely focused on Mattel business. The Learning Co. acquisition had been touted as a way for Mattel to modernise its image by transforming from a Barbie doll-maker to a high-tech family products concern.

The acquisition was expected to help restore Mattel's profits, which have slipped in recent quarters due to tired sales of old toys such as Barbie, which turned 40 this year. Instead, Mattel warned of an after-tax loss at The Learning Co. between $50 million and $100 million compared with a previously expected profit of $50 million. It cited lower revenues, the writeoff of bad debts, higher advertising and promotional costs and the termination of some distribution deals. Mattel's stock lost 25 per cent on the news, falling to 12-11/16 in very heavy trading. On Wednesday, Mattel shares were up 1/4 at 13-5/16 in afternoon trading on the New York Stock Exchange - not far from its year-low of 11-11/16. Meanwhile, shareholders have been moving forward on class action lawsuits stemming from the profit warning. Barad told her board that Learning Co. department heads hadn't fully briefed her on the extent of the losses.

Analysts said Thursday's earnings announcement could include some moves to address problems at The Learning Co. "I'm wondering if there will be any announcements Thursday in changes either at the top (of Mattel) or at the top of The Learning Co.," said Tucker Anthony analyst Margaret Whitfield. "I would imagine something could be in the offing at The Learning Co." rather than Barad's immediate exit.

Analysts said they weren't convinced the board was ready to take action against Barad.

"Until they quantify the ongoing impact to earnings for The Learning Co. I think it's premature to try and figure out where they stand," Merrill Lynch analyst Hayley Kissel said. "I suspect The Learning Co. is a profitable entity on ago-forward basis. It's uncertain as to how long it is going to take to resolve some of the issues. The Learning Co. is clearly less profitable than we and Mattel were led to believe. But I still think it's profitable," she said.

This week, there also have been media reports that Mattel may be a potential takeover target among major entertainment concerns, although no suitors have come forward publicly.

"Mattel is a good company with core brands that have value," Kissel said. "The companies that are the usual (suitor) suspects are entertainment companies. If there is a buyer for Mattel, it will have to be a financial buyer, a leveraged buyout type of buyer." Kissel did not name any potential buyers. She added that although she had not been briefed on the inner workings of The Learning Co, she didn't think that Mattel's problems were unsolvable or that Barad would be pushed out.