Leap Frog Case Study

Background Information
LeapFrog Enterprises was founded in 1995 by Mike Wood. Origins date back to 1990 when Mike Wood had an epiphany. He was playing with his 3 year old son and trying to help him recognize letters. It was then Wood came up with the idea of phonemic awareness. Wood took $15,000 of his own money to invest in a patent. Upon advice from friend he had 20 mothers test the products marketability. Of the 20 mothers, all 20 loved the concept. In 1995 LeapFrog Enterprises released their first product, the Phonics Desk which integrates technology with research-based learning model for phonics instruction. Toys R Us bought 40,000 units for the upcoming holiday season. This came out to be a $2.4 million order and allowed Wood to leave his law practice. It was then the company was launched. In 1997 Knowledge Universe acquires 85% of LeapFrog Enterprises. KU President, Tom Kalinske joins LeapFrog as CEO and brings 30-plus years experience to the company. Also the acquisition brought $50 million of much needed capital to LeapFrog.
In 2002 LeapFrog’s sales soared to $532 million which was an increase of 69 percent from the previous year. This took them to the third spot in U.S. toy company rankings. LeapFrogdominated two product categories: preschool electronic learning aids and nonpreschool electronic learning aids. It was in 2002 when LeapFrog successfully issued 9 million shares in its initial public offering. They were valued at $13 per share which raised $115 million for LeapFrog. It was also the most successful IPO of the year. By 2002 LeapFrog had introduced more than 65 learning products on 6 learning platforms. They had totaled 200 industry awards, with over 40 in 2002 alone. Also as of 2002 there have been over 8 million LeapPads sold worldwide.
By 2002 LeapFrog had become available to 30+ international countries. It was also available in 5 different languages. Near the end of 2002, 33 employees were selling the LeapFrog internationally. Sega... [continues]

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