Canadian entrepreneur and investor Kevin O'Leary, a former Canadian TV sports producer, started Softkey International in his living room on a $10,000 investment. As a repackager of high-end business software for the consumer market, Softkey succeeded in its mission to become "the Campbell's Soup of software". By 1994, Softkey was a billion-dollar consolidator in the educational software market, acquiring no less than sixty rivals, such as WordStar, Broderbund and Spinnaker Software. It then moved to Boston and took the name of one of its acquisitions, The Learning Company (TLC).
Mattel bought in with great enthusiasm at the top of the market in 1999 at US$3.65B, but ultimately found itself losing money with 467 software titles. This acquisition was intended to broaden Mattel's product line and help Mattel sell more products that appeal to boys, but TLC began reporting unexpected losses before the deal was even completed. The deal was supposed to immediately add $50 million annually to Mattel's bottom line. The company instead lost $82.4 million in that fiscal year because of a number of problems with the acquisition, including a loss of a key distribution deal and a high return of unsold products from retailers. In October, Mattel announced that its earnings would fall well below expectations, prompting the departure one month later of TLC's O'Leary and another founder. Mattel ultimately let go of the company to The Gores Group, LLC, (GTG) for nothing other than a cut of future profits. GTG said of TLC's business structure, "[it] was a textbook example of a business built mostly by cobbled-together acquisitions, which were then purchased by a larger company with little idea of how to make the pieces fit together." The company was subsequently turned around in short order, repairing the mess made by O'Leary. Said James Bailey, President of GTG, "there were seven separate Internet initiatives, all run by different people. Some of these people had never met each other, even though they worked in the same building." In 2001, Gores sold The Learning Company's entertainment holdings to Ubisoft, and most of the other holdings to Irish company Riverdeep.
Softkey International Inc. Faces Unique Task After Acquiring Learning Co.(Originated from San Jose Mercury News, Calif.)
Dec 10, 1995; Dec. 11--softkey international Inc. faces a unique challenge. The Cambridge, Mass., publisher of consumer software must...
SoftKey closing in on Learning Co. deal Software firms meet to work out merger; white knight looks to have lost bidding war
Dec 07, 1995; softkey International Inc. has taken its gloves off, and it looks like the bare-fisted approach may be working. The...