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SoftKey

SoftKey International (originally SoftKey Software Products, Inc.) was a software company founded by Kevin O'Leary in 1986 in Toronto, Ontario.[1] It was known as The Learning Company from 1995 to 1999 after acquiring The Learning Company and taking its name.

SoftKey International
The Learning Company (1995–1999)
Founded1986; 37 years ago (1986) (as SoftKey Software Products)
FoundersKevin O'Leary
Defunct1999; 24 years ago (1999)
FateAcquired by Mattel and folded into Mattel Interactive
SuccessorsMattel Interactive (1999-2001)
Riverdeep Interactive Learning
Software MacKiev
Headquarters
United States (U.S)
ProductsEducational software
Shovelware games

SoftKey played a major role in the dissolution of the edutainment industry by the turn of the millennium.[2] Contributing factors include its reduction of the market price by releasing shovelware discs of freeware and shareware,[3] hostile takeovers of major edutainment software companies, reduction of these acquisitions to a skeleton staff, and questionable financial practices to maintain its stock price.[2]

In 1999, the company was acquired by Mattel in what Businessweek called one of "the Worst Deals of All Time".[4] It was subsequently folded into Mattel Interactive,[citation needed] Riverdeep Interactive Learning, and Software MacKiev.

Products edit

SoftKey published and distributed CD-ROM-based personal computer software for Windows and Macintosh computers during the late 1980s and 1990s.[5] Its lineup consisted of software intended for home audiences, specifically shovelware discs containing various freeware or shareware game software. The company enjoyed great success by offering "jewel-case only" products, dubbed its "Platinum" line.[citation needed]

As a home and small office software publisher, SoftKey bought the rights to application packages from their authors and distributed them under its own "Key" label. By late 1992, SoftKey was distributing 35 different products in this manner.[6] SoftKey began to develop its own software by 1994, and had branched out to include edutainment games and CD-ROMs in its line of products.[7]

In 1986, SoftKey released specialized graphics package KeyChart for the IBM PC and compatibles, designed to make time-consuming plotting easier.[8] In 1993, it was selling KeyMap, a DOS-only software that offered maps, route planning, and a database tool for annotating maps.[9] Around this time, Computer Associates acquired Easy Tax (DOS) from SoftKey and sold it as Simply Tax.[10]

SoftKey's acquisition of The Learning Company added the Reader Rabbit and Math Rabbit educational video games to its collection. Its acquisition of MECC added The Oregon Trail, Word Munchers, Number Munchers and Storybook Weaver.[11] With the acquisition of Broderbund, it obtained multiple award-winning brands including Carmen Sandiego, The Print Shop, Living Books, Family Tree Maker, Arthur, and KidPix.[12]

Marketing edit

According to founder Kevin O'Leary, SoftKey's business model was to market its retail products "no different from cat food or any other consumer good."[6] It was one of few companies to rent space in stores to better manage distribution.[13] O'Leary stated, "When we approach a retailer, we can offer them a wide range of titles that diversifies their risk. So if they give us five or 10 square feet of store space, we’ll guarantee X dollars of sell-through."[6] He also said, "It's not about technology anymore. It's about marketing, merchandising, brand management, and shelf space. In the cat food business, that's all that matters. And in the software business, that's all that matters.''[14]

The company pioneered revolving racks with software packaged in standard CD jewel cases, allowing them to display three times as much product.[15] It took products out of niche software businesses and into general stores with more traffic such as Office Depot, Radio Shack, Willson Stationers and SmithBooks. It used eye-catching graphics on the boxes and made all of its packaging uniform. O'Leary believed that "What's inside the box is important, but it's not as important as how it's marketed."[6] He stated that "It is truly a packaged goods philosophy that's taken over this industry. It's about facings and shelf space and advertising dollars and driving sales through the door and profit per square foot in gross margin."[6]

In October 1995, SoftKey had 10 centers in cities in Europe, Asia, Canada, and the United States. It sold its products through more than 18,000 outlets, including grocery stores, hardware stores, and airport gift shops, and had distributors in 47 countries.[16]

Pricing edit

SoftKey's pricing strategy was to prioritize the number of copies sold over the price per unit. As such, SoftKey listed its titles for lower prices, generally between $40 and $100, with minimum profit.[6] The Christian Science Monitor stated that the move could "transform the industry," leading to lower software prices but more variety in the types of stores that sell software.[14]

The corporate mission of SoftKey International, Inc. was "to be the leading electronic publisher of value-priced consumer software-worldwide."[16] One analyst dubbed its products "coasterware", since they were so cheap that "if you don't like the actual software you can use the CD-ROMs as drink coasters".[17]

O'Leary wanted to "produce products to service that 40 percent of the market that hasn't bought educational software because of pricing issues."[18] He stated, "In the last two years, we've moved from an industry that sells primarily to businesses to an industry that's going through a violent change to become a commodity.''[7]

The company became known for aggressively driving down the development costs of products and laying off employees of the companies it acquired.[19] Casey Dworkin, publisher of Retail Price Week, said that SoftKey appeals to companies that want to "sell software by the pound, appealing to impulse purchases by customers who are intrigued but don't want to drop $40 for a piece of software."[15] They compared SoftKey's practices to a laundry-detergent maker marketing a premium-brand version, a lower-end brand, and a generic version of the same product.[15]

SoftKey built a business by acquiring struggling software companies, repackaging and repricing its products.[20] "SoftKey believes that much consumer software is overpriced and therefore cannot reach a broad market. It's a philosophy that clashes with the artistic sensibilities of many in the multimedia software business—but is nonetheless likely to become increasingly influential in the volatile software world."[21]

Profit edit

SoftKey Software Products was the fastest growing company in Canada in 1992, with sales of $36.8 million and profit of $6.1 million. Its most profitable products were its tax-software and processing service.[6] By April 1995, SoftKey's stock was valued at $25.50, about 20 times the year's earnings.[22] A public offering of 2.3 million common shares was priced at $28.875.[23]

SoftKey products were sold in more than 19,000 stores in over 40 countries [24] In June of that year, Montgomery Securities raised more than $60 million for the company. In October, SoftKey raised another $350 million in an unrated private offering.[17] On November 28, 1995, SoftKey rose from 3.2 million to 4.7 million shares, the largest increase in open positions among Nasdaq issues.[25]

In August 1998, the stock exchange halted trading in The Learning Company, as the company issued a statement to clear up questions about its accounting practices.[26] Shares of The Learning Company (NYSE: TLC) fell 1 15/16 to 26 3/8 and Mattel (NYSE: MAT) plunged 20 percent to 23 11/16.[27] The company continued to grow, with revenue of $800 million despite an accumulated deficit of $1.1 billion by the end of 1998.[4]

History edit

In 1986, Canadian businessman and investor Kevin O'Leary along with John Freeman[28] started SoftKey Software Products, Inc. in O'Leary's basement with a loan of $10,000 from his mother.[29][30] He convinced other companies to bundle SoftKey's products with their own, later licensing software from other firms, which proved more cost-effective than internal development.[31]

In 1993, SoftKey International was created out of a three-way merger between SoftKey Software Products, WordStar International, and Spinnaker Software.[32][33] Shareholders of Softkey Software represented about 53 percent of the new company's shares.[33] After the merger, the company moved to Spinnaker's offices in Cambridge, Mass.[34]

Acquisitions edit

MECC and The Learning Company edit

 
Logo of SoftKey post–Learning Company acquisition

In October 1995, SoftKey initiated a bidding war against Broderbund for Learning Company, launching a hostile offer valued at $606 million. SoftKey also announced it had agreed to buy the Minnesota Educational Computing Corporation (MECC) for $370 million, throwing a wrench into Broderbund's offer.[13][35] O'Leary commented, "They're working on the economics of yesterday", stating that "Learning's premium-priced products were out of step with trends in the market."[36]

After the acquisition of The Learning Company, SoftKey changed its name to "The Learning Company".[37] A substantial percentage of the staff were let go, reducing it to a skeleton staff.[citation needed] MECC' senior vice president of product development Susan Schilling stated: "[O'Leary] had an interest in earning money. I'm not sure he had a desire to help children learn."[38]

Acquisitions from 1994 to 1998 edit

On September 14, 1994, SoftKey acquired privately held Software Marketing Corp., Phoenix, for about 600,000 shares of SoftKey common stock and the assumption of $1.6 million in long-term debt.[39]

On November 30, 1995, the original Learning Company announced that it had sued the Tribune Company for violating securities laws as a "strategic partner" of SoftKey International.[40] The next day, SoftKey agreed to acquire Compton's New Media from Tribune for stock valued at $106.5 million.[41] Compton's New Media was a publisher of encyclopedia CD-ROMs, and was originally a unit of Encyclopedia Britannica.[42][43]

In 1996, SoftKey International acquired EduSoft, a French education software developer and publisher, for $14.3M USD.[44]

In March 1998, Softkey, now called The Learning Company, acquired Mindscape Inc. from Pearson PLC for $150 million in cash and stock.[45] Broderbund's Red Orb Entertainment was moved to Mindscape.[46]

In June 1998, Learning Co. agreed to buy rival Broderbund Software Inc., maker of the blockbuster game Myst, in a stock deal valued at about $416 million.

In December 1998, The Learning Company acquired Palladium Interactive.[47]

According to Information technology consulting company Booz Allen Hamilton, two of SoftKey International's acquisition deals rank among the ten worst U.S. acquisitions during 1994–1996 as measured by shareholder value two years after the deal.[48]

Sale to Mattel edit

In the fall of 1998, Mattel agreed to acquire The Learning Company in a stock-for-stock merger valuing the company at approximately $4.2 billion. The merger was finalized and unanimously approved by both companies' boards of directors on December 14.[49] On May 7, 1999, shareholders of both companies voted to approve the merger. The merger was completed on May 13, 1999.[50] Jill E. Barad, Mattel's chairman and chief executive officer stated "This merger gives Mattel a $1 billion software division with an unparalleled portfolio of branded content and profit margins exceeding that of our traditional business,"[51] The company was placed under Mattel's new Mattel Interactive division.[52]

Aftermath edit

The sale proved to be fraught. A report from the Center for Financial Research and Analysis a few weeks after the merger highlighted the "lack of proper due diligence by Mattel during the Learning Co. acquisition," and listed numerous systemic problems with The Learning Company.[4][48] A few weeks later O'Leary, who had been hired as president of Mattel's new TLC digital division, sold his stock in the company for $6 million.[4] In the fourth quarter of 1999, Mattel reported a loss of $184 million,[48] reportedly due to poor sales and inventory problems.[53] The stock price valuation of Mattel dropped $2 billion in one day.[4] Michael Perik and Kevin O'Leary, founders and heads of the Learning Co, left the company.[54]

The Telegraph deemed it "one of the worst takeovers in recent history".[55] Toy analyst Margaret Whitfield of Tucker Anthony Cleary Gull called it "a disaster for Mattel".[56] Bloomberg, Businessweek, and CNBC all described it as one of the worst mergers of all time.[57][4][58]

In January 2000, Mattel brought on software executive and former Sega of America president Bernie Stolar to assist with their financial troubles.[59] On February 3, 2000 Chairman and CEO Jill E. Barad resigned from Mattel.[60] The 1999 Annual Report began, "The bad news for 1999 unfortunately has overshadowed the good news. We are all painfully aware of the negative effect the acquisition of The Learning Company and its subsequent performance had on our results for 1999" [52]

The acquisition saw the end of the mid-1990s edutainment boom. Former Learning Company educational design department manager, Toby Levenson, said that edutainment had become "a toxic word". Blake Montgomery of EdSurge wrote, "For many years, people making educational products didn't want them to be entertaining because that could be called "edutainment" and that would hurt your funding.”[61]

Sale to Gores Technology Group edit

On April 3, 2000, Mattel announced its plan to dissolve its assets related to the software business. Gores Technology Group acquired The Learning Company for $27.3 million plus a profit-sharing agreement with Mattel, to create their entertainment, productivity and education divisions, which became GAME Studios, The Learning Company, and Broderbund respectively.[4][62] GAME Studios was sold to Ubisoft in 2001. Gores subsequently sold most of the other holdings – including the edutainment series and the brand name The Learning Company – to Irish company Riverdeep Interactive Learning, which later became Houghton Mifflin Harcourt.[63] Harcourt released several book sets under The Learning Company brand umbrella, including Oregon Trail Adventures, The Little Box of Love, and The Little Box of Laughs.[64]

As of April 2018, Houghton Mifflin Harcourt has ceased using the Learning Company brand.[citation needed]

List of acquisitions edit

Software titles edit

  • 20,000 Leagues Under the Sea[65]
  • Air Power: The US Air Force in Action[66]
  • The American Heritage Talking Dictionary[67]
  • Angst: Rahz's Revenge
  • ArtRageous: The Amazing World of Art[68]
  • Arthur's Reading Race[69]
  • Astrorock[70]
  • The Bible: A Multimedia Experience[71]
  • BodyWorks 5.0: the complete multimedia guide to human anatomy[72]
  • Comanche CD (Budget CD-ROM Release)
  • Design It! 3-D
  • DinoPark Tycoon[73]
  • Dr. Health'nstein's Body Fun
  • Dr. Schueler's Home Medical Advisor Pro[74]
  • Dr. Seuss' ABC[69]
  • Earthworm Jim
  • Explorers of the New World[75]
  • Falcon AT
  • Flight of the Intruder
  • Green Eggs and Ham[69]
  • The Hubble Space Telescope[76]
  • Infopedia[77]
  • JetStrike[78]
  • Just Grandma and Me[69]
  • KeyAccounting (also known as Painless Accounting)
  • KeyCad Complete[79]
  • KeyChart[80]
  • KeyClipart series[81]
  • KeyDatabase Plus
  • KeyFonts[82]
  • KeyMailer
  • KeyPublisher
  • The Koshan Conspiracy[83]
  • Labels Unlimited[84]
  • Lamborghini American Challenge[85]
  • Leonardo, the inventor[86]
  • Lynn Fischer's Healthy Indulgences[87]
  • Me and my world: Multimedia picture dictionary[88]
  • Megafortress & Patriot
  • MPC Wizard[89]
  • Multipedia[90]
  • The Muppet Calendar[91]
  • The Oregon Trail: Classic Edition[92]
  • Oregon Trail II[93]
  • The Otter's Adventure[94]
  • Pocket and Tails Go Exploring[95]
  • PC PaintBrush Clipart Collection For Windows (ISBN 1-56434-687-0 )[95]
  • Pocket and Tails Go to Town[96]
  • Pro Landscaper 3-D[97]
  • Shadows of Cairn[98]
  • Shelley Duvall's Tales of Digby the Dog[99]
  • Silent Service II[100]
  • SoftKey Weekend[101]
  • Solitaire Antics
  • Spanish to Go![102]
  • Sports Illustrated Swimsuit Calendar[103]
  • Tom Kite Golf
  • Troggle Trouble Math[104]
  • The Three Little Pigs[69]
  • WriteNow
  • Wordstar for Windows 2[105]
  • War Wind II: Human Onslaught

References edit

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  64. ^ Ginns, Russell (September 11, 2014). "Book Set Review: "The Little Box of Love"". yeahstub.com.
  65. ^ Verne, Jules (July 17, 1995). 20,000 leagues under the sea [CD-ROM. OCLC 655891547.
  66. ^ Air power: The U.S. Air Force in action. July 17, 1995. OCLC 39734008.
  67. ^ SoftKey International Inc (July 17, 1995). The American Heritage talking dictionary. SoftKey. OCLC 38959902.
  68. ^ SoftKey International Inc (July 17, 1995). ArtRageous!: the amazing world of art. SoftKey International. OCLC 222224231.
  69. ^ a b c d e Trim, Mary (January 1, 2004). Growing and Knowing: A Selection Guide for Children's Literature. Walter de Gruyter. ISBN 9783598440076 – via Google Books.
  70. ^ Astrorock: CD-ROM. SoftKey. July 17, 1997. OCLC 786165091.
  71. ^ SoftKey International Inc; World Library, Inc (July 17, 1999). The Bible: a multimedia experience. Learning Co. OCLC 43689223. {{cite book}}: |first2= has generic name (help)
  72. ^ BodyWorks 5.0: the complete multimedia guide to human anatomy. July 17, 1993. OCLC 34314842.
  73. ^ SoftKey International Inc (July 17, 1995). DinoPark tycoon. SoftKey International Inc. OCLC 35845074.
  74. ^ SoftKey Multimedia Inc (July 17, 1997). Dr. Schueler's home medical advisor pro. SoftKey. OCLC 319894925.
  75. ^ SoftKey Multimedia Inc (July 17, 1999). Explorers of the New World. SoftKey Multimedia. OCLC 45795055.
  76. ^ The Hubble Space Telescope. SoftKey Multimedia. July 17, 1995. OCLC 33346900.
  77. ^ SoftKey Multimedia Inc (July 17, 1996). Infopedia 2.0. SoftKey Multimedia Inc. OCLC 695597879.
  78. ^ Jetstrike: the ultimate surprise attack. SoftKey; [Eksp. Indbindingscentralen. July 17, 1995. OCLC 472732146.
  79. ^ Hard Copy of program's Instruction Manual
  80. ^ KeyChart. July 17, 1987. OCLC 22456636.
  81. ^ SoftKey Multimedia Inc (July 17, 1995). KEY mega ClipArt 15,000. SoftKey. OCLC 42915334.
  82. ^ Key fonts pro: CD-ROM for Windows & Mac. July 17, 1994. OCLC 34159677.
  83. ^ SoftKey Multimedia (July 17, 1993). The Koshan conspiracy. SoftKey. OCLC 222149768.
  84. ^ SoftKey Multimedia Inc (July 17, 1997). Labels unlimited: your total professional labeling system. SoftKey Multimedia Inc. OCLC 39706385.
  85. ^ SoftKey International (July 17, 1995). Lamborghini: American challenge. SoftKey Multimedia. OCLC 38859412.
  86. ^ SoftKey Multimedia Inc (July 17, 1996). Leonardo, the inventor: take a look inside the greatest mind the world has ever known. SoftKey. OCLC 35148711.
  87. ^ Fischer, Lynn; SoftKey Multimedia Inc (July 17, 1995). Lynn Fischer's healthy indulgences. SoftKey. OCLC 33482694.
  88. ^ SoftKey Multimedia Inc (July 17, 1995). Me and my world: [multimedia picture dictionary. SoftKey. OCLC 38426305.
  89. ^ SoftKey International Inc (July 17, 1994). MPC wizard: test & tune your manual multimedia PC. SoftKey International. OCLC 32301269.
  90. ^ SoftKey International Inc (July 17, 1995). Multipedia: the reference library that starts where your encyclopedia leaves off. SoftKey Multimedia. OCLC 37016199.
  91. ^ The Muppet calendar. SoftKey. July 17, 1995. OCLC 49297435.
  92. ^ SoftKey Multimedia Inc (July 17, 1996). The Oregon Trail. SoftKey. OCLC 35923659.
  93. ^ Minnesota Educational Computing Corporation; SoftKey Multimedia Inc; Learning Company (July 17, 1997). Oregon Trail II. Learning Co. OCLC 47630963.
  94. ^ The Otter's adventure. SoftKey International. July 17, 1995. OCLC 224956581.
  95. ^ a b Optical Data Corporation; SoftKey Data Corporation (July 17, 1995). Pocket & Tails go exploring. SoftKey; Optical Data Corp. OCLC 36661217.
  96. ^ Pocket & Tails go to town. July 17, 1995. OCLC 965562713.
  97. ^ Pro landscaper 3-D. July 17, 1997. OCLC 222595034.
  98. ^ Shadows of Cairn. July 17, 1995. OCLC 37488752.
  99. ^ Duvall, Shelley; Sanctuary Woods Multimedia Corporation; SoftKey International Inc (July 17, 1994). Shelley Duvall's Tales of Digby the dog. Sanctuary Woods Multimedia: SoftKey International. OCLC 35120535.
  100. ^ Silent service II. SoftKey; [Eksp. Indbindingscentralen. July 17, 1995. OCLC 471332913.
  101. ^ SoftKey Multimedia Inc (July 17, 1995). SoftKey weekend. SoftKey Multimedia. OCLC 33986770.
  102. ^ RXL Pulitzer; SoftKey (July 17, 1996). Spanish to go!. SoftKey. OCLC 39009997.
  103. ^ Sports illustrated swimsuit calendar. SoftKey International. July 17, 1994. OCLC 47940006.
  104. ^ SoftKey Multimedia Inc (July 17, 1996). Troggle trouble math. SoftKey Multimedia. OCLC 422695128.
  105. ^ Box, user manual and license key. No diskette or CD.

External links edit

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Softkey redirects here For the input device see soft key This article may need to be rewritten to comply with Wikipedia s quality standards as some sections are not fluently written and there is some redundancy between them You can help The talk page may contain suggestions November 2020 SoftKey International originally SoftKey Software Products Inc was a software company founded by Kevin O Leary in 1986 in Toronto Ontario 1 It was known as The Learning Company from 1995 to 1999 after acquiring The Learning Company and taking its name SoftKey InternationalTrade nameThe Learning Company 1995 1999 Founded1986 37 years ago 1986 as SoftKey Software Products FoundersKevin O LearyDefunct1999 24 years ago 1999 FateAcquired by Mattel and folded into Mattel InteractiveSuccessorsMattel Interactive 1999 2001 Riverdeep Interactive LearningSoftware MacKievHeadquartersUnited States U S ProductsEducational softwareShovelware gamesSoftKey played a major role in the dissolution of the edutainment industry by the turn of the millennium 2 Contributing factors include its reduction of the market price by releasing shovelware discs of freeware and shareware 3 hostile takeovers of major edutainment software companies reduction of these acquisitions to a skeleton staff and questionable financial practices to maintain its stock price 2 In 1999 the company was acquired by Mattel in what Businessweek called one of the Worst Deals of All Time 4 It was subsequently folded into Mattel Interactive citation needed Riverdeep Interactive Learning and Software MacKiev Contents 1 Products 2 Marketing 3 Pricing 4 Profit 5 History 5 1 Acquisitions 5 1 1 MECC and The Learning Company 5 1 2 Acquisitions from 1994 to 1998 5 2 Sale to Mattel 5 2 1 Aftermath 5 3 Sale to Gores Technology Group 6 List of acquisitions 7 Software titles 8 References 9 External linksProducts editSoftKey published and distributed CD ROM based personal computer software for Windows and Macintosh computers during the late 1980s and 1990s 5 Its lineup consisted of software intended for home audiences specifically shovelware discs containing various freeware or shareware game software The company enjoyed great success by offering jewel case only products dubbed its Platinum line citation needed As a home and small office software publisher SoftKey bought the rights to application packages from their authors and distributed them under its own Key label By late 1992 SoftKey was distributing 35 different products in this manner 6 SoftKey began to develop its own software by 1994 and had branched out to include edutainment games and CD ROMs in its line of products 7 In 1986 SoftKey released specialized graphics package KeyChart for the IBM PC and compatibles designed to make time consuming plotting easier 8 In 1993 it was selling KeyMap a DOS only software that offered maps route planning and a database tool for annotating maps 9 Around this time Computer Associates acquired Easy Tax DOS from SoftKey and sold it as Simply Tax 10 SoftKey s acquisition of The Learning Company added the Reader Rabbit and Math Rabbit educational video games to its collection Its acquisition of MECC added The Oregon Trail Word Munchers Number Munchers and Storybook Weaver 11 With the acquisition of Broderbund it obtained multiple award winning brands including Carmen Sandiego The Print Shop Living Books Family Tree Maker Arthur and KidPix 12 Marketing editAccording to founder Kevin O Leary SoftKey s business model was to market its retail products no different from cat food or any other consumer good 6 It was one of few companies to rent space in stores to better manage distribution 13 O Leary stated When we approach a retailer we can offer them a wide range of titles that diversifies their risk So if they give us five or 10 square feet of store space we ll guarantee X dollars of sell through 6 He also said It s not about technology anymore It s about marketing merchandising brand management and shelf space In the cat food business that s all that matters And in the software business that s all that matters 14 The company pioneered revolving racks with software packaged in standard CD jewel cases allowing them to display three times as much product 15 It took products out of niche software businesses and into general stores with more traffic such as Office Depot Radio Shack Willson Stationers and SmithBooks It used eye catching graphics on the boxes and made all of its packaging uniform O Leary believed that What s inside the box is important but it s not as important as how it s marketed 6 He stated that It is truly a packaged goods philosophy that s taken over this industry It s about facings and shelf space and advertising dollars and driving sales through the door and profit per square foot in gross margin 6 In October 1995 SoftKey had 10 centers in cities in Europe Asia Canada and the United States It sold its products through more than 18 000 outlets including grocery stores hardware stores and airport gift shops and had distributors in 47 countries 16 Pricing editSoftKey s pricing strategy was to prioritize the number of copies sold over the price per unit As such SoftKey listed its titles for lower prices generally between 40 and 100 with minimum profit 6 The Christian Science Monitor stated that the move could transform the industry leading to lower software prices but more variety in the types of stores that sell software 14 The corporate mission of SoftKey International Inc was to be the leading electronic publisher of value priced consumer software worldwide 16 One analyst dubbed its products coasterware since they were so cheap that if you don t like the actual software you can use the CD ROMs as drink coasters 17 O Leary wanted to produce products to service that 40 percent of the market that hasn t bought educational software because of pricing issues 18 He stated In the last two years we ve moved from an industry that sells primarily to businesses to an industry that s going through a violent change to become a commodity 7 The company became known for aggressively driving down the development costs of products and laying off employees of the companies it acquired 19 Casey Dworkin publisher of Retail Price Week said that SoftKey appeals to companies that want to sell software by the pound appealing to impulse purchases by customers who are intrigued but don t want to drop 40 for a piece of software 15 They compared SoftKey s practices to a laundry detergent maker marketing a premium brand version a lower end brand and a generic version of the same product 15 SoftKey built a business by acquiring struggling software companies repackaging and repricing its products 20 SoftKey believes that much consumer software is overpriced and therefore cannot reach a broad market It s a philosophy that clashes with the artistic sensibilities of many in the multimedia software business but is nonetheless likely to become increasingly influential in the volatile software world 21 Profit editSoftKey Software Products was the fastest growing company in Canada in 1992 with sales of 36 8 million and profit of 6 1 million Its most profitable products were its tax software and processing service 6 By April 1995 SoftKey s stock was valued at 25 50 about 20 times the year s earnings 22 A public offering of 2 3 million common shares was priced at 28 875 23 SoftKey products were sold in more than 19 000 stores in over 40 countries 24 In June of that year Montgomery Securities raised more than 60 million for the company In October SoftKey raised another 350 million in an unrated private offering 17 On November 28 1995 SoftKey rose from 3 2 million to 4 7 million shares the largest increase in open positions among Nasdaq issues 25 In August 1998 the stock exchange halted trading in The Learning Company as the company issued a statement to clear up questions about its accounting practices 26 Shares of The Learning Company NYSE TLC fell 1 15 16 to 26 3 8 and Mattel NYSE MAT plunged 20 percent to 23 11 16 27 The company continued to grow with revenue of 800 million despite an accumulated deficit of 1 1 billion by the end of 1998 4 History editIn 1986 Canadian businessman and investor Kevin O Leary along with John Freeman 28 started SoftKey Software Products Inc in O Leary s basement with a loan of 10 000 from his mother 29 30 He convinced other companies to bundle SoftKey s products with their own later licensing software from other firms which proved more cost effective than internal development 31 In 1993 SoftKey International was created out of a three way merger between SoftKey Software Products WordStar International and Spinnaker Software 32 33 Shareholders of Softkey Software represented about 53 percent of the new company s shares 33 After the merger the company moved to Spinnaker s offices in Cambridge Mass 34 Acquisitions edit MECC and The Learning Company edit nbsp Logo of SoftKey post Learning Company acquisitionIn October 1995 SoftKey initiated a bidding war against Broderbund for Learning Company launching a hostile offer valued at 606 million SoftKey also announced it had agreed to buy the Minnesota Educational Computing Corporation MECC for 370 million throwing a wrench into Broderbund s offer 13 35 O Leary commented They re working on the economics of yesterday stating that Learning s premium priced products were out of step with trends in the market 36 After the acquisition of The Learning Company SoftKey changed its name to The Learning Company 37 A substantial percentage of the staff were let go reducing it to a skeleton staff citation needed MECC senior vice president of product development Susan Schilling stated O Leary had an interest in earning money I m not sure he had a desire to help children learn 38 Acquisitions from 1994 to 1998 edit On September 14 1994 SoftKey acquired privately held Software Marketing Corp Phoenix for about 600 000 shares of SoftKey common stock and the assumption of 1 6 million in long term debt 39 On November 30 1995 the original Learning Company announced that it had sued the Tribune Company for violating securities laws as a strategic partner of SoftKey International 40 The next day SoftKey agreed to acquire Compton s New Media from Tribune for stock valued at 106 5 million 41 Compton s New Media was a publisher of encyclopedia CD ROMs and was originally a unit of Encyclopedia Britannica 42 43 In 1996 SoftKey International acquired EduSoft a French education software developer and publisher for 14 3M USD 44 In March 1998 Softkey now called The Learning Company acquired Mindscape Inc from Pearson PLC for 150 million in cash and stock 45 Broderbund s Red Orb Entertainment was moved to Mindscape 46 In June 1998 Learning Co agreed to buy rival Broderbund Software Inc maker of the blockbuster game Myst in a stock deal valued at about 416 million In December 1998 The Learning Company acquired Palladium Interactive 47 According to Information technology consulting company Booz Allen Hamilton two of SoftKey International s acquisition deals rank among the ten worst U S acquisitions during 1994 1996 as measured by shareholder value two years after the deal 48 Sale to Mattel edit In the fall of 1998 Mattel agreed to acquire The Learning Company in a stock for stock merger valuing the company at approximately 4 2 billion The merger was finalized and unanimously approved by both companies boards of directors on December 14 49 On May 7 1999 shareholders of both companies voted to approve the merger The merger was completed on May 13 1999 50 Jill E Barad Mattel s chairman and chief executive officer stated This merger gives Mattel a 1 billion software division with an unparalleled portfolio of branded content and profit margins exceeding that of our traditional business 51 The company was placed under Mattel s new Mattel Interactive division 52 Aftermath edit The sale proved to be fraught A report from the Center for Financial Research and Analysis a few weeks after the merger highlighted the lack of proper due diligence by Mattel during the Learning Co acquisition and listed numerous systemic problems with The Learning Company 4 48 A few weeks later O Leary who had been hired as president of Mattel s new TLC digital division sold his stock in the company for 6 million 4 In the fourth quarter of 1999 Mattel reported a loss of 184 million 48 reportedly due to poor sales and inventory problems 53 The stock price valuation of Mattel dropped 2 billion in one day 4 Michael Perik and Kevin O Leary founders and heads of the Learning Co left the company 54 The Telegraph deemed it one of the worst takeovers in recent history 55 Toy analyst Margaret Whitfield of Tucker Anthony Cleary Gull called it a disaster for Mattel 56 Bloomberg Businessweek and CNBC all described it as one of the worst mergers of all time 57 4 58 In January 2000 Mattel brought on software executive and former Sega of America president Bernie Stolar to assist with their financial troubles 59 On February 3 2000 Chairman and CEO Jill E Barad resigned from Mattel 60 The 1999 Annual Report began The bad news for 1999 unfortunately has overshadowed the good news We are all painfully aware of the negative effect the acquisition of The Learning Company and its subsequent performance had on our results for 1999 52 The acquisition saw the end of the mid 1990s edutainment boom Former Learning Company educational design department manager Toby Levenson said that edutainment had become a toxic word Blake Montgomery of EdSurge wrote For many years people making educational products didn t want them to be entertaining because that could be called edutainment and that would hurt your funding 61 Sale to Gores Technology Group edit On April 3 2000 Mattel announced its plan to dissolve its assets related to the software business Gores Technology Group acquired The Learning Company for 27 3 million plus a profit sharing agreement with Mattel to create their entertainment productivity and education divisions which became GAME Studios The Learning Company and Broderbund respectively 4 62 GAME Studios was sold to Ubisoft in 2001 Gores subsequently sold most of the other holdings including the edutainment series and the brand name The Learning Company to Irish company Riverdeep Interactive Learning which later became Houghton Mifflin Harcourt 63 Harcourt released several book sets under The Learning Company brand umbrella including Oregon Trail Adventures The Little Box of Love and The Little Box of Laughs 64 As of April 2018 Houghton Mifflin Harcourt has ceased using the Learning Company brand citation needed List of acquisitions editFebruary 1994 WordStar International and Spinnaker Software June 1994 Aris Multimedia Entertainment July 1994 Compact Publishing September 1995 Software Marketing Corporation July 1995 Tewi Verlag GmbH August 1995 Future Vision Holding December 1995 The Learning Company December 1995 Compton s NewMedia Late 1995 EduSoft May 1996 Minnesota Educational Computing Corporation MECC October 1997 Microsystems Software December 1997 Creative Wonders March 1998 Mindscape August 1998 BroderbundSoftware titles edit20 000 Leagues Under the Sea 65 Air Power The US Air Force in Action 66 The American Heritage Talking Dictionary 67 Angst Rahz s Revenge ArtRageous The Amazing World of Art 68 Arthur s Reading Race 69 Astrorock 70 The Bible A Multimedia Experience 71 BodyWorks 5 0 the complete multimedia guide to human anatomy 72 Comanche CD Budget CD ROM Release Design It 3 D DinoPark Tycoon 73 Dr Health nstein s Body Fun Dr Schueler s Home Medical Advisor Pro 74 Dr Seuss ABC 69 Earthworm Jim Explorers of the New World 75 Falcon AT Flight of the Intruder Green Eggs and Ham 69 The Hubble Space Telescope 76 Infopedia 77 JetStrike 78 Just Grandma and Me 69 KeyAccounting also known as Painless Accounting KeyCad Complete 79 KeyChart 80 KeyClipart series 81 KeyDatabase Plus KeyFonts 82 KeyMailer KeyPublisher The Koshan Conspiracy 83 Labels Unlimited 84 Lamborghini American Challenge 85 Leonardo the inventor 86 Lynn Fischer s Healthy Indulgences 87 Me and my world Multimedia picture dictionary 88 Megafortress amp Patriot MPC Wizard 89 Multipedia 90 The Muppet Calendar 91 The Oregon Trail Classic Edition 92 Oregon Trail II 93 The Otter s Adventure 94 Pocket and Tails Go Exploring 95 PC PaintBrush Clipart Collection For Windows ISBN 1 56434 687 0 95 Pocket and Tails Go to Town 96 Pro Landscaper 3 D 97 Shadows of Cairn 98 Shelley Duvall s Tales of Digby the Dog 99 Silent Service II 100 SoftKey Weekend 101 Solitaire Antics Spanish to Go 102 Sports Illustrated Swimsuit Calendar 103 Tom Kite Golf Troggle Trouble Math 104 The Three Little Pigs 69 WriteNow Wordstar for Windows 2 105 War Wind II Human OnslaughtReferences edit Burgess Steve Kevin O Leary NUVO magazine Archived from the original on December 8 2020 Retrieved December 8 2020 a b paleotronic August 20 2019 The Family Business An Interview with Broderbund Software founder Doug Carlston Paleotronic Magazine Retrieved October 31 2020 Is the Educational Games Industry Falling Into the Same Trap It Did 20 Years Ago EdSurge News EdSurge February 7 2016 Retrieved October 31 2020 a b c d e f g Kevin O Leary He s not a billionaire he just plays one on TV Archived from the original on September 2 2016 Retrieved September 10 2016 O Leary Kevin 2011 Cold Hard Truth On Business Money amp Life Doubleday Canada ISBN 978 0 385 67174 3 a b c d e f g Strategy Staff November 16 1992 The secret of SoftKey s success Strategy Archived from the original on December 8 2020 a b Coolidge Shelley Donald June 28 1994 Competition Drives Software Mergers The Christian Science Monitor Sandberg Diment Eirk April 20 1986 The Executive Computer Putting Plotters To Work In The Office The New York Times Swislow William August 29 1993 Just The Facts Chicago Tribune Rosen Jan M October 28 1993 COMPANY NEWS Now Hear This More Free Software The New York Times SoftKey Buys Another Educational Software Firm Chicago Tribune May 17 1996 Dunkin Alan April 28 2000 Broderbund and The Learning Company Merge GameSpot a b Pitta Julie October 31 1995 Bidding War Opens for Learning Co Los Angeles Times a b Belsie Laurent May 13 1994 Consumer Software Is Expected To Be Next Fast Growing Segment The Christian Science Monitor a b c Choi Audrey November 2 1995 SoftKey Sells Software Just Like Other Commodities The Associated Press a b Dunn Connie October 1 1995 Industry Interview SoftKey International Inc Computer User Archived from the original on January 19 2001 a b Greenberg Herb October 25 1995 Business Insider Does SoftKey International Have Some Hard Core Problems SFGate Fisher Lawrence M December 8 1995 SoftKey Reaches Agreement to Buy Learning Company The New York Times ISSN 0362 4331 Archived from the original on September 16 2016 Retrieved September 10 2016 History of The Learning Company Inc FundingUniverse www fundinguniverse com Archived from the original on September 16 2016 Retrieved September 15 2016 Fisher Lawrence M December 8 1995 SoftKey Reaches Agreement to Buy Learning Company The New York Times Pitta Julie December 8 1995 Learning Co to Be Bought by SoftKey for 606 Million Computers Friendly suitor Broderbund is outbid Deal would make SoftKey largest educational software company Los Angeles Times Abelson Reed April 9 1995 Investing it The ground floor Basking in Technology s Glow The New York Times Stocks Fall in Volatile Trading With Dow Off by 8 64 The New York Times Associated Press June 28 1995 SoftKey s Best Sellers Now Available For Windows 95 Bloomberg September 28 1995 Uncovered Short Positions Gain 2 on Nasdaq Market The New York Times November 28 1995 The Learning Company Stock Dives Nearly 20 Los Angeles Times Reuters August 20 1998 Dignan Larry December 14 1998 Mattel The Learning Co in 3 8B merger Znet How I Made My First Million Dollars Part 1 Ask Mr Wonderful Shark Tank s Kevin O Leary YouTube Archived from the original on December 21 2021 Scipioni Jade July 24 2019 What Kevin O Leary would do if he lost everything and had to start over CNBC Retrieved November 7 2020 Shark Tank investor Kevin O Leary explains how a 10 000 loan from his mother helped him build a 4 billion company businessinsider com April 17 2015 Retrieved January 19 2017 A history of Kevin O Leary s spotty business record in four deals www canadianbusiness com Retrieved November 7 2020 SoftKey to buy Spinnaker WordStar UPI August 18 1993 Retrieved November 4 2020 a b BUSINESS TECHNOLOGY 3 Way Merger In Software The New York Times Reuters August 18 1993 Slater Derek February 14 1994 SoftKey gazelle or lummox Computerworld Strom Stephanie October 31 1995 Mergers For Year Approach Record The New York Times Fisher Lawrence M November 9 1995 Learning Accepts New Offer From Broderbund Software The New York Times Retrieved December 5 2020 Donahue Sean July 22 1998 Broderbund Acquired Wired Lussenhop Jessica January 19 2011 Oregon Trail How three Minnesotans forged its path City Pages Archived from the original on January 23 2011 Company Briefs The New York Times September 14 1994 Tribune Is Sued By Learning Company The New York Times Reuters December 2 1995 Fisher Lawrence M December 1 1995 SoftKey Gets an Ally in Hostile Takeover Bid The New York Times Rothman Matt July 6 1993 Tech News Compton s New Media attracts buyers attention Variety Patent Barred For Compton s The New York Times October 31 1994 CBR Staff Writer August 14 1996 SOFTKEY BUYS EDUSOFT IN PARIS Tech Monitor Company News Learning Company Sets Deal For Mindscape The New York Times Dow Jones March 7 1998 Dunkin Alan October 2 1998 Red Orb Stays With Mindscape GameSpot Learning Company Acquires Again Palladium makes genealogy software December 1998 a b c Learning from Mattel PDF Tuck School of Business at Dartmouth April 2000 Shareholder News Cutbacks in Retailer Buying Mattel and The Learning Company Agree To Merge Mattel December 14 1998 Archived from the original on October 17 2007 Press Releases Shareholders Approve Merger of Mattel and The Learning Company Mattel May 7 1999 Archived from the original on October 17 2007 Press Release Mattel Completes Merger with The Learning Company Mattel May 13 1999 Archived from the original on October 17 2007 a b Mattel Inc 1999 Annual Report A Truly Great Company With The Very Best People A Compelling Underlying Strategy And Resources For Sustainable Growth PDF Mattel 2000 Mayer Caroline E February 4 2000 Ailing Mattel Forces CEO to Resign The Washington Post Bannon Lisa November 11 1999 Co Founders of Learning Co Unit Leave Mattel After Earnings Surprise The Wall Street Journal Cave Andrew September 30 2000 Mattel sale ends 3 6bn fiasco The Telegraph Gores Engineers Rapid Turnaround At Software Maker The Gores Group Los Angeles Business Journal April 16 2001 Archived from the original on December 9 2010 Rosenbush Steve October 4 2007 When Big Deals Go Bad and Why Bloomberg Retrieved October 11 2015 Top 10 Best and Worst Mergers of All Time CNBC December 29 2009 Retrieved November 7 2020 Hays Constance L February 4 2000 Chief of Mattel Steps Down After Reporting Loss in 1999 The New York Times Press Releases Mattel Reports 1999 Results Mattel February 3 2000 Archived from the original on October 17 2007 Is the Educational Games Industry Falling Into the Same Trap It Did 20 Years Ago EdSurge News EdSurge February 7 2016 Retrieved November 7 2020 Gores Technology Group Acquires The Learning Company From Mattel Inc The Gores Group September 29 2000 Archived from the original on May 13 2008 https www gores com wp content uploads 2018 01 Press Release Gores Technology Group Acquires The Learning Company from Mattel Inc pdf bare URL PDF Ginns Russell September 11 2014 Book Set Review The Little Box of Love yeahstub com Verne Jules July 17 1995 20 000 leagues under the sea CD ROM OCLC 655891547 Air power The U S Air Force in action July 17 1995 OCLC 39734008 SoftKey International Inc July 17 1995 The American Heritage talking dictionary SoftKey OCLC 38959902 SoftKey International Inc July 17 1995 ArtRageous the amazing world of art SoftKey International OCLC 222224231 a b c d e Trim Mary January 1 2004 Growing and Knowing A Selection Guide for Children s Literature Walter de Gruyter ISBN 9783598440076 via Google Books Astrorock CD ROM SoftKey July 17 1997 OCLC 786165091 SoftKey International Inc World Library Inc July 17 1999 The Bible a multimedia experience Learning Co OCLC 43689223 a href Template Cite book html title Template Cite book cite book a first2 has generic name help BodyWorks 5 0 the complete multimedia guide to human anatomy July 17 1993 OCLC 34314842 SoftKey International Inc July 17 1995 DinoPark tycoon SoftKey International Inc OCLC 35845074 SoftKey Multimedia Inc July 17 1997 Dr Schueler s home medical advisor pro SoftKey OCLC 319894925 SoftKey Multimedia Inc July 17 1999 Explorers of the New World SoftKey Multimedia OCLC 45795055 The Hubble Space Telescope SoftKey Multimedia July 17 1995 OCLC 33346900 SoftKey Multimedia Inc July 17 1996 Infopedia 2 0 SoftKey Multimedia Inc OCLC 695597879 Jetstrike the ultimate surprise attack SoftKey Eksp Indbindingscentralen July 17 1995 OCLC 472732146 Hard Copy of program s Instruction Manual KeyChart July 17 1987 OCLC 22456636 SoftKey Multimedia Inc July 17 1995 KEY mega ClipArt 15 000 SoftKey OCLC 42915334 Key fonts pro CD ROM for Windows amp Mac July 17 1994 OCLC 34159677 SoftKey Multimedia July 17 1993 The Koshan conspiracy SoftKey OCLC 222149768 SoftKey Multimedia Inc July 17 1997 Labels unlimited your total professional labeling system SoftKey Multimedia Inc OCLC 39706385 SoftKey International July 17 1995 Lamborghini American challenge SoftKey Multimedia OCLC 38859412 SoftKey Multimedia Inc July 17 1996 Leonardo the inventor take a look inside the greatest mind the world has ever known SoftKey OCLC 35148711 Fischer Lynn SoftKey Multimedia Inc July 17 1995 Lynn Fischer s healthy indulgences SoftKey OCLC 33482694 SoftKey Multimedia Inc July 17 1995 Me and my world multimedia picture dictionary SoftKey OCLC 38426305 SoftKey International Inc July 17 1994 MPC wizard test amp tune your manual multimedia PC SoftKey International OCLC 32301269 SoftKey International Inc July 17 1995 Multipedia the reference library that starts where your encyclopedia leaves off SoftKey Multimedia OCLC 37016199 The Muppet calendar SoftKey July 17 1995 OCLC 49297435 SoftKey Multimedia Inc July 17 1996 The Oregon Trail SoftKey OCLC 35923659 Minnesota Educational Computing Corporation SoftKey Multimedia Inc Learning Company July 17 1997 Oregon Trail II Learning Co OCLC 47630963 The Otter s adventure SoftKey International July 17 1995 OCLC 224956581 a b Optical Data Corporation SoftKey Data Corporation July 17 1995 Pocket amp Tails go exploring SoftKey Optical Data Corp OCLC 36661217 Pocket amp Tails go to town July 17 1995 OCLC 965562713 Pro landscaper 3 D July 17 1997 OCLC 222595034 Shadows of Cairn July 17 1995 OCLC 37488752 Duvall Shelley Sanctuary Woods Multimedia Corporation SoftKey International Inc July 17 1994 Shelley Duvall s Tales of Digby the dog Sanctuary Woods Multimedia SoftKey International OCLC 35120535 Silent service II SoftKey Eksp Indbindingscentralen July 17 1995 OCLC 471332913 SoftKey Multimedia Inc July 17 1995 SoftKey weekend SoftKey Multimedia OCLC 33986770 RXL Pulitzer SoftKey July 17 1996 Spanish to go SoftKey OCLC 39009997 Sports illustrated swimsuit calendar SoftKey International July 17 1994 OCLC 47940006 SoftKey Multimedia Inc July 17 1996 Troggle trouble math SoftKey Multimedia OCLC 422695128 Box user manual and license key No diskette or CD External links editOfficial website at the Wayback Machine archived 1997 01 01 Retrieved from https en wikipedia org w index php title SoftKey amp oldid 1188553368, wikipedia, wiki, book, books, library,

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