Children's tablet maker Fuhu files for bankruptcy, agrees to sale to Mattel - LA Times
But Fuhu ran into trouble a year ago. Foxconn's "mishandling" of tablets that were destined for Christmas shoppers last year caused them to come in late, Fuhu said in court documents. That set off a ripple effect that hit the company hard. Shoppers turned to other devices, while the late delivery left Fuhu with an oversupply of tablets early this year. Fuhu returned about $90 million worth of inventory to Foxconn and agreed to buy devices back as necessary.
A few months ago, Foxconn started demanding quicker payments, according to court filings. The two sides tried working out a deal. But by this fall, Foxconn cut off communications with Fuhu and suspended manufacturing of nabi devices, the court documents say.
Stores including Wal-Mart and Target have been scrambling to get their hands on nabi tablets, with some of them turning to rival brands as Fuhu ran out.
Foxconn declined to comment. The company tops the list of Fuhu creditors, owed more than $61 million. It also owns a minority stake in Fuhu, as do DreamWorks Animation, Intel Capital, LG Display Co. and several other hardware companies.
Court documents say Fuhu has talked with high-ranking executives at about 15 potential "strategic or financial buyers," including nine firms with which talks have progressed to confidential information-sharing. About 500 potential bidders were initially contacted.
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