(Adds comments about joint venture with Discovery Communications and share price.)

   DOW JONES NEWSWIRES 
 

Hasbro Inc.'s (HAS) second-quarter earnings rose 4.8% amid strong sales of most of its toy brands, including those related to the Transformers movie sequel, but revenue fell just short of Wall Street's expectations while profit topped estimates. Meanwhile, the toy maker said its TV network and Web site joint venture with Discovery Communications Inc. (DISCA) won't hurt earnings as much as previously expected. President and Chief Executive Brian Goldner reiterated Hasbro's long-stated target of growing 2009 revenue and per-share earnings - despite a 15 to 20 cents a share hit from the television investment and assuming no major deterioration in the global economy or in the value of foreign currencies.

Hasbro in April said it expected the Discovery joint venture to hurt 2009 earnings by 25 to 30 cents a share, but lower financing costs and amortization of expenses tied to the deal prompted the revision. The Pawtucket, R.I., company expects the deal to hurt 2010 earnings by 25 to 30 cents a share, down from previous guidance of 30 to 35 cents a share.

For the second quarter, Hasbro reported a profit of $39.3 million, or 26 cents a share, up from $37.5 million, or 25 cents a share, a year earlier. The latest period included a 6 cent charge related to the Discovery joint venture.

Revenue increased 1% to $792.2 million, but rose 7% in constant currency.

Analysts polled by Thomson Reuters most recently were looking for earnings of 23 cents on revenue of $797 million.

Gross margin fell to 59.7% from 60.7%.

Hasbro is holding a conference call to discuss results at 8:30 a.m. ET.

Shares recently gained 4.4% to $26.50 in premarket trading. The stock is down by roughly a third in the past year.

Toy makers' sales had slumped in recent quarters as consumers spend less and a rebound isn't seen anytime soon. For its part, Hasbro is placing its hopes on toys tied to the smash "Transformers: Revenge of the Fallen" to boost sales. Much of Hasbro's recent growth stems from its success featuring its toys in hit movies as its lineup includes G.I. Joe, Star Wars and Spider-Man products. A G.I. Joe movie is coming up next month.

Rival Mattel Inc. (MAT) on Friday reported another quarter of slumping sales, partly attributing it to lack of toys tied to summer entertainment, though its bottom line benefitted from cost cuts.

In its U.S. and Canadian segment sales rose 4.8%. International sales declined 9.9%, hurt by foreign currency effects.

Hasbro in April unveiled a pricey joint venture that will give it shared control with Discovery of a new cable-TV network and Web site for children based on Hasbro brands and the Discovery Kids network.

(Mary Ellen Lloyd contributed to this report.)

-By Tess Stynes, Dow Jones Newswires; 212-416-2481; tess.stynes@dowjones.com