Elmo's tickled red

Elmo is also being peddled like never before. Mattel Inc. kept the doll's tricks under tight wraps until its unveiling in September.

Most retailers placed their orders without having seen the doll itself. And Elmo is selling like crazy. Parents are clearing out retailers' stocks in many cases in one day creating an early holiday sensation and the first real must-have toy since the late 1990s.

"We had thousands of people prepay to reserve an Elmo that really was sight unseen," said Ernie Speranza, the chief marketing officer of KB Toys, a chain based in Pittsfield, Mass. "It was the best one-day product launch we've seen in 30 years." Now, thanks in part to the laughing red creature, industry analysts predict the hottest season in five years for the $22-billion U.

S. toy business. Some are already calling it the "Elmo Effect.

" "The customers are calling the stores every day to find out if they got any in stock," said Scott McCall, Wal-Mart Stores Inc.'s chief toy merchant. "It's created a lot of demand and a lot of interest in the toy business.

" The industry excitement partly reflects a wide range of potential big sellers this year. Parents who don't find Elmo are likely to be wooed by a host of other offerings: a Fisher-Price digital camera, a flying car from Jakks Pacific Inc., new Bratz dolls sporting real diamond bracelets from MGA Entertainment Inc.

and Hasbro Inc.'s updated board game Monopoly Here Now. And just to make sure parents get the message, Wal-Mart launched the opening salvo in this year's toy wars, announcing last week that it was cutting prices on more than 100 toys and games.

Elmo, the sweet, furry "Sesame Street" character with an infectious giggle, became a retailing hit a decade ago, when what was then Tyco Toys launched its first laughing and quaking Tickle Me Elmo doll. Mattel's Fisher-Price infant and preschool division bought Tyco the following year, and Elmo has been a flagship brand for the $5-billion-plus company ever since. Fisher-Price has held kids' interest by releasing a new iteration of the toy each year.

In 2002, for example, the company released Chicken Dance Elmo, which wore a fuzzy yellow costume, flapped its arms like wings and sang the chicken dance song. This year's version is called T.M.

X., which stands for Tickle Me Elmo Extreme, and it celebrates the 10th anniversary of the original doll. (Mattel said the X also was meant to be a play on the Roman numeral for 10.

) Its suggested retail price is $40. For Mattel and its retailers, the unusually early hit is twice as delicious. The September sellout gives the toy people an extra shot at hawking the product, because they have time to get more Elmos before the customary kickoff for holiday shopping, the day after Thanksgiving.

"The traditional toy business hasn't had something like this in quite a long time, so it's nice to get a few bites at the apple," said Ronald Boire, the domestic president of Wayne, N.J.-based Toys R Us Inc.

, which includes more than 500 stores. Retailers every year tout sought-after toys during the holiday season, from Pokemon trading cards to Harry Potter-themed games, many of which sell out. But the industry hasn't had a true toy craze since 1998.

That year, every TV news show featured snaking lines of parents, bundled up against the predawn cold, waiting outside stores for a chance to buy the must-have toy: Furby. The fuzzy critter from Hasbro's Tiger Electronics, the first "smart" plush toy, looked a bit like a squashed owl. For about $30, it was both voice and motion activated, responded to language and movement and had a 200-word vocabulary.

What T.M.X.

and Furby have in common is innovation, said M. Eric Johnson, a professor of management at Dartmouth College's Tuck School of Business who studies the toy industry. : L.

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