Jan. 29 (Bloomberg) -- Mattel Inc., the world's largest toymaker, said fourth-quarter profit rose 2.6 percent, beating analysts' estimates, on holiday sales of Barbie dolls and Fisher-Price toys such as T.M.X. Elmo.

Net income increased to $286.4 million, or 75 cents a share, from $279.2 million, or 69 cents, a year earlier, the El Segundo, California-based company said today in a statement. Revenue climbed 14 percent to $2.11 billion from $1.84 billion.

Global Barbie sales rose for a second straight quarter. Barbie had fallen for three years because of competition from MGA Entertainment Inc.'s Bratz dolls. Fisher-Price preschool toys including the T.M.X. Elmo stuffed animal and the Kid-Tough Digital Camera also helped lift revenue in the fourth quarter, which accounts for more than one third of the annual total.

``Santa stopped in El Segundo before making his rounds for Christmas,'' said Anthony Lombardi, who helps manage $150 billion at Delaware Investment Management in Philadelphia. ``There's been a pretty nice progression on Barbie sales improvement.'' The firm owned 10.3 million Mattel shares as of Sept. 30.

Shares of Mattel gained 46 cents, or 1.9 percent, to $24.42 at 9:33 a.m. in New York Stock Exchange composite trading. They surged 43 percent in 2006, the biggest annual gain in 11 years.

The average estimate of nine analysts surveyed by Bloomberg was 67 cents a share, excluding some items. Revenue was forecast to be $1.98 billion. Gerrick Johnson, an analyst at BMO Capital Markets in New York, estimated 65 cents on sales of $2.05 billion. Mattel had a tax gain of 11 cents a share a year ago.

Barbie Sales

Global Barbie sales as well as U.S. Barbie sales each rose 3 percent in the fourth quarter. In the U.S., Barbie sales gained for the fourth consecutive quarter. About 20 percent of Mattel's sales and 35 percent of profit comes from Barbie, according to Bob Goldsborough, who helps manage $16 billion in assets at Ariel Capital Management LLC in Chicago. The firm owns 6.8 million Mattel shares.

``It was a perfect quarter,'' helped by sales of Barbie and toy cars such as Matchbox, Johnson wrote today in an e-mail. He has an ``outperform'' Mattel rating and doesn't own any.

Chief Executive Officer Bob Eckert in 2005 combined the Mattel and Fisher-Price units and promoted Fisher-Price President Neil Friedman to lead the division. Mattel last year offered fantasy-themed Barbies such as the 12 Dancing Princesses line for younger girls and more realistic Fashion Fever.

`We Made Progress'

``We made progress with the Barbie brand but we realize there is still work to be done,'' Eckert, 52, said during a conference call with investors and analysts.

Mattel Girls & Boys Brands sales, which includes Barbie, increased 17 percent to $1.24 billion in the fourth quarter. This includes revenue from Radica Games Ltd., which Mattel acquired during the period, of $62.5 million.

Sales of other girls' toys such as Polly Pocket and Pixel Chix climbed 8 percent in the quarter. Wheels sales, which includes Matchbox and Hot Wheels cars, gained 5 percent. Entertainment sales, which includes games and puzzles, jumped 62 percent, helped by Radica games such as handheld poker and blackjack.

Fisher-Price toys, which include T.M.X. Elmo, a digital camera, MP3 music player for preschoolers and Dora the Explorer products from the Nickelodeon children's television show, increased 16 percent to $805.9 million.

``There was across-the-board strength,'' Lombardi said today in a telephone interview. ``Clearly they had the benefit of the Radica acquisition.''

T.M.X. Elmo

Mattel introduced T.M.X. Elmo on Sept. 19 to commemorate the 10th anniversary of the original Tickle Me doll. Sean McGowan, an analyst at Wedbush Morgan Securities, said he never saw T.M.X. Elmo in stores during the holiday season because it was so popular. The fuzzy red Muppet from the ``Sesame Street'' children's television show falls over after being tickled on his chin, tummy or toe.

T.M.X.'s popularity helped sell other versions of Elmo, McGowan said in an interview last week. The Kid-Tough Digital Camera and Dora the Explorer line also sold well, he said. McGowan has a ``buy'' on Mattel shares.

American Girl doll revenue was up 1.9 percent to $245.2 million.

Gross margin, or the percentage of sales left after subtracting the cost of goods sold, widened to 48 percent from 47.8 percent. This was the first increase since 2003, Mattel said.

McGowan estimates the toy industry had its best holiday season in about five years, helped by innovative products and higher prices.