It’s perhaps no surprise that Robert Eckert’s office looks more like a toy store than an executive suite. There’s a trove of Barbies on the floor near the door, a giant Winnie the Pooh nearby and a huge display of Hot Wheels and Masters of the Universe action figures. Behind his desk, there are even a few dolls in his likeness, including a “Bob Barbie” with gray hair, dress shirt and mini employee badge.

Yet even after a decade at the helm of the world’s largest toy company, Eckert, 56, says he still doesn’t know what children really want. Every winter, he tries to predict a best-selling “toy of the year”-and his record is hit or miss. He isn’t even sure if his company’s biggest bet in years-a new brand of toys, books, dolls and clothing called Monster High-will be a hit. “There’s no magic formula,” he says.

Eckert might not be Willy Wonka, but he’s presiding over what some analysts say is a reinvigorated company. Sales are expected to reach nearly $6 billion this year, with profits projected to jump 44 percent. “The product line is the strongest I’ve seen in 10 years,” says toy analyst Margaret Whitfield, of investment bank Sterne Agee. The stock has more than doubled since March 2009.

Still, 2010 is shaping up to be a rocky year. Commodity and labor costs have been rising, and profits could be hurt by the dollar’s strength against the euro, says Eckert. Mattel’s (MAT) big rival, Hasbro (HAS), is launching a cable TV channel with Discovery Communications that will be a new marketing platform for its toys. And analysts say Monster High, although promising, could be a monster dud. Mattel spent more than two years and tens of millions of dollars on the venture, and it’s counting on children getting into the toys without the launching pad of a movie or TV show. “A lot of it depends on kids understanding the story,” says analyst Gerrick Johnson of BMO Capital Markets.

A latecomer to the toy world, Eckert grew up in Chicago and spent 23 years at Kraft Foods (KFT), eventually becoming CEO (Kraft was then owned by tobacco giant Philip Morris (PM)). Clean-cut, peppy and rail thin (he runs 20 miles a week), he studied business in college and grad school. Analysts say that since arriving at Mattel in 2000, he has brought more financial discipline to the firm by cutting debt and streamlining operations. Foreign sales have grown from 29 percent of revenue when he started to 46 percent today. And a recent cost-cutting program is expected to save $200 million.

We caught up with Eckert at Mattel headquarters in El Segundo, Calif., to hear his thoughts on toys, competitive threats and the state of children’s play.

SmartMoney: Analysts say the new Monster High toy brand is a risky gamble.
Robert Eckert: Financially, it’s important. But the real bet is more cultural: Can a toy company create new intellectual property that goes quickly beyond toys? Toy Story 3 is a movie that toys are based on. Here, we’ll start with toys and turn it into entertainment if all goes well.

SM: How do you keep Barbie fresh in the age of Lady Gaga?
RE: Barbie is the No. 1-selling doll in the world. She is now 51 years old. And the folks who run the brand figured out how to make Barbie cool again. As long as Barbie’s cool, we’re fine.

SM: But she hasn’t translated so well to the online world.
RE: She has. She’s one of the top Web sites for girls ages 2 to 11. A lot of girls who are done playing with the doll play with Barbie on our sites.

SM: How do you keep kids playing with dolls and cars when the cool new playthings are electronic and digital?
RE: We embrace digital media. The toy business is growing; our toys have kept up, and they’re more sophisticated. We’re not defensive about it anymore. We’re creating new brands and things.

SM: Like what?
RE: We have a new device from Fisher-Price called the iXL. It’s a handheld digital device, not unlike an iPhone but designed for a 3-year-old. Another example is one of my favorite Barbies this year-the doll with a video camera in her necklace, so a girl sees the world from Barbie’s perspective. You can plug her in and download all this stuff. Three-quarters of our toys now have some technology in them.

SM: How are play patterns different today than they were a decade ago?
RE: For the most part, play patterns haven’t changed. And that’s where technology can be tricky. We can put too much technology in a toy, and kids don’t play with it. Boys, for the most part, like to see things crash, and girls like hair play and fashion play.

SM: What worries you?
RE: Something always goes wrong at the worst time of the year for us, around September and October. We’ve had a port strike when most of our toys were sitting in the Long Beach harbor. We’ve had recalls, swine flu, 9/11, typhoons and computer-chip shortages. I don’t know what might go wrong, but I have a lot of confidence we’ll figure it out.

SM: Mattel hasn’t made any big acquisitions in years. Will you be more acquisitive now?
RE: We may be. The trick is to find the right thing at the right time and the right price. It’s easier said than done.

SM: What were your favorite toys?
RE: I did stuff that kids do today: building blocks, Legos, an Erector Set. I’m sure I played with pots and pans on the kitchen floor.

SM: After 10 years at the company, are you a little bit of a toy guy?
RE: No. I admire toys and respect the people who create them. But the real toy people are artists. I’m not an artist. I can’t draw.

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