sank 4% Monday after predicting its latest earnings shortfall.

The Emeryville, Calif., maker of educational games for kids predicted earnings for the quarter ended last month of 33 cents a share. That's down from the year-ago 55 cents a share and well short of the 61-cent Wall Street analyst consensus estimate as reported by Thomson First Call.

The company also forecast 2004 earnings of 50 cents a share on sales of $695 million. That's significantly below the analyst consensus estimate of $1.19 a share on $781 million in sales.

"The operating climate in the United States is tougher than we anticipated, and we expect to see this continue through the holiday season," said CEO Tom Kalinske. "In addition, we are experiencing softness in our basic LeapPad business in the United States, and we have had several challenges getting our new distribution center and supply-chain systems up and running smoothly during this peak season."

The warning is nothing new for the company, a onetime Wall Street favorite whose shares have lost more than half their value over the last year after a

string of earnings disappointments.

On Monday, LeapFrog dropped 75 cents to $18.24.