Why do I say so? Because of something I've already explained in the past: Amazon.com treats console sales as part of its closely followed media segment. We know this because Amazon.com's CFO confirmed as much in its Q1 earnings conference call:
...I just mentioned [North American Media] a little bit in one of the previous questions. But certainly, our digital media growth has been great and certainly it's helping that. One other color just to keep in mind, in Q4, I had mentioned that video games, including video game consoles, the consoles are part of North America media, that's a seasonal business that was bringing down growth in Q4. So it's also something to keep in mind.
Now, although Microsoft's earnings were for the most part well above expectations, both in terms of earnings and revenues, there was a tiny tidbit that didn't quite go so well:
We shipped 1.1 million Xbox 360 consoles compared to 1.7 million during the fourth quarter of fiscal year 2011. Even in the soft console market, Xbox 360 maintained its market share leadership position in the U.S.
So the Xbox 360 shipped 35% less when compared to the same quarter last year, but kept its leadership of the market, which means other consoles probably saw a similar -- i.e., weak -- quarter as well. For Microsoft this doesn't make much difference, but for Amazon.com, taking into account that these consoles are reported as part of the media segment, it might mean a much lower growth rate in the closely followed media segment.
So here it is: The drop in Xbox shipments -- which would probably have been even steeper if not for a very attractive promotion Microsoft made during the quarter - can mean that Amazon.com will have trouble growing its media segment when it reports its earnings on July 26. Although I believe Amazon.com might beat earnings estimates (taking into account how low these have been slashed lately -- earnings estimates for this quarter have been cut by 90%), this kind of potential disappointment might not sit well with a stock that trades at 185 times its forward 2012 earnings.