Sure, given how speculative Amazon (NASDAQ:AMZN) is, the first reason everybody thinks led Wal-Mart (NYSE:WMT) to dump Amazon's Kindle from its stores will be "Wal-Mart doesn't want to be Amazon's showroom!". Indeed, not long ago people thought exactly the same when Target (NYSE:TGT) took the same course of action.
However, a few back of the envelope calculations can tell us the real motive. And it would seem that the real motive is not Amazon's retail importance. Quite the contrary.
The real motive
You see, there were 3913 Wal-Mart U.S. stores operating in July 31 2012. These 3913 generated $67.4 billion in revenues for Wal-Mart (source: Wal-Mart's 10-Q). During that same quarter, which probably informed Wal-Mart's decision not to carry the Amazon Kindle line, rough estimates of Amazon's Kindle sales put these at a mere 500k (for the Kindle Fire), and we have reason to believe the e-paper Kindles sold even slower (after all, they rank lower in Amazon's best seller lists, and Amazon's purchasing of e-paper components all but ceased almost a year ago - indicating a plunge in sales).
Now, of these 500k Fires sold, it's hard to believe that Wal-Mart would have sold more than 25-50% of the units - since most were probably sold by Amazon itself, and the devices also sell elsewhere, such as at Best Buy (NYSE:BBY). This means Wal-Mart sold, at most, something along 125k-250k Fires over 3913 stores. This gives us 32-64 Kindle fires per store per quarter. So less than one device per day per store.
And there's your answer as to why Wal-Mart ended up dropping Amazon's Kindle. The product didn't move and Wal-Mart was not going to allocate floor space to something which doesn't move. We don't need any conspiracy theory to explain this.
The most likely reason for Wal-Mart dropping Amazon's Kindle line, is that the goods didn't sell much.
Regarding Amazon, the most likely path continues to be downward. The stock trades at almost 320 times 2012 estimated earnings, and it's also likely that 2013 estimates will be brought down much like every estimate has been brought down in the last two years. That said, I'd expect the new line of Kindle tablets and eReaders to sell well - better than the last Kindle fire. But it won't change anything in terms of profits, and what Amazon lacks is profits.
Disclosure: I am short AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.