This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

GameStop to Stop Zune Sales

Updated from May 22

SAN FRANCISCO -- Video-game retailer GameStop (GME - Get Report) has decided to stop selling Microsoft's (MSFT - Get Report) Zune players at its stores due to what it sees as insufficient demand from customers.

The move is unlikely to affect GameStop, whose sales come almost completely from video games but it puts up another hurdle in Microsoft's attempt to grow Zune sales.

"We have decided to exit the Zune category because it just did not have the appeal we had anticipated," said a GameStop spokesperson. "It (also) did not fit with our product mix." GameStop made the decision about a month ago. GameStop said it will sell Zune players online until it clears out its inventory.

GameStop has hundreds of stores across the country and losing that distribution channel could hurt Zune sales. Many of GameStop's customers are avid users of Microsoft's Xbox 360 console and could have presented a cross-selling opportunity for Microsoft.

Microsoft said Friday that the Zune continues to be carried by other big-box retailers. "We have a set of great partnerships that give Zune a strong presence at retail including Best Buy (BBY - Get Report), Target (TGT - Get Report), Wal-Mart (WMT - Get Report) and others," said Adam Sohn, director of marketing for Zune, in a statement. "We will continue to invest in retail partnerships and have seen good momentum online and at retail over the last few months."

Microsoft has sold about 2 million Zunes since the device's release in Nov. 2006. Zune is estimated to have about 4% of the overall market share for digital media players currently.

Zune's total sales are a fraction of those for rival Apple's (AAPL - Get Report) iPod. Apple sold 10.6 million iPods in the last quarter alone.

GameStop first offered Zunes to its customers for pre-orders in Oct 2006.

The decision to stop selling Zunes took a toll on the company's margins in the first quarter. Gross margins for the quarter were 26.1%, down from 27.2% the same quarter year before, reported GameStop on Thursday.

Shares of GameStop were down $3.15, or 6.2%, to $47.72 following in-line guidance for the current quarter and fiscal year.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $126.44 0.00%
BBY $33.50 0.00%
GME $43.56 0.00%
MSFT $44.40 0.00%
TGT $82.27 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs