Roger Ehrenberg, COO of investment tracking service Monitor110, accused Microsoft of padding its Xbox 360 sales numbers in a recent blog posted on his website. The practice, known as "channel stuffing," involves shipping out unwanted product to retailers, thus stuffing the channel, and then counting the units as sold instead of just shipped. The extra product is usually sent back to the company, but the inflated "sales figures" help the bottom line look better.
Ehrenberg said, "…it has come to light that Microsoft, in an effort to embellish its perceived momentum in gaming and its window into family rooms the world over, has been using the oldest and shabbiest of retailer tricks to juice sales figures for the Xbox 360: channel stuffing."
He concludes that Microsoft is practicing this tactic because the numbers reported on Xbox 360 sales figures at the end of 2006 don’t add up. Microsoft says that it has sold over 10 million units, but according to Ehrenberg, it has fallen short of this figure by at least one million. "So how can Microsoft make its stated goal? It’s simple: they "stuff" the retail channel by requiring retailers to take Xbox 360s over and above those they need by the end of 2006."
In spite of Ehrenberg’s accusations, market analysts from such prominent securities firms as Wedbush Morgan, Lazard Capital Markets and Nollenberger Capital Partners seriously doubt the report.
[via GameSpot]
