Is an Xbox 360 price cut inbound?

Rumors are circulating that Microsoft is getting ready to cut the price of the Xbox 360 games console to $299.

Here's a scan of what is claimed to be an upcoming Kmart weekly ad:

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The price drop would come at a good time for the console, given that the video game industry's biggest trade show, E3, will be taking place in Los Angeles on July 15-17.

The console pictured there is the 20GB "Pro" model, and if that ad is correct, the listed price shows a $50 drop from the current MSRP. I would also assume that if this price cut turned out to be genuine, then the "Arcade" and "Elite" models will also see similar price cuts.

Cutting the price of the Xbox 360 "Pro" to $299 would make it $100 less than the 40GB PS3.

So far no comment from Microsoft on whether this is real or a hoax.