The embattled server maker missed an August deadline to file its annual financial report and last week its auditor, Ernst & Young LLP, resigned, citing concerns about the company’s governance and transparency. An investigation of the accounting issues by a special board committee found “no evidence of fraud or misconduct on the part of management or the board of directors,” Super Micro said Tuesday in a statement.
Revenue will be $5.5 billion to $6.1 billion in the quarter ending in December, the company said. Analysts, on average, expected sales of $6.79 billion, according to data compiled by Bloomberg. Profit, excluding some items, is expected to be 56 cents to 65 cents per share, compared with 80 cents anticipated by analysts.
Super Micro has had a tumultuous year. Shares were rising at the start of 2024, with Wall Street enthusiastic about AI-fueled demand for the company’s high-powered machines, and the company winning inclusion in the S&P 500.
But scrutiny intensified after a former employee alleged earlier this year in federal court that Super Micro had sought to overstate its revenue. Short seller Hindenburg Research referenced those claims in a research report, alleging “glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.”
Recently, the failure to file its 10-K financial disclosure and the departure of E&Y has put the San Jose, California-based company at a risk of being delisted by Nasdaq Inc. and booted from the index. The shares have slipped 44% since EY’s resignation last week and are down more than 75% from a March peak.
Tuesday’s update was the company’s opportunity to ease investor fears. N Quinn Bolton, an analyst at Needham, suspended his rating of Super Micro after the resignation of EY. In a note ahead of the event, he said the update from Super Micro could provide an opportunity to reassess the suspension. Instead, investors appears disappointed with the results. The shares fell to a low of $22.52 after closing at $27.70 in New York.
“This could signal the beginning of a prolonged slide, with customers possibly seeking alternative providers due to Super Micro’s accounting issues,” said Woo Jin Ho, an analyst at Bloomberg Intelligence. “Its inability to provide timing for when it will file its 10-K increases the likelihood of a Nasdaq delisting, posing a major overhang.”
Super Micro said it “continues to work diligently” on the financial filing delays, but can’t predict when the delayed form will be filed. The board’s special committee said it would recommend improvements to internal governance or controls in addition to “other work that is ongoing.”
Nasdaq rules give the company until mid-November to submit a plan to restore it to compliance. If Super Micro’s plan is approved, the company could get extra time to file its disclosures — pushing the deadline to February 2025. “The company intends to take all necessary steps to achieve compliance with the Nasdaq continued listing requirements as soon as possible,” Super Micro said.
For the quarter that ended in September, Super Micro said preliminary results show sales of $5.9 billion to $6 billion. Analysts, on average, estimated $6.47 billion. Profit, excluding some items, was about 76 cents per share, the company said. Wall Street expected 74 cents.
