Super Micro Computer’s Stock Takes a Hit After Filing Delay
Uncertainty Looms Over Auditor Resignation and Export Control Violations
Super Micro Computer, Inc. (NASDAQ:SMCI) stock is feeling the pressure after the company announced it would be unable to file its fiscal first-quarter 2025 Form 10-Q for the September 30, 2024 quarter due to the significant effort and cost required. This delay is just the latest in a series of setbacks for the company, which is still reeling from the resignation of its auditor, Ernst & Young.
A Special Committee Investigation
Following concerns raised by its previous independent accounting firm, Super Micro’s Board of Directors formed a Special Committee to investigate internal controls. Although the committee has completed its initial review, more time is needed to finalize its work. The company is currently in the process of selecting a new independent auditor to replace the resigned audit firm.
Risks of Delisting and Early Repayment
Super Micro Computer risks being delisted from the Nasdaq exchange, which could have significant consequences. If delisted, the company may be required to repay up to $1.725 billion in convertible bonds early, as per the bond agreement. To avoid this fate, Super Micro must submit its annual report to the SEC by mid-November.
Guidance and Expectations
Despite the challenges it faces, Super Micro expects first-quarter revenue of $5.9 billion-$6 billion, down from its previous guidance of $6 billion-$7 billion. The company anticipates adjusted EPS of 75 cents-76 cents versus its previous guidance of 67 cents-83 cents. For the second quarter, Super Micro expects revenue of $5.5 billion-$6.1 billion and adjusted EPS of 56 cents-65 cents.
Analysts Remain Cautious
Analysts remain wary of Super Micro Computer, citing concerns over the ongoing search for a new auditor and delayed SEC filings. JPMorgan downgraded the company to Underweight, citing risks from the lack of clarity on Ernst & Young’s resignation and issues with corporate governance. Needham also flagged the unresolved auditor situation as a significant concern, suspending its rating until Super Micro files its 10-K and appoints a new auditor.
A Troubled Past
In August, a short report by Hindenburg accused Super Micro Computer of manipulating its financials, engaging in self-dealing with related parties, and bypassing sanctions. The report’s claims are based on evidence from court records, corporate documents, and interviews with former top executives. Since then, Super Micro Computer stock has plummeted over 62%.
Current Market Performance
As of Wednesday, SMCI stock is down 2.67% at $21.12 premarket. The company’s future remains uncertain, and investors are advised to exercise caution when considering Super Micro Computer as a potential investment opportunity.
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