Super Micro Computer Shares Soar After Special Committee Clears Company of Misconduct
New Chief Accounting Officer Appointed Amidst Governance Concerns
Super Micro Computer’s stock surged approximately 29% after a special committee investigation found no evidence of misconduct within the artificial intelligence server maker. The committee’s report, released on Monday, also recommended replacing the company’s current CFO, David Weigand, a process that is already underway. Kenneth Cheung, the current vice president of Finance, has been appointed as the new chief accounting officer.
Committee’s Findings and Recommendations
The special committee’s investigation, which reviewed evidence related to Super Micro’s financial statements, did not raise any substantial concerns about the integrity of the company’s senior management or Audit Committee. The committee concluded that the company’s financial statements are materially accurate and that the Audit Committee exhibited appropriate independence and proper oversight.
Background on Governance Concerns
Super Micro has faced governance concerns in recent months, including the resignation of its auditor, Ernst & Young, in October. The company has yet to file audited financials for the fiscal year ended June or the most recent quarter. Additionally, a short position in the company was revealed by Hindenburg Research in August, citing “fresh evidence of accounting manipulation.”
New Auditor and Nasdaq Listing
Super Micro’s new auditor, BDO, has yet to certify the company’s filings or publicly address the governance questions. The company is still at risk of being delisted from the Nasdaq due to its delayed financial reports, but Super Micro remains confident that it will be able to maintain its listing.
Analysts’ Take
In a note to clients, JPMorgan analysts highlighted the importance of BDO’s acceptance of the special committee’s findings and the potential for an independent review. They also noted that Nasdaq’s support for Super Micro’s request for an extension of time to regain compliance will be a key watch point.
Company’s Response
Super Micro’s shares have rallied in recent weeks, but are still down about 65% from their March high. The company’s stock was added to the S&P 500 in March, but has faced significant governance concerns since then.
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