Super Micro, a server manufacturer that publishes annual financial statements later than scheduled and currently faces the risk of being excluded from the Nasdaq list, last Tuesday, November 5, shared with the public data on the results of its activities for the last fiscal quarter.
The value of the shares of the mentioned company showed a significant drop, which amounted to 17% during the extended trading. The corresponding dynamic of the server manufacturer’s securities is because its earnings turned out to be worse than preliminary expectations. Also, in this case, the negative impact factor was that guidance came in weaker compared to forecasts. Also, the downward trajectory of the value of Super Micro shares is to some extent related to the fact that the company has stated that it does not know when the annual results for the last fiscal year will be released.
It is worth noting that the securities of the server manufacturer began to fall in price last week. The relevant process began after the firm’s auditor, Ernst & Young, resigned.
Also, a negative factor affecting the securities of the server manufacturer is that the activist accused Super Micro of accounting irregularities and involvement in the supply of sensitive chips to countries and companies under sanctions, contrary to export control standards.
On a call with analysts on Tuesday, the firm stated that it had no intention to discuss any questions related to Ernst & Young’s decision to resign and did not address corporate governance issues. At the same time, Super Micro chief executive officer Charles Liang noted that the company is currently actively engaged in hiring a new auditor.
The server manufacturer faces a potential delisting on the Nasdaq stock exchange. The corresponding probability will become a reality if the company doesn’t file its annual report with the US Securities and Exchange Commission by mid-November. It is worth noting that the firm has not reported on the audit results since May. Charles Liang on a call with analysts stated that the company is working with urgency to become current again with its financial reporting.
The server manufacturer’s net sales for the first quarter of fiscal year 2025, which ended on September 30, were recorded in the range of $5.9 billion to $6 billion. It is worth noting that analysts interviewed by the media expected that this figure would amount to $6.45 billion. At the same time, this circumstance does not negate the significant growth of the company’s net sales. The corresponding figure for the first quarter of fiscal year 2025 increased by 181% compared to the result a year ago.
Recently, the Super Micro business has been on a growth trajectory. The corresponding dynamic is largely due to the fact that the company supplies servers packed with Nvidia’s processors for artificial intelligence.
Analysts asked Charles Liang about the likelihood of sales growth in the context of a situation implying that all the current problems faced by the firm will be solved, or if Super Micro plans to gain senior management to improve financial reporting. Instead of answering this question directly, the head of the company spoke about the latest Nvidia graphics processing unit Blackwell, which shipping began in recent weeks. He also separately noted the high level of consumer demand for the corresponding product.
Answering a question from one of the analysts about when Blackwell’s revenue might show up in Super Micro’s financial statements, Charles Liang said that the server manufacturer asks Nvidia about it every day and that the companies continue to work closely together. He noted that the capacity headed by him firm is ready, but not enough new chips.
Analysts also asked if the company’s plans for building servers based on Blackwell have changed, which may indicate that other server manufacturers may have the capacity or allocations of Nvidia’s graphics processing units at Super Micro’s expense.
David Weigand, the company’s chief financial officer, said that several state-of-the-art projects are currently in progress and that Nvidia has confirmed that it has not made any changes to allocations. Separately, he noted that Super Micro maintains a strong relationship with the mentioned firm and does not expect this to change.
The adjusted net income of the server manufacturer for the last fiscal quarter ranged from 75 to 76 cents per share. It is worth noting that this indicator corresponds to the preliminary forecast of LSEG.
Super Micro predicts that its revenue for the second quarter of fiscal year 2025 will be fixed in the range of $5.5 billion to $6.1 billion. It’s worth noting that the LSEG consensus estimate provides that the corresponding figure will be $6.86 billion. The company also predicts that its adjusted earnings per share for the second quarter of fiscal year 2025 will range from 56 to 65 centers. At the same time, the LSEG consensus estimate provides for this indicator at 83 cents.
Also on Tuesday, Super Micro said its board of directors had commissioned a special committee to look into Ernst & Young’s concerns. The firm noted that the results of the three-month investigation conducted by the committee indicate that there is no evidence of fraud or misconduct on the part of management. At the same time, a series of remedial measures was recommended for the company to strengthen its internal governance and oversight functions.
Super Micro also separately announced its intention to take all measures to keep its listing on Nasdaq.
The shares of the server manufacturer rose by 246% last year. In March 2024, the value of the company’s securities peaked at $118.81 per equity shortly after being added to the S&P 500. Since then, the server manufacturer’s market capitalization has decreased by more than $55 billion.
As we have reported earlier, Micron Shares Demonstrate Significant Increase.
