Super Micro said an independent committee instituted by the board to probe the initial concerns raised by Ernst & Young, which has since resigned as the auditor, gave a clean chit to the board’s Audit Committee.
Super Micro Computer, Inc. ($SMCI) shares plunged in premarket trading on Wednesday even as the stock futures point to a sharply higher open after Republican party nominee Donald Trump is on the cusp of a surprisingly strong victory in the 2024 election.
San Jose, California-based Super Micro announced the preliminary fiscal year 2025 first-quarter results, expecting net sales of $5.9 billion to $6 billion compared to the $6 billion to $7 billion guidance range. This was below the consensus estimate of $6.38 billion.
Non-GAAP earnings per share (EPS) are expected at $0.75-$0.76, within the guidance of $0.67-$0.83, and above the consensus of $0.74.
The company said GAAP gross margin will likely be at 13.3%. It expects to report cash and cash equivalents of $2.1 billion and total debt of $2.3 billion.
For the second quarter, the company expects net sales of $5.5 billion to $6.1 billion and non-GAAP EPS of $0.56-$0.65. The numbers trailed the consensus estimates of $6.86 billion and $0.83, respectively, according to Yahoo Finance.
Super Micro also said an independent committee instituted by the board to probe the initial concerns raised by Ernst & Young, which has since resigned as the auditor, gave a clean chit to the board’s Audit Committee.
Following a three-month investigation, the Special Committee did not find any “evidence of fraud or misconduct on the part of management or the Board of Directors,” it said.
The committee, however, recommended a series of remedial measures for the company to strengthen its internal governance and oversight functions. It said it will deliver the full review report this week or next.
Issuing an update on the delay in filing the Form 10-K report for the fiscal year that ended June 30, 2024, Super Micro said timeline for the filing is uncertain. The company also said it is taking necessary steps to regain compliance with the Nasdaq’s continued listing requirements regarding timely filing of the financial reports with the SEC.
As of am 6:02 am ET, Super Micro shares plummeted 24.69% to $20.86, marking the lowest level since late-May of 2023.
The retail sentiment toward the stock was mixed. A user on Stocktwits said $22 appeared cheap.
Another raised the possibility of a potential bankruptcy filing. A third said the stock has no support until $13.
Following Super Micro’s update, Barclays reduced the price target for the stock from $42 to $25 and maintained an “Equal-Weight” rating, the Fly reported. The September quarter revenue miss, the December quarter sub-par revenue outlook and the lack of visibility into the timing for filing the annual report as the company scouts for a new auditor will likely pressure the stock near term, the firm said. It sees a “rising risk” of Super Micro not meeting Nasdaq’s listing requirements.
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