Super micro slides due to weak outlook as delisting risk looms

(Bloomberg) — Shares of Super Micro Computer Inc. plunged on Wednesday after the server maker gave disappointing sales guidance and gave no timeline for filing official financial reports for the past fiscal year.

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Revenue will be between $5.5 billion and $6.1 billion in the quarter ending in December, the company said in a statement on Tuesday, well below analyst forecasts of $6.79 billion. The profit outlook also fell far short of estimates, excluding some items.

Super Micro has had a turbulent year. Shares rose at the start of 2024 as investors bet that the AI ​​boom would spur demand for the company's high-performance machines and add the stock to the S&P 500. But then a former employee claimed in federal court earlier this year that Super Micro had filed a motion to overstate its revenue. Short seller Hindenburg Research referenced these claims in a research report, claiming “glaring accounting red flags.”

The troubled server maker also missed an August deadline to file its annual financial report, and last week its auditor Ernst & Young LLP resigned amid concerns about corporate governance and transparency. An investigation into the accounting issues by a special committee of the board found “no evidence of fraud or misconduct by management or the board,” Super Micro said in the statement.

The company's shares have fallen 77% since their peak in March, wiping out about $50 billion in market value. The stock fell as much as 27% after the market opened in New York on Wednesday, heading for its biggest intraday decline in a week.

Sales were hit in the first quarter of the fiscal year by the availability of semiconductors, Chief Executive Officer Charles Liang said. Asked on a conference call Tuesday whether the company's accounting problems had affected its relationship with Nvidia Corp., the leading maker of powerful artificial intelligence processors, executives said the chipmaker had made no changes to Super Micro's supply allocations .

“Right now, according to our relationship, according to our communication, things are very positive,” Liang said of the relationship with Nvidia.

Ernst & Young's failure to file its 10-K financial disclosure and exit have put the San Jose, Calif.-based company at risk of delisting from Nasdaq Inc. and being removed from the index.

Tuesday's update was the company's opportunity to allay investor fears. Needham analyst N. Quinn Bolton has suspended his rating on Super Micro following Ernst & Young's resignation. In a note before the event, he said Super Micro's update could provide an opportunity to reassess the suspension. Instead, it sparked a selloff in the company's shares.

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