Super Micro Computer Faces Uncertainty

By Akash Sriram and Stephen Nellis

(Reuters) – Super Micro Computer, whose auditor unexpectedly stepped down last week, flagged uncertainty about the timing of its annual report but stated that a probe concerning accounting practices has found no evidence of fraud by the company.

Shares of the San Jose, California-based server maker fell about 15.5% to $23.42 in extended trading.

The company anticipates net sales of $5.5 billion to $6.1 billion for the second quarter, compared to analysts' estimates of $6.86 billion, according to data compiled by LSEG. Super Micro expects profits between 48 cents and 58 cents per share, significantly lower than estimates of 75 cents per share.

Super Micro has become a key supplier to specialty cloud-computing providers such as CoreWeave that focus on providing chips from Nvidia (NASDAQ: NVDA) for artificial intelligence work.

During a conference call with investors, Super Micro's CEO, Charles Liang, mentioned that the company’s forecast reflects anticipation for Nvidia's latest chips. He noted that the computer servers designed around those chips are ready for production and that there's no expected reduction in Nvidia chip allocation.

Liang, who founded Super Micro in 1993, also expressed openness to separating the company’s chairman and CEO roles, which he currently holds.

The preliminary results come shortly after Ernst & Young resigned as its auditor, raising investor concerns about the firm’s accounting practices. The special committee probe relates to concerns raised by EY regarding governance, transparency, and internal control over financial reporting.

Super Micro risks being delisted from Nasdaq if it fails to meet deadlines this month. The recent departure of EY complicates the process of restoring compliance.

On the conference call, Super Micro executives avoided questions from analysts regarding the timeline for filing its annual report or securing a new auditor.

“It feels like yesterday this was a stock-market darling, showing how quickly things can change for investors and companies alike,” said Ryan Detrick, chief market strategist at investment advisory firm Carson Group.