Super Micro Computer (NASDAQ:SMCI) Share Decline

Super Micro Computer (NASDAQ:SMCI) shares dropped over 4% in premarket trading on Wednesday following the announcement of a delay in filing its quarterly 10-Q report for the period ending September 30, 2024.

A Form 10-Q is the company's quarterly financial report.

In its press release, Super Micro Computer attributed the delay to unresolved issues related to an ongoing internal review of the company's controls and reporting processes.

The review, initiated by the company's board in response to concerns raised by the former accounting firm, has resulted in delays for both the 2024 annual 10-K filing and the current quarterly 10-Q.

In August, SMCI delayed its annual report filing, citing a need to assess its internal controls over financial reporting.

In late October, Ernst & Young resigned as SMCI's accounting firm, stating it could no longer rely on management’s and the Audit Committee’s representations and was unwilling to be associated with financial statements prepared by management.

This news sent SMCI shares tumbling more than 30% and intensified investor worries about the company's accounting practices.

A special committee established by SMCI's board has completed an initial investigation but requires additional time to finalize its work, according to the latest press release.

Key tasks include appointing a new accounting firm and finalizing the assessment of the company's internal controls as of June 30, 2024. The company stated it needs a successor accounting firm to conduct a thorough audit of its financial statements and internal controls before the 10-K and latest 10-Q can be filed.