Super Micro Computer: Delayed Annual Report Is A Major Red Flag

5
Comment
Favorite

Super Micro Computer: Delayed Annual Report Is A Major Red Flag

Seeking Alpha08-29

Ballooning generative AI investments have resulted in exponential growth for high-performance server provider Super Micro Computer.While sales have skyrocketed in recent quarters, related working ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment

No comments yet

Most Discussed

7x24

All

Terms and Conditions·Privacy Policy

Company: TTMF Limited. Tech supported by Xiangshang Yixin.

Email：uservice@ttm.financial

{"i18n":{"language":"en_US"},"data":{"share":"https://ttm.financial/m/news/2463475513?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2024-08-29 21:00","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2463475513","market":"us","top_or_hot":-1,"title":"Super Micro Computer: Delayed Annual Report Is A Major Red Flag","media":"Seeking Alpha","content":"<div>\n<p>Ballooning generative AI investments have resulted in exponential growth for high-performance server provider Super Micro Computer.While sales have skyrocketed in recent quarters, related working ...</p>\n\n<a href=\"https://seekingalpha.com/article/4717778-super-micro-computer-delayed-annual-report-is-a-major-red-flag-sell-smci-stock\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Super Micro Computer: Delayed Annual Report Is A Major Red Flag</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSuper Micro Computer: Delayed Annual Report Is A Major Red Flag\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-29 21:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4717778-super-micro-computer-delayed-annual-report-is-a-major-red-flag-sell-smci-stock><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Ballooning generative AI investments have resulted in exponential growth for high-performance server provider Super Micro Computer.While sales have skyrocketed in recent quarters, related working ...</p>\n\n<a href=\"https://seekingalpha.com/article/4717778-super-micro-computer-delayed-annual-report-is-a-major-red-flag-sell-smci-stock\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4533","symbol_name":"AQR资本管理(全球第二大对冲基金)","start_time":0,"source_url":"https://seekingalpha.com/article/4717778-super-micro-computer-delayed-annual-report-is-a-major-red-flag-sell-smci-stock","article_id":"2463475513","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2463475513","pubTimestamp":1724936400,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Ballooning generative AI investments have resulted in exponential growth for high-performance server provider Super Micro Computer.While sales have skyrocketed in recent quarters, related working capi","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4533":"AQR资本管理(全球第二大对冲基金)","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","IE00BN29S564.USD":"JANUS HENDERSON BALANCED \"A3\" (USD) INC","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","LU0072462426.USD":"贝莱德全球配置 A2","IE00BHPRN162.USD":"BNY MELLON BLOCKCHAIN INNOVATION \"B\" (USD) ACC","IE00BDCRKT87.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC","BK4543":"AI","BK4527":"明星科技股","BK4550":"红杉资本持仓","IE00BZ199S13.USD":"BNY MELLON MOBILITY INNOVATION \"B\" (USD) ACC","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","IE00BMPRXR70.SGD":"Neuberger Berman 5G Connectivity A Acc SGD-H","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","IE00BYXW3230.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"AA\" (USD) ACC","BK4503":"景林资产持仓","IE00BJLML261.HKD":"HSBC GLOBAL EQUITY INDEX \"HCH\" (HKD) ACC","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","IE00B775H168.HKD":"JANUS HENDERSON BALANCED \"A5M\" (HKD) INC","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC","IE00BDRTCR15.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC A","IE0005OL40V9.USD":"JANUS HENDERSON BALANCED \"A6M\" (USD) INC","BK4581":"高盛持仓","IE00BK4W5L77.USD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (USD) ACC","LU0053671581.USD":"摩根大通美国小盘成长股 A(dist)","LU0057025933.USD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"AX\" (USD) ACC","IE00BK4W5M84.HKD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (HKD) ACC","BK4549":"软银资本持仓","LU0006306889.USD":"SCHRODER ISF US LARGE CAP \"A\" (USD) INC AV","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","IE00BFSS7M15.SGD":"Janus Henderson Balanced A Acc SGD-H","BK4548":"巴美列捷福持仓","BK4170":"电脑硬件、储存设备及电脑周边","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","IE00BMPRXQ63.HKD":"NEUBERGER BERMAN NEXT GENERATION CONNECTIVITY FUND \"A\" (HKDHDG) ACC","LU1861215975.USD":"贝莱德新一代科技基金 A2","SMCI":"超微电脑","IE0034235303.USD":"PINEBRIDGE US RESEARCH ENHANCED CORE EQUITY \"A\" (USD) ACC","BK4532":"文艺复兴科技持仓","BK4554":"元宇宙及AR概念","LU0069063385.USD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (USD) ACC","LU0077335932.USD":"FIDELITY AMERICAN GROWTH \"A\" INC","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","BK4534":"瑞士信贷持仓","BK4567":"ESG概念","IE0004086264.USD":"BNY MELLON GLOBAL OPPORTUNITIES \"A\" (USD) ACC"},"translate_title":"超微计算机：年报延迟是重大危险信号","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SMCI":1},"content_text":"Ballooning generative AI investments have resulted in exponential growth for high-performance server provider Super Micro Computer.While sales have skyrocketed in recent quarters, related working capital requirements have resulted in materially negative cash flow.Based on projected FY2025 revenue growth, the company might be required to raise additional capital in early 2025.However, accessing the capital markets might be difficult following the surprise delay of its annual report on form 10-K due to an extended review of internal controls.Given the uncertainties and risks associated with a potentially protracted accounting review, investors should consider moving to the sidelines.BlackJack3DIt's been a volatile 2024 so far for shares of Super Micro Computer, Inc. or \"Super Micro\" (NASDAQ:SMCI). In tandem with NVIDIA Corporation or \"Nvidia\" (NVDA), the high-performance server and storage solutions provider has been widely viewed as a prime beneficiary of ballooning investments into generative AI.Yahoo FinanceIndeed, sales have skyrocketed in recent quarters, but related working capital requirements have resulted in materially negative cash flow.In addition, the company has been experiencing margin issues as of late which are expected to persist in the near term.Company Press Releases / Regulatory FilingsTo ensure sufficient liquidity, Super Micro has accessed the capital markets several times between December 2023 and March 2024.In aggregate, the company has raised more than $4 billion in net proceeds from a combination of equity and convertible debt offerings:Regulatory FilingsWhile Super Micro finished FY2024 with $1.67 billion in cash and cash equivalents, expectations for further exponential growth will likely require the company to raise additional funds in the not-too-distant future:Company PresentationHowever, before accessing the capital markets again, management will likely have to prove that the company's internal controls are adequate and effective:SAN JOSE, Calif., August 28, 2024 – Super Micro Computer (...) today announced that it expects that it will not timely file its Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (...) and expects to file a Notification of Late Filing on Form 12b-25 with respect to the Annual Report on August 30, 2024.SMCI is unable to file its Annual Report within the prescribed time period without unreasonable effort or expense. Additional time is needed for SMCI’s management to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting as of June 30, 2024.SMCI has not made updates to its results for the fiscal year and quarter ended June 30, 2024 that were announced in SMCI’s press release dated August 6, 2024.At least in my opinion, the delay has likely been caused by Tuesday's damning report released by high-profile short-seller outfit Hindenburg Research which contained a plethora of allegations with regard to the company's accounting practices.After learning about the Hindenburg Research report, Super Micro's auditors likely declined to sign off on the company's annual report without management addressing allegations of improper revenue recognition and circumvention of internal controls.To be perfectly honest, I wasn't exactly impressed by the Hindenburg Research report at first glance which, at least on the accounting front, appeared to be mostly a rehash of past revenue recognition issues.Market participants didn't seem too concerned either as shares ended Tuesday's session down less than 3% after selling off more than 15% in pre-market.However, Wednesday's disclosures are a major red flag. Given allegations of improved revenue recognition dating all the way back to 2020, it could take several months or even quarters for the company to work through the numbers.As a remainder, it took Super Micro several years to address revenue recognition issues originally discovered in 2017. The inability to file timely financial statements with the SEC resulted in Nasdaq delisting the company's common shares in August 2018.With the assistance of external forensic accountants, Super Micro filed restated financials with the SEC in 2019 and managed to relist on Nasdaq in early 2020.Should the company's auditors and management indeed discover renewed revenue recognition issues, Super Micro might very well be required to again restate years of financial statements.For my part, I do not expect the company to file its annual report on form 10-K within the automatic 15-day grace period. Given the company's history, auditors will likely require a deep dive into revenue recognition procedures which could take several months or even quarters.In the meantime, substantial cash usage is likely to continue. Even at the lower end of management's FY2025 revenue guidance, Super Micro will likely require additional capital in early 2025 at the latest point.Without audited financials, accessing the corporate debt markets doesn't look like a viable option. Even an equity raise might be difficult as underwriters are not likely to expose themselves to potential legal risks.Under a best-case scenario, management will conclude that Super Micro's internal controls are adequately designed and effective within the next two weeks. Should auditors sign off on the annual report, the company would be able to file the 10-K within the 15-day grace period.However, for the reasons discussed above, I do not expect this to be the case.At this point, Super Micro appears to be caught between a rock and a hard place. The company needs additional capital to fund exponential growth, but might not be able to access the capital markets in the near term.Given the risks associated with a potentially protracted accounting review, investors should consider moving to the sidelines.Bottom Line:Following the surprise delay of Super Micro Computer's annual report on form 10-K, investors would be well-served to prepare for a potentially protracted accounting review as auditors are not likely to sign off until management has proven that internal controls are adequate and effective.However, this might require working through the company's financial statements all the way back to 2020.In the meantime, elevated cash usage is likely to continue. Based on management's FY2025 revenue guidance, I would expect negative free cash flow of up to $3 billion. As a result, Super Micro Computer will likely be required to return to the capital markets in early 2025.However, without audited financials, this could become a difficult exercise.Given the uncertainties and risks associated with a potentially protracted accounting review, investors should consider moving to the sidelines.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":5,"commentSize":0,"repostSize":1,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}