Super Micro Computer is in turmoil. Recent developments have put a cloud of uncertainty over the AI server maker’s accounting practices, which puts additional scrutiny on the company’s business update scheduled for after the market close on Tuesday.
Charles Liang, CEO of Super Micro Computer
Wall Street analysts expect Super Micro to report September quarter revenue of $6.44 billion, up 204% year-over-year, with adjusted earnings per share of 73 cents. For the current quarter ending in December, analysts estimate revenue of $6.84 billion with EPS of 81 cents.
Last month, Super Micro said it was shipping over 100,000 GPUs per quarter. That should equate to high level of growth versus the prior year.
But financial numbers aren’t the most important thing anymore. Revenue doesn’t matter much when there’s uncertainty over accounting and internal controls.
Last week, Super Micro announced in a filing that its accounting firm Ernst & Young resigned. EY said it could “no longer” rely on management’s and the Audit Committee’s representations and didn’t want to be associated with the financial statements prepared by management. At the time, Super Micro said it disagreed with E&Y’s decision and is working to find a new auditor.
Super Micro has been under increased scrutiny for its accounting since an August report from short seller research firm Hindenburg Research said it “found glaring accounting red flags.” Later in August, the company said it would delay filing its form 10-K for the fiscal year ending June 30.
After falling 57% in the last three months, Super Micro shares are now down 6% in 2024, compared with a 21% gain for the Nasdaq Composite.
Investors tomorrow will be looking for clarity from Super Micro on the severity of any of the alleged accounting issues. Absent that, the market will continue to fear the worst following EY’s resignation, especially since Super Micro had already switched auditors last year.
At this time, there is “minimal trust in the company’s reported financials and guidance,” Susquehanna analyst Mehdi Hosseini wrote in a note Monday. Hosseini suggested Super Micro revamp the company’s board of directors and hire a reputable auditor to regain the trust of investors.