Super Micro Computer, Inc. SMCI stock is trading lower Wednesday after it announced that it could not file its fiscal first-quarter 2025 Form 10-Q for the September 30, 2024 quarter due to excessive effort and cost.
The company must also submit its 2024 Form 10-K for the fiscal year ending June 30, 2024.
Following concerns from its previous independent accounting firm, the company’s Board of Directors formed a Special Committee to investigate internal controls.
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Although the committee has concluded its initial review, more time is required to finalize its work. The company is selecting a new independent auditor to replace the resigned audit firm.
Super Micro requires additional time to engage the new auditor, assess internal control effectiveness as of June 30, 2024, and complete the audits for the 2024 Form 10-K and first-quarter 2025 Form 10-Q. The quarterly report cannot be finalized until the completion and filing of the annual report.
Super Micro Computer risks delisting after its auditor, Ernst & Young, resigned due to alleged accounting issues and possible export control violations. If delisted, the company may need to repay up to $1.725 billion in convertible bonds early.
The bond agreement allows holders of Super Micro’s $1.725 billion notes due March 2029 to demand repayment if Nasdaq delists the shares and they are not quickly relisted or traded. To avoid delisting, Super Micro must submit its annual report to the SEC by mid-November.
Super Micro expects first-quarter revenue of $5.9 billion—$6 billion, down from its previous guidance of $6 billion—$7 billion.
The company anticipates adjusted EPS of 75 cents-76 cents versus its previous guidance of 67 cents-83 cents.
Super Micro expects second-quarter revenue of $5.5 billion-$6.1 billion. The company anticipates second-quarter adjusted EPS of 56 cents-65 cents.
Analysts remain cautious about Super Micro Computer despite the company’s positive update from its Special Committee investigation. Concerns linger over the ongoing search for a new auditor and delayed SEC filings.
JPMorgan downgraded Super Micro to Underweight, citing risks from the lack of clarity on Ernst & Young’s resignation and issues with corporate governance. The firm cut its price target to $23, highlighting transparency problems and uncertainty around financial reporting.
Needham also flagged the unresolved auditor situation as a significant concern, suspending its rating until Super Micro files its 10-K and appoints a new auditor.
In August, Hindenburg released a short report accusing Super Micro Computer of manipulating its financials, engaging in self-dealing with related parties, and bypassing sanctions prompting analyst rating downgrades and suspensions.
The report’s claims are based on evidence from court records, corporate documents, and interviews with former top executives.
Super Micro Computer stock plunged over 62% in the last three months.
Price Action: SMCI stock is down 2.67% at $21.12 premarket at last check Wednesday.
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