Shares of Super Micro Computer (trading as Supermicro), rose 37% in extended trading following the announcement of significant steps to address its financial reporting and compliance issues. The stock, which had seen a steep decline since its March peak, gained momentum after the company revealed the appointment of BDO USA as its new independent auditor and the submission of a compliance plan to the Nasdaq stock exchange.
The compliance plan seeks an extension to meet Nasdaq’s listing requirements, as Supermicro has not yet filed its annual report on Form 10-K for the fiscal year ending 30 June 2024 or its quarterly report on Form 10-Q for the quarter ending 30 September 2024.
The company stated in its plan that it expects to file these reports within the discretionary timeline Nasdaq may grant. Pending a review of the plan, Nasdaq has confirmed that Supermicro’s securities will remain listed.
Server expert has been facing a period of turbulence
The announcement comes after a period of turbulence for the San Jose-based server manufacturer. Earlier this month, the company’s shares dropped sharply following the disclosure of unaudited quarterly results that missed revenue expectations and the announcement of delays in filing its annual results. Prior to this, the company was hit by the resignation of Ernst & Young (EY) as its auditor. EY had been appointed in March 2023, replacing Deloitte & Touche, but resigned after less than a year, citing governance concerns.
In response to these challenges, Supermicro formed a special committee to investigate issues raised during EY’s tenure. The investigation, conducted by independent counsel, concluded with no evidence of fraud or misconduct by the company’s management or board of directors. The review also confirmed that the audit committee acted independently in handling the matter.
The company has also faced scrutiny over allegations from activist groups that it may have violated export control regulations by allegedly shipping sensitive components to sanctioned entities. These allegations remain unresolved and have added to investor uncertainty.
Supermicro’s market capitalisation has experienced a steep decline, falling from approximately $70bn at its peak in March 2023 to $12.6bn as of Monday, despite a 16% gain during regular trading.
For the first quarter of fiscal year 2025, which ended on 30 September 2024, Supermicro expects to report net sales between $5.9bn and $6bn. Gross margins are anticipated to be 13.3% under both GAAP and non-GAAP standards. GAAP diluted net income per share is likely to be reported at $0.68 to $0.7, while non-GAAP diluted net income per share is expected to be between $0.75 and $0.76.
Read more: Supermicro shares drop 17% amid delays in annual results and weak guidance
