Shares of Super microcomputer (NASDAQ: SMCI)the ailing artificial intelligence (AI) server manufacturer, rose today after the company finally gave investors a positive update from its independent special committee.
Supermicro, which has experienced a series of financial reporting setbacks, offered good news and helped boost investor confidence.
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As a result, the stock rose 15.6% as of 10:23 a.m. ET.
In a press release this morning, the company said the independent special committee, working with external advisors and a forensic accounting firm, found no evidence of misconduct by management or the board of directors. It was also stated that the audit committee operated independently and did not anticipate an adjustment to the financial results.
One of the committee’s key findings was that the audit committee acted with appropriate independence, and that top management’s rehiring of former employees was consistent with good financial reporting and legal compliance.
The committee also considered issues raised by Ernst & Young, which resigned as the company’s auditor in October. These issues include rehiring employees who resigned in 2018 following a previous audit committee investigation, related party disclosures, export controls related to restricted countries, and revenue recognition practices.
Finally, management agreed to implement the board’s recommendations, including initiating a search for a new CFO, because the committee found process flaws in certain rehire guardrails. Current CFO David Weigand will remain in his post until the board appoints a successor.
Supermicro also accelerated its search for a Chief Compliance Officer, whose responsibilities would be handled by the CFO, as well as its search for a general counsel.
The committee’s report implies that the company’s accounting problems are related to its recent rapid growth, and not to any nefarious intentions. That may be true, as the company has seen significant growth in the AI era, with revenue more than doubling year-over-year.
While the report is a step in the right direction for Super Micro Computer and provides some reassurance for investors, it provided no update on the expected timing for the outstanding 10-K or 10-Q filings, which is the biggest cloud hanging over the head hangs. the stock.
