Can anything save a super microcomputer?

Management also noted that the independent special committee believed that the audit committee was “acting independently”, contrary to EY’s concerns that it was influenced by the CEO. In the press release the Special Committee said:

[T]there is no evidence of fraud or misconduct by management or the Board of Directors. The committee recommends a series of corrective actions for the company to strengthen its internal governance and oversight functions, and the committee expects to deliver the full report on the completed work this week or next.

Despite this update, Supermicro still does not have a timeline for when it will file its 10-K, although it plans to do so in accordance with Nasdaq compliance rules.

Currently, Supermicro is two quarters behind on its financial reporting. The stock has fallen more than 50% since the Hindenburg report was released, and is down 80% from the all-time high it reached in March.

In the meantime, the company needs to hire a new auditor, and management needs to share a plan to resolve that problem as quickly as possible.

Management should also complete the filing of its 10-K and give investors a reasonable expectation of when the filing will occur, or at least shed light on the issues preventing it. Management mostly avoided discussing these issues during the most recent earnings call.

While management maintains that no material changes need to be made to fiscal 2024 results, Hindenburg Research’s allegations, EY’s resignation, the potential DOJ investigation and Supermicro’s inability to resolve the issue within more than two months to resolve that this could be more than enough. a common procedural error. Despite what management has said, financial adjustments are possible and could go back quarters or even years.

Until investors get more transparency from management and see it taking clear steps to regain compliance, the stock should be avoided. For current shareholders, making the decision to sell is more difficult because the shares have already fallen year to date, but the reality is that Supermicro’s selloff may not be over yet.

It is easy for the company to get away from this if it loses trust with its customers. Reports are now coming out about this Nvidiathe main supplier of Super Micro Computer, is forwarding its in-demand chips to other server companies, fearing a crackdown on Supermicro related to any DOJ investigation and possible damage to its own reputation.

It’s time for management to make things clear to investors and stop ambiguity. If it doesn’t resolve some of these issues by the end of the month, it faces a real threat of being delisted from the Nasdaq, which would make it even harder to rebuild its reputation with investors.

Super Micro Computer is running out of time and action needs to be taken.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Can anything save a super microcomputer? was originally published by The Motley Fool