Things have gone from bad to worse Super microcomputer (NASDAQ: SMCI) the past two months, when a short-seller attack culminated in a 10-K filing delay, a Justice Department investigation and, last week, Ernst & Young’s resignation as auditor.
Last night, the company added weak preliminary fiscal first-quarter earnings to the list of reasons why the stock is on the rise. Management also fueled concerns about its financial reporting, saying it still did not know when it would be able to file its 10-K report.
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As a result, the stock fell 24.4% on the news at 10:56 a.m. ET.
The company reported unaudited preliminary results, which in itself seemed strange since it currently has no accountant and investors are still waiting for the official 2024 fiscal report.
The company said it generated preliminary revenue of $5.9 billion to $6 billion in the quarter, below estimates of $6 billion to $7 billion. Adjusted earnings per share results of $0.75-$0.76 were in line with company guidance.
The outlook was also weak, calling for fiscal second-quarter revenues of $5.5 billion to $6.1 billion. Management has provided an update on the financial reporting. The independent special committee said it found no fraud or misconduct by management or the board of directors. The committee said it would recommend a series of corrective actions for internal governance and expects to issue a full report within next week.
Management generally avoided discussing the financial reporting challenges it faces.
Right now, Supermicro’s quarterly numbers aren’t the problem. Management needs to set the record straight with investorshire a new auditor, and complete the 10-K filing. The company is also facing a delisting notice Nasdaq due to the delay in filing the 10-K.
Supermicro’s stock could easily continue to fall from here if the company can’t provide answers to its accounting scandal. At this point, it seems more likely that things will get worse before they get better.
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