On Wednesday, Needham maintained its suspension of coverage on Super Micro Computer (NASDAQ:SMCI) shares. The brokerage firm released comments following the company's announcement of preliminary unaudited financial results for the first quarter of fiscal year 2025. Super Micro reported that while its gross margins exceeded expectations, revenue did not meet the anticipated targets. This revenue shortfall was attributed to customers delaying their orders for the new Blackwell systems.
During the earnings call, a key point of interest was whether Super Micro's management would provide updates regarding the appointment of a new auditor and the filing of the company's 2024 10-K report. Management confirmed they are in the process of searching for a new public accounting firm but did not provide further details on the subject.
Despite the lack of clarity on the auditor issue, the company's special committee has concluded its investigation, revealing no evidence of fraud within the management team or the Board of Directors. This development was noted as a positive outcome for Super Micro.
However, the resignation of the previous auditor, Ernst & Young, remains a significant concern for Needham. The brokerage firm emphasized that the appointment of a new auditor is a critical step that needs to be resolved. Until such time as a new auditor is engaged and the 10-K filing is completed, Needham has decided to continue its suspension of the rating on Super Micro Computer's stock.
In other recent news, Super Micro Computer experienced a series of significant developments. The company reported preliminary revenues between $5.9 and $6.0 billion, missing estimates and reflecting a revenue decrease. Argus downgraded Super Micro's shares from Buy to Hold due to significant accounting concerns and the loss of a key accounting partner, Ernst & Young LLP (EY).
Additionally, Barclays (LON:BARC) and Goldman Sachs revised their price targets on Super Micro's shares due to the company's ability to meet Nasdaq's listing requirements and lower-than-expected revenue.
Despite these challenges, Super Micro confirmed that its Nvidia (NASDAQ:NVDA) GPU allocation remains unchanged and an independent Special Committee found no evidence of fraud or misconduct by the company's management or Board of Directors. Looking ahead, the company's revenue outlook for Q2 of fiscal year 2025 is projected to be between $5.5 and $6.1 billion.
Simultaneously, China's Semiconductor Manufacturing International Corp (SMIC) and Huawei are under investigation by the U.S. Commerce Department for potential violations of U.S. export control laws. The investigations were triggered by concerns raised by Michael McCaul, chair of the House Foreign Affairs Committee. These are the recent developments from Super Micro Computer and SMIC.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Super Micro Computer's (NASDAQ:SMCI) current situation. Despite the challenges highlighted in the article, the company's financials show some positive indicators. For instance, Super Micro's revenue growth stands at an impressive 109.77% over the last twelve months, with quarterly revenue growth reaching 142.95% in Q4 2024. This aligns with the InvestingPro Tip that analysts anticipate sales growth in the current year.
However, the stock has faced significant headwinds recently. InvestingPro data shows that Super Micro's stock price has declined by 55.1% over the past three months and 66.64% over the last six months. This steep decline is reflected in the InvestingPro Tip suggesting that the stock has taken a big hit over the last week and month.
Despite these challenges, Super Micro's P/E ratio stands at 12.41, which is relatively low considering its growth rates. This is supported by an InvestingPro Tip indicating that the stock is trading at a low P/E ratio relative to near-term earnings growth.
For investors seeking a more comprehensive analysis, InvestingPro offers 19 additional tips for Super Micro Computer, providing a deeper understanding of the company's financial health and market position.
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