Things have gone from bad to worse for Super Micro Computer (NASDAQ: SMCI) over the last two months as a short-seller attack snowballed into a delay in its 10-K filing, an investigation by the Department of Justice, and, just last week, the resignation of Ernst & Young as its auditor.
Last night, the company added weak preliminary fiscal first-quarter earnings to the list of reasons the stock is spiraling. Management also fanned concerns about its financial reporting by 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 was down 24.4% as of 10:56 a.m. ET on the news.
The company reported unaudited preliminary results, which seemed odd in itself, as it doesn’t currently have an auditor, and investors are still waiting to see the official fiscal 2024 report.
The company said it brought in preliminary revenue of $5.9 billion-$6 billion in the quarter, which was below estimates of $6 billion-$7 billion. Bottom-line results of adjusted earnings per share of $0.75-$0.76 aligned with its own guidance.
Guidance was also weak, calling for fiscal second-quarter revenue of $5.5 billion-$6.1 billion. Management did provide an update on its financial reporting. Its Independent Special Committee said it found no fraud or misconduct by management or the board of directors. The Committee said it would recommend a set of remedial measures for internal governance and expects to release a full report within the next week.
Management generally avoided discussing the financial reporting challenges it’s facing.
At this point, Supermicro’s quarterly numbers aren’t the issue. Management must set the record straight with investors, hire a new auditor, and complete its 10-K filing. The company is also facing a delisting notice from the Nasdaq due to the delay in the 10-K filing.
Supermicro shares could easily keep falling from here if the company can’t provide an answer for its accounting scandal. Right now, it seems more likely that things will get worse before they get better.
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Super Micro Computer Stock Tumbles Again. Is the Worst Over Yet? was originally published by The Motley Fool
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