Supermicro delays its annual report due to accounting issues • The Register

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Server-maker Super Micro Computer has warned investors it’s not able to meet deadlines for its annual report due to issues with its internal financial reporting.

In a Wednesday announcement, Supermicro revealed that it will not be able to file its Form 10-K – the formal annual report required of listed companies in the USA – on time, and will seek an extension.

“Additional time is needed for SMCI’s management to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting as of June 30, 2024,” the announcement states.

The server maker is standing by its most recent quarterly results, which saw it report huge jumps in revenue and net income.

Supermicro hasn’t offered any detail on what it needs to revisit. But financial forensics outfit Hindenburg Research on Tuesday published a long list of issues it identified at the server-maker.

That list mentions the fact that Supermicro was de-listed by the NASDAQ bourse in 2018 and later charged over accounting irregularities.

Hindenburg Research’s article also claims Supermicro has:

  • Re-hired execs who were associated with its past accounting issues;
  • Shipped partial or faulty products so it can recognize revenue;
  • Conducted related-party transactions with entities linked to CEO Charles Liang’s family, without disclosing them;
  • Touted its own liquid cooling tech as a market-making innovation, but demonstrated rivals’ tech;
  • Shipped shoddy products to customers, who reported high failure rates or terrible build quality.

Take that list with a pinch of salt because Hindenburg’s document admits it holds a short position in Supermicro, meaning it stands to profit if the server maker’s share price drops.

Which well and truly happened today: after closing on Tuesday at $539, Supermicro’s shares plunged to $399 on Wednesday before trending back to $438 at the time of writing.

Investors clearly have a lot to consider. So do buyers of datacenter infrastructure, who Supermicro has targeted with racks full of servers, storage, and switches, often configured to customers’ desired specs and supposedly ready to run pre-installed apps. The outfit has also bet big on liquid cooling, one reason its sales have surged as buyers seek AI-ready infrastructure that often runs too hot for conventional cooling rigs to handle.

Hindenburg Research thinks Supermicro’s problems mean that push will struggle.

“All told, we believe Super Micro is a serial recidivist,” the research firm wrote. “It benefitted as an early mover but still faces significant accounting, governance and compliance issues and offers an inferior product and service now being eroded away by more credible competition.” ®