Super Micro Computer Inc. (SMCI) saw its stock plummet by 10.33% in pre-market trading on Thursday, as reported by Benzinga Pro, following the company’s announcement that it is unable to file its fiscal Q1 2025 Form 10-Q. The filing, which covers the quarter ending September 30, 2024, is delayed due to the company’s ongoing internal control investigations and the substantial time and cost required to complete the report.
Delays Trigger Concerns Over Internal Controls and Financial Reporting
The delay in the quarterly filing is part of a broader issue facing Super Micro. The company is also behind on submitting its 2024 Form 10-K for the fiscal year ending June 30, 2024. This delay stems from concerns raised by Ernst & Young, Super Micro’s former independent accounting firm, which flagged issues related to internal controls. In response, the company’s Board of Directors formed a Special Committee to review the internal control processes. While the preliminary review has been completed, the company needs additional time to finalize the findings.
As a result of these challenges, Super Micro Computer has not been able to complete its quarterly filing until the annual report is finalized. The company is also in the process of selecting a new independent auditor, after Ernst & Young’s resignation, which has further extended the timeline for resolving these issues.
Risk of Delisting and Convertible Bond Concerns
One of the most immediate risks arising from these delays is the possibility of Super Micro being delisted from Nasdaq. A delisting could have significant financial implications for the company, including the potential for the early repayment of up to $1.72 billion in convertible bonds.
Revenue and EPS Guidance Amid Turmoil
Despite the ongoing internal investigations and financial reporting issues, Super Micro has provided guidance for the first quarter of fiscal 2025. The company expects revenue to fall between $5.9 billion and $6 billion, with adjusted EPS in the range of 75-76 cents.
Market Reaction and Expert Commentary
Jim Cramer, the well-known financial commentator, expressed his concerns about Super Micro’s situation on X (formerly Twitter), stating, “SuperMicro is in real hot water with this delay… Don’t know how they get out of this jam…” The sharp drop in stock price reflects the market’s uncertainty about the company’s ability to resolve its internal control issues and fulfill its filing obligations.
The delays, combined with the risk of delisting and the audit challenges, underscore the importance of financial transparency and strong corporate governance for publicly traded companies.
