Topline
Shares of information technology firm Super Micro Computer closed up nearly 30% on Monday after the company said an independent committee found “no evidence of fraud or misconduct”—after a rocky 2024 marked by governance concerns raised by a former auditor and other alleged accounting issues.
Super Micro shares closed up almost 30% on Monday. (Photo Illustration by Omar Marques/SOPA … [+]
Key Facts
Super Micro shares closed up 28.6% at $42, marking their highest point since late October.
Super Micro announced an independent committee formed by the company’s board of directors found “no evidence of fraud or misconduct on the part of management” or the board, according to a statement.
The committee was led by attorney Susie Giordano, an independent member of the Super Micro board specifically brought on to spearhead the investigation, which looked into issues related to Super Micro’s export business, sales practices and the rehiring of employees who resigned after a 2017 audit committee investigation into sales and revenue recognition practices.
The company says the investigation found conclusions made by Ernst & Young, the former auditor that raised concerns about financial reporting and accounting practices at the company in July, were “not supported by the facts examined in the Review.”
Ernst & Young resigned as Super Micro’s auditor in October, and said in its resignation letter it was parting ways because it was “unwilling to be associated with the financial statements prepared by management.”
The company says the committee recommended Super Micro’s board appoint a new chief accounting officer (the company appointed vice president of Finance Kenneth Cheung as its new accounting chief).
Super Micro shares are now up more than 47% on the year, though they have largely slumped in the last six months, sliding 46% amid its fallout with Ernst & Young and delays to its financial report filings.
Ernst & Young did not immediately respond to Forbes’ request for comment.
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What To Watch For
Super Micro is also facing a potential delisting from the Nasdaq in the wake of its delayed financial reports. The company did not file its annual report by its August due date and was sent a non-compliance letter from Nasdaq not long after. Super Micro also delayed the filing of its September quarterly report, though it said in a statement it believes it will submit the annual and quarterly filing within the Nasdaq’s discretionary period (Super Micro recently requested an extension to regain compliance).
Key Background
Super Micro—which manufactures servers and IT products, including equipment used for artificial intelligence—has experienced a bumpy 2024. The company’s stock peaked in March at $118.81, an all-time high, and cratered to as low as $18 in November. Investors began selling Super Micro shares after the company said in August it was not going to file its annual report on time. The company also faced pressure from short-selling firm Hindenburg Research, which claimed it found “glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.” However, JPMorgan analysts noted some of the accusations levied by Hindenburg were “tough to verify,” noting their report was “largely void of details around alleged wrongdoings from the company,” according to CNBC. Super Micro denied the allegations. The company was also reportedly the subject of aJustice Department investigation for alleged accounting violations raised by a former Super Micro employee, according to The Wall Street Journal.
Further Reading
Super Micro Computer Shares Plummet Over 20% After Delayed Annual Report, Short-Sellers’ Allegations (Forbes)
Justice Department Probes Server Maker Super Micro Computer (Forbes)
