Are you going to buy your AI servers from a company that can't file an annual report and just had its auditor quit? That's the question enterprises and hyperscale cloud providers are asking after Supermicro's preliminary first quarter results.
Supermicro said that it reported in the first quarter it will report sales in the range of $5.9 billion to $6 billion, down from its previous range of $6 billion to $7 billion.
Earnings for the first quarter will be between 68 cents a share to 70 cents a share. Non-GAAP first quarter earnings were 75 cents a share to 76 cents a share. Supermicro's previous range for non-GAAP earnings of 67 cents a share to 83 cents a share.
Supermicro said its total cash and cash equivalents are $2.1 billion with debt of about $2.3 billion.
Those results come after the company has delayed its annual report and is in danger of being delisted. On Oct. 24, Ernst & Young notified Supermicro that it had resigned as the company's auditor.
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As for the guidance Supermicro said sales will be between $5.5 billion to $6.1 billion in the second quarter with non-GAAP earnings of 56 cents a share to 65 cents a share. Wall Street was looking for sales of $6.79 billion with non-GAAP earnings between 80 cents a share.
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Supermicro also updated investor on the concerns that made Ernst & Young resign. The Audit Committee said:
"The Special Committee has completed its investigation based on a set of initial concerns raised by EY. Following a three-month investigation led by Independent Counsel, the Committee’s investigation to date has found that the Audit Committee has acted independently and that there is no evidence of fraud or misconduct on the part of management or the Board of Directors. The Committee is recommending a series of remedial measures for the Company to strengthen its internal governance and oversight functions, and the Committee expects to deliver the full report on the completed work this week or next. The Special Committee has other work that is ongoing but expects it to be completed soon."
What remains to be seen is how this ongoing issue affects Supermicro sales. Supermicro is a key AI system provider. Dell Technologies, HPE and others are likely to benefit.
