SAN JOSE, Calif. - Super Micro Computer, Inc. (NASDAQ:SMCI), a provider of IT solutions for various computing sectors, has released its preliminary financial results for the first quarter of fiscal year 2025, which ended on September 30, 2024. The company expects net sales to range between $5.9 billion and $6.0 billion, falling short of its earlier forecast of $6.0 billion to $7.0 billion.
The anticipated GAAP and non-GAAP gross margin is approximately 13.3%. GAAP diluted net income per common share is projected to be between $0.68 and $0.70, surpassing the previously estimated range of $0.60 to $0.77. Non-GAAP diluted net income per common share is expected to be between $0.75 and $0.76, which also exceeds the prior guidance of $0.67 to $0.83.
Super Micro's non-GAAP financial measures for the quarter include adjustments for stock-based compensation expenses totaling $50 million, after accounting for related tax effects of $17 million. The company also expects to report total cash and cash equivalents of about $2.1 billion and total debt of approximately $2.3 billion, which includes bank debt of $0.6 billion and convertible notes of $1.7 billion.
Looking ahead to the second quarter of fiscal year 2025, ending December 31, 2024, Super Micro anticipates net sales in the range of $5.5 billion to $6.1 billion, with GAAP net income per diluted share expected to be between $0.48 and $0.58, and non-GAAP net income per diluted share projected to be between $0.56 and $0.65.
The company also provided an update from the independent Special Committee appointed by its Board of Directors. The Special Committee has completed its investigation based on concerns initially raised by EY and found no evidence of fraud or misconduct by management or the Board of Directors. The Committee recommended remedial measures to strengthen internal governance and oversight functions, with a full report on the completed work expected soon.
Regarding compliance with the Nasdaq listing rule 5250(c)(1), Super Micro announced that it is working to address the delay in filing its Form 10-K, which was due on August 29, 2024. The company has submitted a plan to Nasdaq to regain compliance and intends to take necessary steps to meet the continued listing requirements as soon as possible.
This announcement is based on a press release statement and the final financial results may differ from these preliminary figures. The information is not intended to be an alternative to financial measures prepared in accordance with GAAP.
In other recent news, China's Semiconductor Manufacturing International Corp (SMIC) and Huawei are under investigation by the U.S. Commerce Department for potential violations of U.S. export control laws. The investigation was triggered by concerns raised by Michael McCaul, chair of the House Foreign Affairs Committee, who suggested that SMIC may be illegally producing chips for Huawei.
Simultaneously, Super Micro Computer has seen significant developments, with Argus downgrading the company's shares from Buy to Hold following the loss of its key accounting partner, Ernst & Young LLP (EY). The downgrade came amidst concerns about the company's governance and transparency, as well as an ongoing investigation by the U.S. Department of Justice. Despite these challenges, Super Micro has reported rapid growth in sales and earnings, attributed to its global leadership in AI-accelerated computing platforms.
Furthermore, Mizuho (NYSE:MFG) has maintained a neutral rating on Super Micro shares, citing concerns about the company's internal financial controls and potential delisting from NASDAQ. The company is under pressure to comply with NASDAQ's listing requirements following the resignation of its lead auditor, EY. Despite these challenges, Super Micro reported record annual revenues of $14.94 billion and fourth-quarter revenues of $5.31 billion.
These are the recent developments in both SMIC and Super Micro Computer, shedding light on the ongoing scrutiny and challenges faced by these companies in the technology industry.
InvestingPro Insights
Super Micro Computer's recent financial results reveal a complex picture of the company's performance and market position. According to InvestingPro data, SMCI's revenue for the last twelve months as of Q4 2024 stood at $14.94 billion, with an impressive revenue growth of 109.77% over the same period. This aligns with the company's preliminary Q1 FY2025 results, which show continued strong sales despite falling short of initial forecasts.
The company's P/E ratio of 12.41 suggests that the stock may be undervalued relative to its earnings, especially considering the robust revenue growth. This is further supported by an InvestingPro Tip indicating that SMCI is trading at a low P/E ratio relative to its near-term earnings growth.
However, investors should note that SMCI's stock has experienced significant volatility recently. InvestingPro data shows a 47.01% decline in the stock price over the past week and a 66.74% drop over the last six months. This volatility is reflected in an InvestingPro Tip stating that the stock generally trades with high price volatility.
Despite these challenges, analysts remain optimistic about SMCI's prospects. An InvestingPro Tip reveals that analysts anticipate sales growth in the current year, and three analysts have revised their earnings upwards for the upcoming period. This positive outlook is particularly noteworthy given the company's recent financial performance and market challenges.
For investors seeking a more comprehensive analysis, InvestingPro offers 19 additional tips for SMCI, providing a deeper understanding of the company's financial health and market position.
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