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Supermicro grunts out solid Q3

Falling margins, rising profit

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Supermicro bucked some of the doom and gloom surrounding the low-cost server market by turning in a solid third quarter.

Fresh off a March IPO, Supermicro revealed Q3 revenue of $106m – a 39 per cent rise over the same period last year. The company's net income came in at $4.1m, which compares to $3.6m during last year's third quarter. Gross margins, however, fell to 17 per cent from 20 per cent.

Even the 17 per cent figure beat out rival Rackable, which showed gross margins of just 14 per cent, during its first quarter shocker. Companies such as Rackable, Sun Microsystems and Dell have all seen their x86 systems sales slow in recent months.

You have to love the canned quotation in the Supermicro's earnings statement. Most companies use the quotation to brag about their business in hyperbolic terms. Supermicro instead chose to focus on its products, keeping close to its roots as an OEM aid.

"This quarter, we continued our tradition of innovation with the addition of new products such as our Universal Input/Output ("UIO") servers and their associated I/O carding including LSI 1068 SAS card, Intel Sun Rise Lake SAS RAID 5 card and 4-port Gigabit Ethernet LAN card," said Charles Liang, Supermicro's CEO.

In the same financial statement, Supermicro revealed "no customer accounted for more than 10 per cent of net revenues during the quarter" – a healthy sign.

The server maker now has $21m in cash on hand and expects fourth quarter sales between $106m and $111m. ®

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