Feeds

Super Micro rides server upgrade wave

$1bn breaker

The essential guide to IT transformation

Server and system component maker Super Micro is coming out of the Great Recession riding a pent-up server upgrade cycle where plenty of customers are still looking to save a little bit more money on their iron. Many buyers are looking to Super Micro and its resellers to make them kit instead of Hewlett-Packard, Dell, IBM, or Fujitsu.

In Super Micro's second quarter of fiscal 2011 ended in December, the company reported its fifth consecutive quarter of record revenues, hitting $240.8m in overall sales. That is 32.3 per cent more dough than the mobo player and server upstart raked in a year ago, and up 16.2 per cent sequentially from its fiscal Q1 ended in September. Thanks to cost controls and better pricing on raw components (more on that in a moment), Super Micro boosted net income by 52.1 per cent, to $11.6m.

During fiscal Q2, Super Micro boosted the share of its revenues it gets from complete system sales rather than from components, and Charles Liang, the company's president and chief executive officer, said that the company is getting closer to its goal of having half of its sales come from components and half from finished servers. Volumes for both are on the rise.

Howard Hideshima, the company's chief financial officer, said in a call with Wall Street analysts that the company shipped approximately 61,000 servers and 957,000 subsystems and components in fiscal Q2. Subsystem and component revenues rose by 22 per cent, to just under $143m, while systems sales rose by nearly 51 per cent, to $98m. The average selling price of servers rose to $1,600, up from $1,400 in the year-ago quarter and up from around $1,500 in fiscal Q1. Customers are buying beefier boxes to support virtualized server instances. Hideshima said that the company's SuperBlade blade servers were growing at a much faster rate than the overall business, as were servers with fanless GPUs embedded in their designs.

During the quarter, 57.3 per cent of Super Micro's sales came from the United States, but growth in the Asia/Pacific and EMEA regions was higher than that of the US. One of the reasons why this is the case, explained Liang, is that two years ago, Super Micro opened a factory in The Netherlands to get its production closer to its EMEA customers. This not only provided better support and cut down on product shipping costs from its San Jose factory, it has helped the bottom line. Ditto for the factory that Super Micro opened in Taipei, Taiwan last year, which is just ramping up.

Also boosting profits at Super Micro, ironically, is the company's move into power-efficient servers for hyperscale data centers. While these companies tend to be skinflints when it comes to server pricing, if you do enough deals, according to Liang, you can boost your overall server volumes enough that you can command better pricing on those components. This means that Super Micro gets to pocket more of the dough it gets from selling servers while at the same time offering increasingly aggressive server pricing.

Neither Liang nor Hideshima were not much interested in making prognostications about where industry-wide server shipments and revenues might be, and they dodged several questions on that issue. They did say that they are preparing for the launch of mobos and systems based on Intel's single-socket "Sandy Bridge" Xeon chips, coming in February, and two-socket variants for later this year. They also said that they expected revenues for the fiscal this quarter would be somewhere between $235m to $245m, which works out to year-on-year growth of between 24 and 30 per cent; earnings are expected to be in the same range as this quarter on a non-GAAP basis.

Liang was also pretty confident that Super Micro would break the milestone of $1bn soon. It looks like fiscal 2012 will be the big year, unless something truly astounding happens in the remaining two quarters of Super Micro's fiscal 2011. ®

Next gen security for virtualised datacentres

More from The Register

next story
BBC: We're going to slip CODING into kids' TV
Pureed-carrot-in-ice cream C++ surprise
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
Twitter: La la la, we have not heard of any NUDE JLaw, Upton SELFIES
If there are any on our site it is not our fault as we are not a PUBLISHER
Facebook, Google and Instagram 'worse than drugs' says Miley Cyrus
Italian boffins agree with popette's theory that haters are the real wrecking balls
Sit tight, fanbois. Apple's '$400' wearable release slips into early 2015
Sources: time to put in plenty of clock-watching for' iWatch
Facebook to let stalkers unearth buried posts with mobe search
Prepare to HAUNT your pal's back catalogue
Ex-IBM CEO John Akers dies at 79
An era disrupted by the advent of the PC
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?