Feeds

Servers pump up Super Micro

Intel's Xeon E5 chips set for 'in Q4'

Remote control for virtualized desktops

Server and system component maker Super Micro continued to grow in its fiscal fourth quarter ended in June – despite the impending launch of new Xeon and Opteron processors from Intel and Advanced Micro Devices. The appetite that data centers built up for upgrading machines after the forced diet of the Great Recession has not yet been sated.

In the fourth quarter of Super Micro's fiscal 2011, which ended on June 30, the company posted sales of $260.3m, an increase of 29.1 per cent from the year ago period and up 11.1 per cent sequentially. Gross profits rose in synch with sales of systems, storage, switches, motherboards, and other components, and net income rose even faster, up 39.1 per cent to $10.7m. For the full year, Super Micro had $942.6m in sales (up 30.7 per cent) and net income of $40.2m (up 49.4 per cent).

Super Micro had hoped to do better in terms of gross margins and net income in the fourth quarter, but in the aftermath of the earthquake and tsunami in Japan in March, the company scarfed up excess inventories of memory chips, disk drives, and other components to keep sales rolling in anticipation of shortages. These shortages didn't pan out and some component prices actually fell on the open market, which hurt the company's bottom line. (Had it not done so, Super Micro's top line and bottom line might have suffered had shortages actually happened.)

The company also had $41.6m in revenues to hyperscale data centers – 16 per cent of overall sales, and one Internet customer accounted for 11 per cent, or just under $29m all by itself. While these deals are great for the top line, they tend to have less margin than other server deals through the OEM channel or sold directly to customers in smaller numbers; they actually hurt the bottom line for the company as a whole. Which begs the question why Super Micro is bothering.

"I believe that it is in our interest to grow our data center and cloud business," explained Super Micro president and CEO Charles Liang in a conference call with Wall Street analysts going over the numbers. "Once our Taiwanese facility is ready, it will lower our costs."

Liang is referring to a factory in Taiwan that has been in the works for the past 18 months and that is meant to make it cheaper for Super Micro to build machinery and components for its customers in Europe and Asia. And, now we learn, hyperscale data centers wherever they are located. Super Micro broke ground on the factory in the prior quarter and says it will bring it partially online in the next six months with full production slated for fiscal 2013, which begins in July 2012.

In the quarter, subsystems – motherboard, chassis, and other hardware – accounted for $155m in revenues, up 13.1 per cent from a year ago. Howard Hideshima, Super Micro's CFO, said in the call that the company pushed out 1.54 million subsystem components in the quarter.

Waiting for Interlagos on a Sandy Bridge

System sales accounted for more than 40 per cent of total sales and were above $105m, up 61.5 per cent from a year ago. This is back to the ratio that Super Micro had been hitting for a number of quarters. The company wants a 50-50 split between system and component sales over the long haul, and has made some progress in a few short years. Only two years ago, the split was 70 per cent components, 30 per cent systems.

Hideshima said that Super Micro shipped 57,000 servers in fiscal Q4, and average selling prices were up to $1,800, better than the $1,400 ASPs for both fiscal Q3 and the prior year's fourth fiscal quarter. Blade server revenues were up an astounding 244 per cent, GPU-based servers posted 72 per cent growth, and storage array sales were up 96 per cent in fiscal Q4.

The big question is when Intel and AMD are going to get their latest server chips to the market. Liang didn't have anything to say about AMD's "Interlagos" Opteron 6200 processors, which will start shipping for revenue out of AMD this month, and there's a good reason for that. The Opteron 6200s just plug into existing G34-class two-socket and four-socket servers that use the current Opteron 6100 processors. They just have sixteen "Bulldozer" cores that deliver about 35 per cent more oomph in aggregate than the current twelve-core "Magny-Cours" processors.

Liang said that he was expecting that Intel's "Sandy Bridge" Xeon E5 processors would start shipping in the fourth calendar quarter of this year, but did not say when Intel might launch them. "At the moment, we heard that it is still in the fourth quarter," said Liang on the call, referring to Xeon E5 shipments. "How late in the fourth quarter, we do not know. We are pretty much ready to go." Super Micro has system boards, chassis, and power supplies tuned for the Xeon E5s going through final testing now, he added.

Looking ahead, Hideshima said that Super Micro was being a little conservative in its forecasts for the September quarter, the first of its fiscal 2012 year, because of the impending server chip launches from Intel and AMD. The company expects sales will fall between $240m and $260m, with non-GAAP earnings per share in the range of 23 to 27 cents. It did 29 cents on a non-GAAP basis in the current quarter. So profits are going to still be pinched a bit it looks like along with revenues. Unless Super Micro is low-balling the numbers, of course. ®

Remote control for virtualized desktops

More from The Register

next story
Azure TITSUP caused by INFINITE LOOP
Fat fingered geo-block kept Aussies in the dark
NASA launches new climate model at SC14
75 days of supercomputing later ...
Yahoo! blames! MONSTER! email! OUTAGE! on! CUT! CABLE! bungle!
Weekend woe for BT as telco struggles to restore service
You think the CLOUD's insecure? It's BETTER than UK.GOV's DATA CENTRES
We don't even know where some of them ARE – Maude
DEATH by COMMENTS: WordPress XSS vuln is BIGGEST for YEARS
Trio of XSS turns attackers into admins
Cloud unicorns are extinct so DiData cloud mess was YOUR fault
Applications need to be built to handle TITSUP incidents
BOFH: WHERE did this 'fax-enabled' printer UPGRADE come from?
Don't worry about that cable, it's part of the config
Astro-boffins start opening universe simulation data
Got a supercomputer? Want to simulate a universe? Here you go
prev story

Whitepapers

Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
10 threats to successful enterprise endpoint backup
10 threats to a successful backup including issues with BYOD, slow backups and ineffective security.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
The Heartbleed Bug: how to protect your business with Symantec
What happens when the next Heartbleed (or worse) comes along, and what can you do to weather another chapter in an all-too-familiar string of debilitating attacks?