Everything's great at Supermicro, just small matter of impending NASDAQ delisting

Audit investigation in historic accounting delayed, firm falls out of compliance

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Supermicro will not meet this week's deadline imposed by NASDAQ to file delayed financial results to regain compliance with its regulations, and expects its common stock to be suspended on the exchange by 24 August.

The latest admission came as the server maker reported abbreviated preliminary numbers for Q4 ended 30 June that gave an approximation of net sales and no bottom line figure. Fully diluted earnings per share are said to be in the range of $0.51 to $0.55.

Supermicro said: "While the company has made significant progress toward completing the necessary accounting review processes, it has determined that the Delinquent Reports will not be filed with the SEC by 24 August 2018.

"The delay primarily relates to the magnitude of work that the company must still perform in order to review the company's accounting judgements, estimates and records for transactions that occurred during fiscal year 2015 through 2017, as well as the assessments and conclusions on the effectiveness of its internal control over financial reporting."

This all started in 2017 when Supermicro delayed filing its Annual Report on Form 10-K due to a sales transaction recorded in Q2 being pushed into Q3, altering the Q2 results.

This one deal raised suspicions about others and the audit committee began an independent probe into multiple accounting periods.

Supermicro has yet to file full audited numbers for fiscal 2017 or any of the four quarters in its current financial year. "A significant number of transactions remain to be reviewed," the firm added today.

"To date, none of the hundreds of reviewed transactions has involved revenue that could not ultimately be recognised, however, we have not concluded that a restatement to previously filed financial results is necessary."

CEO Charles Liang said he was disappointed not to meet the NASDAQ deadline and that the company will endeavour to lodge the filing "as soon as possible", but conceded: "As a result of the updated timing, the company expects that its common stock will soon be suspended from trading on NASDAQ's Global Select Market and the Panel will begin delisting proceedings."

Following a "possible suspension" of Supermicro's share trading, the stock will be quoted over-the-counter on the OTC Markets as the "Delinquent reports" are filed and re-listing is sought.

According to abbreviated accounts filed for Q4 of fiscal '18, Supermicro said revenues were between $986m to $996m, beating guidance of $800m to $860m. Sales in the year-ago quarter was $717.9m.

As of June 30, 2018, total cash, cash equivalents and short term investments was $94.1m and bank debt was $116.2m. ®




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