Supermicro Shares Plunge 33% as Auditor Quits, Citing Previous Warnings

[Nomad76]

Supermicro shares took a big hit today when Ernst & Young quit as its auditor, making its stock fall over 30%. EY decided to leave because of their worries in July about how Supermicro runs things, shares information, and keeps track of its money. In August, Supermicro delayed its annual report as they were looking over internal financial controls following Hindenburg Research's allegations of accounting manipulation. Ernst & Young's letter to the Securities and Exchange Commission (SEC) about quitting says they can't trust what the company's leaders say anymore. They also don't want their name on the company's financial papers after discovering new information during their check. "We are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management's and the Audit Committee's representations and to be unwilling to be associated with the financial statements prepared by management."

Supermicro doesn't agree with the accounting firm's decision, and they say fixing these problems won't mean they have to redo any of their financial reports from 2024 or earlier. Commenting on this subject, Nathan Anderson, the founder of Hindenburg, said in a post on X, "As far as auditor statements go, E&Y's SMCI resignation letter is about as strongly worded as I have seen." According to The Wall Street Journal, the Department of Justice is currently looking into the company. Supermicro will present its first quarter fiscal 2025 business update on Tuesday, November 5, 2024, at 5:00 p.m. ET / 2:00 p.m. PT.



View at TechPowerUp Main Site | Source

 

[lexluthermiester]

Wow! That's a thing. And ouch!

 

[Vincero]

Hmmm... not the same but shades of Abit there in terms of breakdown of trust between owners / top management vs others questioning money/accounting...
Doubt Supermicro would fall in to same trap/fate, but you never know - Asus, Gigabyte, MSI, hell even ASRock all have server and industrial 'teams' and products lines and I'm sure they'd happily provide whatever Supermicro did.

 

[JohH]

Good on the auditors for bailing.
A common precursor to a bubble popping is the exposure of corruption. And here the ML bubble should deflate.

 

[kondamin]

Damn, the world needs super micro
Them gone would be the same as the death of SUN.

 

[thesmokingman]

Damn, the world needs super micro
Them gone would be the same as the death of SUN.

lol, they're not gone. They're just gonna be fined and their stock price will get crushed down to its real value. Have you seen the share price in the last 12 months???

 

[kondamin]

lol, they're not gone. They're just gonna be fined and their stock price will get crushed down to its real value. Have you seen the share price in the last 12 months???

Well sure the only company in the sector that is near their real value is intel at the moment.

Doesn't mean that this level of distrust in the management can't be disastrous, especially for a company like super micro that needs to be able to get short term credit

 

[Philaphlous]

Yea I wonder what contractual obligations E&Y have if something like this arises...

 

[Daven]

Only thing I remember about Supermicro is that they hid AMD Opteron products on their website back in the day in order not to anger Intel.

Good riddance to another Intel anti-trust enabler.

 

[lexluthermiester]

Yea I wonder what contractual obligations E&Y have if something like this arises...

Those would be negated in the instance(any) of inaccurate info being rendered by the company being represented.

 

[R-T-B]

There's certainly something goofy going on there after all the rumors. Which is a shame because I generally like their hardware.

 

[SOAREVERSOR]

Good on the auditors for bailing.
A common precursor to a bubble popping is the exposure of corruption. And here the ML bubble should deflate.

ML is not a bubble and it's not going anywhere and it's an actual good use for GPUs.

 

[JohH]

ML is not a bubble and it's not going anywhere and it's an actual good use for GPUs.

It is a bubble. The cap ex race which lifted all tech boats will taper off and the market will over-react with sell offs. That's a bubble.
Much like there was a "dot com" bubble despite the web being an actual good use for computers.

 

[SOAREVERSOR]

It is a bubble. The cap ex race which lifted all tech boats will taper off and the market will over-react with sell offs. That's a bubble.
Much like there was a "dot com" bubble despite the web being an actual good use for computers.

No it's not. It's the future. The question is who's left standing after to take all the marbles. Aka the next likes of Amazon.

 

[JohH]

No it's not. It's the future. The question is who's left standing after to take all the marbles. Aka the next likes of Amazon.

No amount of being the future stops the formation of an economic bubble with its corresponding over-correction. Much like railway mania or the dot com bubble, being the future actually increases the odds of a bubble forming. And we are now in the ML bubble. As it deflates certain companies (like Super Micro and AMD) will have their excessive valuation corrected. And historically bubbles have usually started collapsing as fraud was exposed.

 

[TumbleGeorge]

No it's not. It's the future. The question is who's left standing after to take all the marbles. Aka the next likes of Amazon.

Your hopes to profit from ml balloon:

 

[kondamin]

Only thing I remember about Supermicro is that they hid AMD Opteron products on their website back in the day in order not to anger Intel.

Good riddance to another Intel anti-trust enabler.

But they sold them unlike everyone else

Your hopes to profit from ml balloon:

Oh you can profit from balloons alright, you can even make massive amount of money if you time it just right

 

[Frick]

There's certainly something goofy going on there after all the rumors. Which is a shame because I generally like their hardware.

When the auditor jumps ship it's probably way beyond goofy.

 

[Vayra86]

ML is not a bubble and it's not going anywhere and it's an actual good use for GPUs.

There is just no way the amount of resources poured in right now are going to pay themselves back. That will only happen for the small selection of winners, read, Nvidia. ML and AI isn't going away no, but the immense waste that is created in the race for more of it (and especially, making buck out of it) is going to go somewhere. Its not like the overall operation is going to get cheaper to run, so you're going to have to get more results out of it. I'm not seeing much of that. We hear companies say they're 'doing things with AI' but they also did these things before AI.

It all still sounds way too much like crypto: 'Come here, this is really good, you'll make a lot of money and you'll be part of the creation of something new, be a big stakeholder in it, too'. And on the far horizon: 'Eventually this will be useful for all of us, change the world'. Nothing materialized.