Super Micro Computer craters after auditor resigns
The stock has now given back most of the blockbuster gains it made earlier this year.
Shares of Super Micro Computer, the server-maker that’s riding the wave of the AI boom, are crumbling after a company filing revealed that Ernst & Young resigned as its auditor.
While conducting an audit of its annual report, Ernst & Young “raised questions, including about whether the Company demonstrates a commitment to integrity and ethical values consistent with” best business practices around internal controls, according to Super Micro Computer.
The stock is down more than 30% in early trading, and has now given back most of the over 300% year-to-date gain it enjoyed as of March.
Nonetheless, Super Micro said that — other than this — it didn’t have any “disagreements” with Ernst & Young, nor any “reportable events” (both terms as defined by regulations). Other than that, Mrs. Lincoln...
Per the filing, Ernst & Young sent Super Micro a letter saying, in part, that “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, and after concluding we can no longer provide the Audit Services in accordance with applicable law or professional obligations.”
Super Micro announced in late August that it was delaying the filing of its annual report “to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting” — one day after short-seller Hindenberg Research published a scathing report alleging accounting irregularities, questionable governance, and even sanctions evasion at the company. Super Micro has still yet to file that annual report.
About a month later, The Wall Street Journal reported that the US Department of Justice was investigating the company. Both the DOJ and Hindenburg appear to be following up on allegations raised by former employee Bob Luong surrounding the firm’s accounting practices.
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