Super Micro Computer Inc (NASDAQ: SMCI) says an external review of its business has concluded with no evidence of financial misconduct “on the part of management or the board of directors.”
The AI servers company also confirmed that none of its previous financial reports will have to be revised – a concern that significantly weighed on SMCI in recent weeks.
Supermicro stock rallied 35% following today’s announcement as it helped alleviate investors’ apprehensions about the company’s earnings and governance issues.
Supermicro to names a new chief of finance
Super Micro Computer has been in a sharp downturn ever since Hindenburg accused it of accounting manipulation – a reason Ernst & Young cited as well as it resigned as the company’s auditor in October.
But an independent review by a special board committee in collaboration with Secretariat Advisors (forensic accounting firm) and Cooley LLP (international law firm) found no evidence of financial malpractice, the AI firm revealed in a statement on Monday.
The review did, however, recommend that SMCI hires a new chief of finance and shakes up its legal leadership.
According to the company’s press release:
“The board has instructed management to add additional experienced, senior talent commensurate with the Company’s size and complexity today and to prepare for its future growth.”
Supermicro shares are still down 65% versus their year-to-date high in March.
Things are changing for the better at SMCI
SMCI has already started the process of looking for a new chief of finance to replace David Weigand.
Kenneth Cheung – its former vice president of finance will now serve as the new chief accounting officer, as per the press release on Monday.
All in all, things are starting to change for the better for Supermicro.
It has already named BDO as its new auditor and submitted a plan to regain compliance with the minimum listing requirements of Nasdaq as well.
Additionally, the outcome of the independent review paves the way for Super Micro Computer to report its audited financials.
That’s what SMCI shareholders are responding to on Monday.
Is it too late to invest in SMCI shares?
In November, Supermicro reported preliminary results for its first financial quarter.
The AI servers company said its sales increased a whopping 181% on a year-over-year basis to about $6.0 billion in Q1.
But experts had forecast an even higher $6.45 billion.
Still, Needham analyst Quinn Bolton continues to see upside in SMCI stock to $60. His price target translates to another 40% upside from here.
The investment firm is bullish on the liquid cooling market and sees Supermicro stock as particularly well-positioned to benefit as the AI industry transitions to liquid cooling.
Shares of Super Micro Computer Inc do not, however, pay a dividend at writing.
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