Super Micro Computer Shares Decline Due to Delayed Submission of 10-Q Report

Super Micro Computer (NASDAQ:SMCI) shares declined by over 4% in pre-market trading on Wednesday following the company's announcement that it is delaying the filing of its quarterly 10-Q report for the period ending September 30, 2024. The Form 10-Q is the company’s quarterly financial report. In a press release, Super Micro Computer attributed the delay to unresolved issues related to its internal control and reporting processes.

The internal review initiated by the board of directors in response to concerns raised by the company's former accounting firm has caused delays in both the 2024 annual 10-K filing and the current quarterly 10-Q. In August, SMCI had postponed the filing of its annual report citing the need to evaluate its internal controls over financial reporting. Subsequently, at the end of October, Ernst & Young resigned as SMCI's accounting firm, stating that it could no longer rely on management's and the Audit Committee's representations and did not wish to be associated with the financial statements prepared by management.

This news led to a decline of over 30% in SMCI shares, deepening investor concerns about the company’s accounting practices. According to the latest press release, a special committee established by SMCI's board has completed the initial investigation but needs more time to finalize additional work. Key tasks include appointing a new accounting firm and completing the assessment of the company’s internal controls by June 30, 2024.

The company stated that it needs to appoint a new accounting firm to facilitate the filing of both the 10-K and the most recent 10-Q, which should conduct a thorough audit of the financial statements and internal controls.