Super Micro Computer (SMCI), a retailer of high-performance servers and liquid-cooled AI racks, could not have finalized its annual report for the year that ended on the 30th of June, 2024, without engaging another auditor, given the fact that Ernst & Young (EY) unceremoniously quit towards the end of October. Now, SMCI is leveraging this resignation and the need to again conduct a comprehensive audit by a newly engaged firm as the basis for seeking relief under the Nasdaq exchange's delisting rules.
To wit, Super Micro Computer has now filed a Form NT 10-Q, explaining why its much-delayed annual report could not be filed by the 16th of November deadline given by the Nasdaq exchange. Moreover, the firm has sought additional time under the Rule 12b-25(b) by detailing the following reasons for the inordinate delay:
- Super Micro Computer needs additional time to "select and engage" a successor audit firm.
- More time is needed for the company's management "to complete its assessment of the effectiveness of its internal controls over financial reporting as of June 30, 2024."
- The successor audit firm will need additional time to conduct its audit of the financial statements pertaining to the FY 2024 and Q1 2025.
Bear in mind that Super Micro Computer had until the 16th of November to either file the requisite annual report or come up with a plan to regain compliance with Nasdaq's rules. Given the reasons enunciated by the company today, it is up to the Nasdaq exchange now to either accept SMCI's petition for additional time or go for a formal delisting.
Super Micro Computer's troubles began in August when Hindenburg Research detailed a litany of malpractices at the firm that ranged from distribution channel stuffing and partial shipments to re-hiring top executives responsible for accounting violations that had resulted in a $17.5 million settlement with the SEC. Hindenburg Research also alleged that a material proportion of SMCI's sales came from non-arm's-length suppliers such as Ablecom and Compuware. These allegations have also reportedly attracted scrutiny from a preliminary DOJ investigation.
In the aftermath, Super Micro Computer delayed the publication of its annual report, EY resigned as the designated auditor, making this the second such exit in the past 18 months, and the DOJ initiated a preliminary investigation into the affairs at SMCI.
Meanwhile, NVIDIA appears to be distancing itself from the embattled firm, as illustrated by the recent admission from Super Micro Computer's CEO, Charles Liang, wherein he conceded that the company was "asking NVIDIA every day" for fresh batches of the Blackwell chips but that "not enough new chips" were being delivered. Bear in mind that SMCI was, until recently, NVIDIA's third-largest customer.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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