The Blubber

Super Micro Computer (NASDAQ: SMCI) shares plummeted by nearly 30% in premarket trading on Wednesday after the company’s auditor, Ernst & Young LLP (EY), resigned. According to a regulatory filing, EY submitted a letter of resignation to the members of the audit committee on October 24.

In its filing, Super Micro expressed disagreement with EY’s decision to step down as its independent auditor, noting that the company’s Special Committee has not yet obtained all the information necessary for its ongoing review and has not reached a conclusion. Despite this, Super Micro stated that it takes EY’s concerns seriously and will carefully evaluate the Special Committee’s findings and any recommended actions after the review is completed.

The company’s audit committee chair has discussed EY’s resignation and has begun the process of searching for a new independent registered public accounting firm.

Super Micro, led by CEO Charles Liang, added that it does not currently expect the issues raised by EY or the Special Committee to result in any need to restate its quarterly reports for fiscal year 2024, which ends on June 30, 2024, or for prior years.

Concerns about Super Micro's financial statements surfaced in late August, following a report by Hindenburg Research, which revealed it was shorting the company’s stock. A day later, Super Micro announced a delay in filing its annual 10-K report. However, the company later indicated that it does not anticipate any significant changes to its fiscal 2024 projections.

In September, Liang sent a letter to the company’s customers and partners, assuring them that neither the short report nor the delay in the annual filing would affect their operations.