The appointment of a new auditor by Super Micro Computer is regarded as a "significant positive" development for the company. This transition could facilitate the filing of financial statements and help regain Nasdaq compliance, as pointed out by Wedbush Securities on Tuesday. On Monday, the artificial intelligence server manufacturer announced that it had engaged BDO USA as its independent auditor, marking a crucial next step in bringing financial statements up to date.
"This is an important next step to bring our financial statements current, an effort we are pursuing with both diligence and urgency," stated Super Micro Chief Executive Charles Liang. The company's previous auditor, Ernst & Young, resigned in October after raising concerns about governance and internal controls related to financial reporting.
An independent special committee later investigated these concerns and found no evidence of fraud or misconduct. Recently, Super Micro submitted a compliance plan to the Nasdaq Stock Market, seeking additional time to align with listing requirements due to a noncompliance notice received in September for failing to file its fiscal 2024 annual report.
As a result of this news, Super Micro Computer's shares witnessed a remarkable jump of 33% in late-afternoon trading on Tuesday. Analysts from Wedbush outlined a scenario in which the best outcome could be a report from the committee indicating that identified issues are tied to the company's controls and processes rather than its financials.
If BDO concurs with the committee's findings, the company could enhance its financial controls without needing to restate prior figures, thereby potentially resolving the filing issue more quickly and avoiding delisting. However, BDO may also require adjustments to financials if accounting errors are discovered, which could lead to delays in meeting filing deadlines.
"Even if the best-case scenario plays out, we believe EY's resignation will still raise lingering concerns about the health of Super Micro's financials," Wedbush added. Furthermore, back in August, Hindenburg Research had accused the company of "accounting manipulation." While this auditor appointment is a positive step, uncertainties regarding Super Micro's listing risk remain..