Hindenburg Research has several specific & intended accounting
errors at Super Micro Computer $SMCI (-0,53 %)
found. Hindenburg Research is a short seller fund, that investigatively focuses on companies that actively defraud or have violated laws.
I would like to explain in this post what the allegations are.
- Super Micro has already received revenue before the delivery of goods and for partial deliveries recognized. This practice is contrary to generally accepted accounting principles (GAAP) and can lead to an artificial inflation of revenue numbers.
- There are hidden transactions with the companies Ablecom and Compuwarethat are linked to the CEO of Super Micro and his brothers and his brothers. These connections were not properly disclosed, which could have transparency and integrity of the company's financial reporting, Hindenburg said.
- After settling previous SEC violations, Super Micro has reinstated executives involved in prior accounting scandals accounting scandals. This is a disregard for compliance.
- There are allegations that Super Micro circumvented internal controls in order to sales and profit margins to inflate sales and profit margins.
In addition to these accusations, Super Micro also has other problems which I will explain here.
- Loss of Tesla $TSLA as an exclusive customer was a major backlash. Tesla was an important customer and has reduced its dependence on Super Micro and instead signed significant contracts with Dell
$DELL instead, according to reports from May
2024 and statements by Elon Musk emerged.
- Super Micro admits that large tech companies, such as Amazon and Digital Ocean, are hardly represented anymore. Amazon has terminated the collaboration due to delivery problems terminated. Digital Ocean has also turned its back on Super Micro and joined Dell switched to Dell.
What's more, the quality of some products is poor.
- Genesis Cloud is described on the Super Micro website as a "success story" but both current and former employees report disastrous technical experiences.
- GMI Clouda start-up provider in Asia and the USAreported an error rate of 17,5% for its orders of 256
Super Micro servers and after less than a year switched to HP $HPQ (+1,2 %) .
- An employee of NexGen Clouda Nvidia
$NVDA (+4,85 %) partner, reported that up to 50% of the Super Micro orders received from Super Micro firmware problems had firmware problems.
- Several former employees and channel partners have confirmed that the poor after sales service of Super Micro is preventing the company from retaining customers. One former salesperson described service as the company's Achilles heel.
