By Akash Sriram and Stephen Nellis
(Reuters) – Artificial intelligence server maker Super Micro Computer reported third-quarter revenue below estimates on Tuesday, hurt by a shortage of some crucial components and questions about the profitability of a new range of servers.
Shares of Super Micro, which has more than tripled in value so far this year, were down 14% in after-the-bell trading.
The San Jose, Calif.-based company, which builds powerful AI servers with chips from Nvidia, Advanced Micro Devices and others, expects fourth-quarter revenue to beat estimates as it expects stable demand.
But during an earnings conference call, analysts peppered company executives with questions about the spending needed to support the transition to a new generation of Nvidia chips requiring liquid cooling and whether those new servers, which will hit the market later this year, will cost enough. to increase Super Micro’s profit margins.
The AI server maker was added to the S&P 500 index last month.
Super Micro is banking on its in-house liquid cooling technology for its servers to gain market share in a competitive sector.
CEO Charles Liang told analysts the company paid a premium to secure supplies needed to quickly build these liquid-cooled servers in the coming quarters, but said end customers would only pay a ” very minimal premium” for these servers compared to older air-cooled servers. waiters.
At the end of the March quarter, inventories stood at $4.12 billion, compared to $1.45 billion for the year ended June 30, 2023.
“It hurts our cash flow, but you know what, it doesn’t matter because we need that inventory for fourth-quarter shipments,” Chief Financial Officer David Weigand said.
Super Micro aimed to stay within its 14% to 17% gross margin range over the long term, he added, although some analysts say the company’s quarterly guidance implied margins below that range.
The company expects fourth-quarter revenue of between $5.1 billion and $5.5 billion, compared with analysts’ average estimate of $4.89 billion, according to LSEG data.
“If we had not been limited by some shortages of key components, we could have delivered more,” Liang said.
The company raised its annual sales forecast to a range of $14.7 billion to $15.1 billion, up from the previously reported $14.3 billion to $14.7 billion.
Super Micro reported adjusted earnings of $6.65 per share in the first quarter, compared with analysts’ estimates of $5.78 per share.
Revenue for the quarter ended March 31 was $3.85 billion, compared with an estimate of $3.95 billion, according to LSEG data.
Gross margin for the three-month period stood at 15.5%, down from 17.6% a year earlier, in line with analysts’ expectations.
(Reporting by Akash Sriram in Bangalore and Stephen Nellis in San Francisco; editing by Tasim Zahid and Jamie Freed)
News Source : finance.yahoo.com
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