Super Micro Computer Inc. (SMCI, Financial) filed Quarterly Report for the period ended 2008-12-31.
Super Micro Computer Inc. has a market cap of $184.69 million; its shares were traded at around $5.34 with a P/E ratio of 7.8 and P/S ratio of 0.34.
We perform the majority of our research and development efforts in-house. Research and development expenses represented approximately 7.0% and 6.2% of our net sales for the three and six months ended December 31, 2008, respectively, compared to approximately 5.2% and 5.3% of our net sales for the three and six months ended December 31, 2007, respectively.
One of our key suppliers is Ablecom, which supplies us with contract design and manufacturing support. For the three and six months ended December 31, 2008, our purchases from Ablecom represented approximately 22.8% and 25.2% of our cost of sales, respectively, compared to approximately 28.0% and 25.8% of our cost of sales for the three and six months ended December 31, 2007, receptively. The decrease in percentage of cost of sales was primarily related to higher net sales of system accessories which were purchased from other suppliers. Ablecoms sales to us constitute a substantial majority of Ablecoms net sales. We continue to maintain our manufacturing relationship with Ablecom in Asia in an effort to reduce our product costs. In addition to providing a larger volume of contract manufacturing services for us, Ablecom continues to warehouse for us an increasing number of components and subassemblies manufactured by multiple suppliers prior to shipment to our facilities in the U.S. and Europe. We typically negotiate the price of products that we purchase from Ablecom on a quarterly basis; however, either party may re-negotiate the price of products with each order. As a result of our relationship with Ablecom, it is possible that Ablecom may in the future sell products to us at a price higher or lower than we could obtain from an unrelated third party supplier. This may result in our reporting for one or more periods gross profit as a percentage of net sales less than or in excess of what we might have obtained absent our relationship with Ablecom.
Net sales. Net sales decreased by $8.4 million, or 6.1%, to $128.6 million from $136.9 million, for the three months ended December 31, 2008 and 2007, respectively. This was due primarily to a decrease in unit volumes of server system and serverboards offset by an increase in unit volumes of chassis and system accessories. For the three months ended December 31, 2008, the approximate number of server system units sold decreased 9.1% to 40,000 compared to 44,000 for the three months ended December 31, 2007. The average selling price of server system units was approximately $1,300 in both the three months ended December 31, 2008 and 2007. The average selling prices of our server systems remained constant principally driven by an increase in sales of our Superblades and higher average selling prices of 6000 Series configurations of servers offset in part by the declines in average selling prices of more mature products sold to distributors. Sales of server systems decreased by $5.3 million or 9.1% from the three months ended December 31, 2007 to the three months ended December 31, 2008, primarily due to lower sales of our OEM and bundled server solutions and lower sales of 5000 and 6000 Series configurations of servers. Sales of server systems represented 41.0% of our net sales for the three months ended December 31, 2008 as compared to 42.4% of our net sales for the three months ended December 31, 2007. For the three months ended December 31, 2008 and 2007, we derived approximately 66.5% and 60.9%, respectively, of our net sales from products sold to distributors and we derived approximately 33.5% and 39.1%, respectively, from sales to OEMs and to end customers. For the three months ended December 31, 2008, customers in the United States, Asia, Germany and rest of Europe accounted for approximately 65.1%, 10.3%, 6.4% and 15.3%, of our net sales, respectively, as compared to 62.1%, 11.7%, 5.7% and 18.4%, respectively, for the three months ended December 31, 2007.
Cost of sales. Cost of sales decreased by $5.2 million, or 4.7%, to $104.5 million from $109.7 million, for the three months ended December 31, 2008 and 2007, respectively. Cost of sales as a percentage of net sales was 81.3% and 80.1% for the three months ended December 31, 2008 and 2007, respectively. The decrease in absolute dollars of cost of sales was primarily attributable to the decrease in net sales, a decrease of $2.7 million in inventory provision and a decrease of $1.1 million in freight-in charges. The higher cost of sales as a percentage of net sales was primarily due to a decrease in standard gross margin as a result of lower margins in system accessories and serverboards offset in part by higher margins in server systems and chassis. In the three months ended December 31, 2008, we recorded a $1.4 million expense, or 1.1% of net sales, related to the provision for warranty reserve as compared to $1.3 million, or 0.9% of net sales, in the three months ended December 31, 2007. The increase in the provision for warranty reserve was primarily due to higher repair costs and the effect of a 90 day extension of our warranty period. In the three months ended December 31, 2008, we recorded a $0.2 million benefit, or 0.2% of net sales, related to the inventory provision as compared to $2.4 million expense, or 1.8% of net sales, in the three months ended December 31, 2007. The decrease in the inventory provision was primarily due to our focus on reducing excess and slow moving inventory through product conversion and increasing sales efforts. The benefit for inventory provision was primarily from the sale of previously reserved inventory.
Net sales. Net sales increased by $17.7 million, or 7.0%, to $272.6 million from $254.9 million, for the six months ended December 31, 2008 and 2007, respectively. This was due primarily to an increase in unit volumes of chassis, system accessories and server systems offset in part by a decrease in unit volumes of serverboards. For the six months ended December 31, 2008, the approximate number of server system units sold increased 3.7% to 85,000 compared to 82,000 for the six months ended December 31, 2007. The average selling price of server system units was approximately $1,300 in both six months ended December 31, 2008 and 2007. The average selling prices of our server systems remained constant principally driven by an increase in sales of Superblades and 6000 Series configurations of servers offset in part by declines in average selling prices of more mature products to OEMs and end customers and declines in average selling prices of 5000 and 7000 Series configurations of servers. Sales of server systems increased by $4.9 million or 4.8% from the six months ended December 31, 2007 to the six months ended December 31, 2008, primarily due to higher sales of our OEM and bundled server solutions utilizing our high efficiency power supplies, higher sales of 6000 Series configurations of servers and higher sales of Superblades offset in part by lower sales of 5000 Series configuration of servers. Sales of server systems represented 39.8% of our net sales for the six months ended December 31, 2008 as compared to 40.6% of our net sales for the six months ended December 31, 2007. For the six months ended December 31, 2008 and 2007, we derived approximately 64.4% and 60.9%, respectively, of our net sales from products sold to distributors and we derived approximately 35.6% and 39.1%, respectively, from sales to OEMs and to end customers. For the six months ended December 31, 2008, customers in the United States, Asia, Germany and rest of Europe accounted for approximately 65.7%, 10.8%, 5.8% and 15.4%, of our net sales, respectively, as compared to 61.9%, 12.9%, 5.3% and 17.7%, respectively, for the six months ended December 31, 2007.
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Super Micro Computer Inc. has a market cap of $184.69 million; its shares were traded at around $5.34 with a P/E ratio of 7.8 and P/S ratio of 0.34.
Highlight of Business Operations:
We sell our server systems and components primarily through distributors and to a lesser extent to OEMs as well as through our direct sales force. We derived approximately 66.5% and 64.4% of our net sales from products sold to distributors, and 33.5% and 35.6% from sales to OEMs and to end customers for the three and six months ended December 31, 2008, respectively. We derived approximately 60.9% of our net sales from products sold to distributors, and 39.1% from sales to OEMs and to end customers for both the three and six months ended December 31, 2007. None of our customers accounted for 10% or more of our net sales in the three and six months ended December 31, 2008 and 2007. We derived approximately 65.1% and 65.7% of our net sales from customers in the United States for the three and six months ended December 31, 2008, respectively, and approximately 62.1% and 61.9% of our net sales from customers in the United States for the three and six months ended December 31, 2007, respectively. We derived approximately 34.9% and 34.3% of our net sales from customers outside the United States for the three and six months ended December 31, 2008, respectively, and approximately 37.9% and 38.1% of our net sales from customers outside the United States for the three and six months ended December 31, 2007, respectively.We perform the majority of our research and development efforts in-house. Research and development expenses represented approximately 7.0% and 6.2% of our net sales for the three and six months ended December 31, 2008, respectively, compared to approximately 5.2% and 5.3% of our net sales for the three and six months ended December 31, 2007, respectively.
One of our key suppliers is Ablecom, which supplies us with contract design and manufacturing support. For the three and six months ended December 31, 2008, our purchases from Ablecom represented approximately 22.8% and 25.2% of our cost of sales, respectively, compared to approximately 28.0% and 25.8% of our cost of sales for the three and six months ended December 31, 2007, receptively. The decrease in percentage of cost of sales was primarily related to higher net sales of system accessories which were purchased from other suppliers. Ablecoms sales to us constitute a substantial majority of Ablecoms net sales. We continue to maintain our manufacturing relationship with Ablecom in Asia in an effort to reduce our product costs. In addition to providing a larger volume of contract manufacturing services for us, Ablecom continues to warehouse for us an increasing number of components and subassemblies manufactured by multiple suppliers prior to shipment to our facilities in the U.S. and Europe. We typically negotiate the price of products that we purchase from Ablecom on a quarterly basis; however, either party may re-negotiate the price of products with each order. As a result of our relationship with Ablecom, it is possible that Ablecom may in the future sell products to us at a price higher or lower than we could obtain from an unrelated third party supplier. This may result in our reporting for one or more periods gross profit as a percentage of net sales less than or in excess of what we might have obtained absent our relationship with Ablecom.
Net sales. Net sales decreased by $8.4 million, or 6.1%, to $128.6 million from $136.9 million, for the three months ended December 31, 2008 and 2007, respectively. This was due primarily to a decrease in unit volumes of server system and serverboards offset by an increase in unit volumes of chassis and system accessories. For the three months ended December 31, 2008, the approximate number of server system units sold decreased 9.1% to 40,000 compared to 44,000 for the three months ended December 31, 2007. The average selling price of server system units was approximately $1,300 in both the three months ended December 31, 2008 and 2007. The average selling prices of our server systems remained constant principally driven by an increase in sales of our Superblades and higher average selling prices of 6000 Series configurations of servers offset in part by the declines in average selling prices of more mature products sold to distributors. Sales of server systems decreased by $5.3 million or 9.1% from the three months ended December 31, 2007 to the three months ended December 31, 2008, primarily due to lower sales of our OEM and bundled server solutions and lower sales of 5000 and 6000 Series configurations of servers. Sales of server systems represented 41.0% of our net sales for the three months ended December 31, 2008 as compared to 42.4% of our net sales for the three months ended December 31, 2007. For the three months ended December 31, 2008 and 2007, we derived approximately 66.5% and 60.9%, respectively, of our net sales from products sold to distributors and we derived approximately 33.5% and 39.1%, respectively, from sales to OEMs and to end customers. For the three months ended December 31, 2008, customers in the United States, Asia, Germany and rest of Europe accounted for approximately 65.1%, 10.3%, 6.4% and 15.3%, of our net sales, respectively, as compared to 62.1%, 11.7%, 5.7% and 18.4%, respectively, for the three months ended December 31, 2007.
Cost of sales. Cost of sales decreased by $5.2 million, or 4.7%, to $104.5 million from $109.7 million, for the three months ended December 31, 2008 and 2007, respectively. Cost of sales as a percentage of net sales was 81.3% and 80.1% for the three months ended December 31, 2008 and 2007, respectively. The decrease in absolute dollars of cost of sales was primarily attributable to the decrease in net sales, a decrease of $2.7 million in inventory provision and a decrease of $1.1 million in freight-in charges. The higher cost of sales as a percentage of net sales was primarily due to a decrease in standard gross margin as a result of lower margins in system accessories and serverboards offset in part by higher margins in server systems and chassis. In the three months ended December 31, 2008, we recorded a $1.4 million expense, or 1.1% of net sales, related to the provision for warranty reserve as compared to $1.3 million, or 0.9% of net sales, in the three months ended December 31, 2007. The increase in the provision for warranty reserve was primarily due to higher repair costs and the effect of a 90 day extension of our warranty period. In the three months ended December 31, 2008, we recorded a $0.2 million benefit, or 0.2% of net sales, related to the inventory provision as compared to $2.4 million expense, or 1.8% of net sales, in the three months ended December 31, 2007. The decrease in the inventory provision was primarily due to our focus on reducing excess and slow moving inventory through product conversion and increasing sales efforts. The benefit for inventory provision was primarily from the sale of previously reserved inventory.
Net sales. Net sales increased by $17.7 million, or 7.0%, to $272.6 million from $254.9 million, for the six months ended December 31, 2008 and 2007, respectively. This was due primarily to an increase in unit volumes of chassis, system accessories and server systems offset in part by a decrease in unit volumes of serverboards. For the six months ended December 31, 2008, the approximate number of server system units sold increased 3.7% to 85,000 compared to 82,000 for the six months ended December 31, 2007. The average selling price of server system units was approximately $1,300 in both six months ended December 31, 2008 and 2007. The average selling prices of our server systems remained constant principally driven by an increase in sales of Superblades and 6000 Series configurations of servers offset in part by declines in average selling prices of more mature products to OEMs and end customers and declines in average selling prices of 5000 and 7000 Series configurations of servers. Sales of server systems increased by $4.9 million or 4.8% from the six months ended December 31, 2007 to the six months ended December 31, 2008, primarily due to higher sales of our OEM and bundled server solutions utilizing our high efficiency power supplies, higher sales of 6000 Series configurations of servers and higher sales of Superblades offset in part by lower sales of 5000 Series configuration of servers. Sales of server systems represented 39.8% of our net sales for the six months ended December 31, 2008 as compared to 40.6% of our net sales for the six months ended December 31, 2007. For the six months ended December 31, 2008 and 2007, we derived approximately 64.4% and 60.9%, respectively, of our net sales from products sold to distributors and we derived approximately 35.6% and 39.1%, respectively, from sales to OEMs and to end customers. For the six months ended December 31, 2008, customers in the United States, Asia, Germany and rest of Europe accounted for approximately 65.7%, 10.8%, 5.8% and 15.4%, of our net sales, respectively, as compared to 61.9%, 12.9%, 5.3% and 17.7%, respectively, for the six months ended December 31, 2007.
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