Super Micro Computer Inc. (SMCI, Financial) filed Quarterly Report for the period ended 2009-03-31.
Super Micro Computer Inc. has a market cap of $208.44 million; its shares were traded at around $6.01 with a P/E ratio of 11.34 and P/S ratio of 0.39.
One of our key suppliers is Ablecom, which supplies us with contract design and manufacturing support. For the three and nine months ended March 31, 2009, our purchases from Ablecom represented approximately 18.1% and 23.1% of our cost of sales, respectively, compared to approximately 27.4% and 26.4% of our cost of sales for the three and nine months ended March 31, 2008, respectively. The decrease in percentage of cost of sales was primarily related to higher product mix of server systems and 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 and do not have any current plans to reduce our reliance on Ablecom product purchases. 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.
Impairment of long-term investments. Impairment of long-term investments relates to the unrealized loss on the carrying value of our investments in auction-rate securities; such securities were rated AAA at the date of purchase. The liquidity and fair value of these securities has been negatively impacted by the uncertainty in the credit markets and exposure of these securities to the financial condition of bond insurance companies. We have received all interest payments due on these instruments on a timely basis. Each of these securities has been subject to auction processes for which there had been insufficient bidders on the scheduled rollover dates and the auctions have subsequently failed. When these securities lost the short-term liquidity previously provided by the auction processes, we reclassified these securities as non-current investments. We have used a discounted cash flow model to estimate the fair value of these investments as of March 31, 2009. The material factors used in preparing the discounted cash flow model are 1) the discount rate utilized to present value the cash flows, 2) the time period until redemption and 3) the estimated rate of return. Management derives the estimates by obtaining input from market data on the applicable discount rate, estimated time to maturity and estimated rate of return. The changes in fair value have been primarily due to changes in the estimated rate of return and a change in the estimated redemption period (increasing by one year at quarter end). The fair value of our investment portfolio may range between 2% to 4% by increasing or decreasing the rate of return used by 1% or by increasing or decreasing the term used by 1 year. Changes in these estimates or in the market conditions for these investments are likely in the future based upon the then current market conditions for these investments and may affect the fair value of these non-current investments. As of March 31, 2009 we have recorded an accumulative unrealized loss of $801,000, net of deferred income taxes, on the securities. We deem this loss to be temporary due to our ability and intention to hold the securities until full recovery.
Net sales. Net sales decreased by $27.2 million, or 19.9%, to $109.5 million from $136.8 million, for the three months ended March 31, 2009 and 2008, respectively. This was due primarily to a decrease in unit volumes of serverboards, chassis and server systems partially offset by an increase in unit volumes of system accessories. For the three months ended March 31, 2009, the approximate number of server system units sold decreased 4.9% to 39,000 compared to 41,000 for the three months ended March 31, 2008. The average selling price of server system units decrease 8.3% to approximately $1,100 in the three months ended March 31, 2009 compared to approximately $1,200 in the three months ended March 31, 2008. The average selling prices of our server systems decreased principally driven by lower average selling prices of 6000 Series configurations of servers and OEM bundled server solutions and the declines in average selling prices of more mature products sold to distributors. Sales of server systems decreased by $5.0 million or 10.5% from the three months ended March 31, 2008 to the three months ended March 31, 2009, primarily due to lower sales of 6000 Series configurations of servers offset by higher sales of our OEM and bundled server solutions. Sales of server systems represented 39.1% of our net sales for the three months ended March 31, 2009 as compared to 35.0% of our net sales for the three months ended March 31, 2008. We believe that the decline in our net sales in the three months ended March 31, 2009 was primarily attributable to reductions in information technology spending in response to the global economic downturn and to a lesser extent was impacted by delayed customer orders in anticipation of the release by Intel of its Nehalem line of microprocessors. For the three months ended March 31, 2009 and 2008, we derived approximately 65.9% and 62.8%, respectively, of our net sales from products sold to distributors and we derived approximately 34.1% and 37.2%, respectively, from sales to OEMs and to end customers. For the three months ended March 31, 2009, customers in the United States, Asia, Germany and rest of Europe accounted for approximately 59.8%, 12.0%, 4.6% and 18.8%, of our net sales, respectively, as compared to 58.0%, 17.5%, 5.7% and 17.3%, respectively, for the three months ended March 31, 2008.
Cost of sales. Cost of sales decreased by $18.7 million, or 16.7%, to $93.2 million from $111.9 million, for the three months ended March 31, 2009 and 2008, respectively. Cost of sales as a percentage of net sales was 85.1% and 81.8% for the three months ended March 31, 2009 and 2008, respectively. The decrease in absolute dollars of cost of sales was primarily attributable to the decrease in net sales, a decrease of $1.7 million in
Read the The complete Report
Super Micro Computer Inc. has a market cap of $208.44 million; its shares were traded at around $6.01 with a P/E ratio of 11.34 and P/S ratio of 0.39.
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 65.9% and 64.8% of our net sales from products sold to distributors, and 34.1% and 35.2% from sales to OEMs and to end customers for the three and nine months ended March 31, 2009, respectively. We derived approximately 62.8% and 61.6% of our net sales from products sold to distributors, and 37.2% and 38.4% from sales to OEMs and to end customers for the three and nine months ended March 31, 2008. None of our customers accounted for 10% or more of our net sales in the three and nine months ended March 31, 2009 and 2008. We derived approximately 59.8% and 64.0% of our net sales from customers in the United States for the three and nine months ended March 31, 2009, respectively, and approximately 58.0% and 60.5% of our net sales from customers in the United States for the three and nine months ended March 31, 2008, respectively. We derived approximately 40.2% and 36.0% of our net sales from customers outside the United States for the three and nine months ended March 31, 2009, respectively, and approximately 42.0% and 39.5% of our net sales from customers outside the United States for the three and nine months ended March 31, 2008, respectively. We perform the majority of our research and development efforts in-house. Research and development expenses represented approximately 7.8% and 6.8% of our net sales for the three and nine months ended March 31, 2009, respectively, compared to approximately 5.8% and 5.5% of our net sales for the three and nine months ended March 31, 2008, respectively.One of our key suppliers is Ablecom, which supplies us with contract design and manufacturing support. For the three and nine months ended March 31, 2009, our purchases from Ablecom represented approximately 18.1% and 23.1% of our cost of sales, respectively, compared to approximately 27.4% and 26.4% of our cost of sales for the three and nine months ended March 31, 2008, respectively. The decrease in percentage of cost of sales was primarily related to higher product mix of server systems and 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 and do not have any current plans to reduce our reliance on Ablecom product purchases. 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.
Impairment of long-term investments. Impairment of long-term investments relates to the unrealized loss on the carrying value of our investments in auction-rate securities; such securities were rated AAA at the date of purchase. The liquidity and fair value of these securities has been negatively impacted by the uncertainty in the credit markets and exposure of these securities to the financial condition of bond insurance companies. We have received all interest payments due on these instruments on a timely basis. Each of these securities has been subject to auction processes for which there had been insufficient bidders on the scheduled rollover dates and the auctions have subsequently failed. When these securities lost the short-term liquidity previously provided by the auction processes, we reclassified these securities as non-current investments. We have used a discounted cash flow model to estimate the fair value of these investments as of March 31, 2009. The material factors used in preparing the discounted cash flow model are 1) the discount rate utilized to present value the cash flows, 2) the time period until redemption and 3) the estimated rate of return. Management derives the estimates by obtaining input from market data on the applicable discount rate, estimated time to maturity and estimated rate of return. The changes in fair value have been primarily due to changes in the estimated rate of return and a change in the estimated redemption period (increasing by one year at quarter end). The fair value of our investment portfolio may range between 2% to 4% by increasing or decreasing the rate of return used by 1% or by increasing or decreasing the term used by 1 year. Changes in these estimates or in the market conditions for these investments are likely in the future based upon the then current market conditions for these investments and may affect the fair value of these non-current investments. As of March 31, 2009 we have recorded an accumulative unrealized loss of $801,000, net of deferred income taxes, on the securities. We deem this loss to be temporary due to our ability and intention to hold the securities until full recovery.
Net sales. Net sales decreased by $27.2 million, or 19.9%, to $109.5 million from $136.8 million, for the three months ended March 31, 2009 and 2008, respectively. This was due primarily to a decrease in unit volumes of serverboards, chassis and server systems partially offset by an increase in unit volumes of system accessories. For the three months ended March 31, 2009, the approximate number of server system units sold decreased 4.9% to 39,000 compared to 41,000 for the three months ended March 31, 2008. The average selling price of server system units decrease 8.3% to approximately $1,100 in the three months ended March 31, 2009 compared to approximately $1,200 in the three months ended March 31, 2008. The average selling prices of our server systems decreased principally driven by lower average selling prices of 6000 Series configurations of servers and OEM bundled server solutions and the declines in average selling prices of more mature products sold to distributors. Sales of server systems decreased by $5.0 million or 10.5% from the three months ended March 31, 2008 to the three months ended March 31, 2009, primarily due to lower sales of 6000 Series configurations of servers offset by higher sales of our OEM and bundled server solutions. Sales of server systems represented 39.1% of our net sales for the three months ended March 31, 2009 as compared to 35.0% of our net sales for the three months ended March 31, 2008. We believe that the decline in our net sales in the three months ended March 31, 2009 was primarily attributable to reductions in information technology spending in response to the global economic downturn and to a lesser extent was impacted by delayed customer orders in anticipation of the release by Intel of its Nehalem line of microprocessors. For the three months ended March 31, 2009 and 2008, we derived approximately 65.9% and 62.8%, respectively, of our net sales from products sold to distributors and we derived approximately 34.1% and 37.2%, respectively, from sales to OEMs and to end customers. For the three months ended March 31, 2009, customers in the United States, Asia, Germany and rest of Europe accounted for approximately 59.8%, 12.0%, 4.6% and 18.8%, of our net sales, respectively, as compared to 58.0%, 17.5%, 5.7% and 17.3%, respectively, for the three months ended March 31, 2008.
Cost of sales. Cost of sales decreased by $18.7 million, or 16.7%, to $93.2 million from $111.9 million, for the three months ended March 31, 2009 and 2008, respectively. Cost of sales as a percentage of net sales was 85.1% and 81.8% for the three months ended March 31, 2009 and 2008, respectively. The decrease in absolute dollars of cost of sales was primarily attributable to the decrease in net sales, a decrease of $1.7 million in
Read the The complete Report
