Author Topic: SMCI - Super Micro  (Read 6483 times)

Foreign Tuffett

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Re: SMCI - Super Micro
« Reply #10 on: October 05, 2018, 08:54:32 AM »
Will customer still use their products after this Bloomberg piece?

That's the risk I see, reputational risk.  If it's a net-net now imagine where it will be after a few quarters of low growth?

Hopefully higher? The (implicit) point I was trying to make is that the balance sheet (both current assets and real estate) supports the current valuation. You don't need growth here to win. All you need is for them to get their financials current to help prove to the market that this isn't a big fat fraud.









benhacker

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Re: SMCI - Super Micro
« Reply #11 on: October 05, 2018, 10:41:52 AM »
Do you think they have any liability for this issue?
Ben Hacker
Beaverton, Oregon - USA

given2invest

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Re: SMCI - Super Micro
« Reply #12 on: October 05, 2018, 11:43:06 AM »
Don't forget there are still no financials!  This thing was already hairy before this article.  Now it's the hairiest of hairy! 

But yah it's intriguing.  But I'm not buying.

Spekulatius

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Re: SMCI - Super Micro
« Reply #13 on: October 05, 2018, 12:48:39 PM »
No inventory write off seems to me a big assumption considering that they have produced components with a hardware Trojan horse in it.At the very least they. Would need to buff up their supply chain supervision, thoroughly inspect and test all their existing WIP and purge whatever is suspect.
Then there are e siting customers who demand that they take their already sold product back. The latter could easily make this a zero alone. Then we have lawsuits from customers, pot. criminal lawsuits from the government, class action lawsuits etc...It seems to me that a net net may not be good enough under these circumstances.
To be a realist, one has to believe in miracles.

bizaro86

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Re: SMCI - Super Micro
« Reply #14 on: October 05, 2018, 02:14:10 PM »
If someone offered you the chance to buy all of Super Micro's inventory what would you pay for it? I personally wouldn't be willing to pay anything near cost for it.

Whether individual pieces are infected or not may not even matter. Who is going to recommend the purchase of that hardware to their boss now? Seem like it would be a lot of career risk for an IT buyer...

rb

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Re: SMCI - Super Micro
« Reply #15 on: October 05, 2018, 03:42:51 PM »
A net net is only useful is you can flip a switch, shut the company down, monetize the assets. If the company continues to operate and losses mount that net/net advantage can quickly evaporate.

This is a company with a founder/shareholder in control. It's not a situation where the guy will go.... well it was fun while it lasted. Let's close her up, take the money and be merry.

There will be consequences from this for the company. The only reason why these guys have business it's because they're cheap. But it's also a commodity business. Which means that their competitors, while more expensive, won't be that expensive. So it won't cost so much to leave them. To a company risking reputational damage, leaving them is almost instinctive, a no thought decision. Notice how Nate mentioned in his post that they don't use SuperMicro?

I guess the extent of the damage will depend on the makeup of SuperMicro's customer base. For example, in the case of a porn company, they probably don't care much if Chinese Intelligence also gets a peek. So they'll keep going for the cheap servers (I imagine a discount will be forthcoming as well). But other types of clients will care very much. But there will be damage. This is also happening to a company that got delisted because it couldn't produce financials for their relatively simple business. Very hairy indeed.

writser

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Re: SMCI - Super Micro
« Reply #16 on: October 06, 2018, 02:56:20 AM »
Very intriguing story. As others pointed out, a perceived margin of safety in net asset value is probably not worth a lot in this case. If the allegations are true, the inventory requires a huge haircut and receivables will be disputed.

I'm inclined to think the market is overreacting. I mean, "Chinese spies are taking over all our computers" is basically a headline handcrafted to totally freak out US investors .. Decent chance this was done at one of their suppliers without their knowledge, that the chip only has very limited capabilities and/or can be worked around, that this hack affects only a limited percentage of their products and that in a year or two everybody has forgotten this. In that case this looks cheap now. However, I have absolutely no facts to justify my opinion and on the other hand, it could also be true that this company has severe security issues and that sales will drop off a cliff (they will drop in any case). And it's not like the company was perfect before the bomb dropped. All in all: probably too difficult for me. But I will follow it for popcorn value.
« Last Edit: October 06, 2018, 02:58:54 AM by writser »
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hillfronter83

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Re: SMCI - Super Micro
« Reply #17 on: October 06, 2018, 08:43:28 AM »

Spekulatius

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Re: SMCI - Super Micro
« Reply #18 on: October 06, 2018, 01:33:51 PM »
https://www.buzzfeednews.com/article/johnpaczkowski/apple-china-hacking-bloomberg-servers-spies-fbi

This is getting more interesting.

I mentioned it before, but if this Trojan horse motherboard exists, some of the hardware should show up and  should get dissected by hardware nerds in the next few weeks. If the hardware doesn’t show up, the scope if this was either very limited or the entire thing a hoax.
To be a realist, one has to believe in miracles.

given2invest

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Re: SMCI - Super Micro
« Reply #19 on: October 06, 2018, 02:33:29 PM »
It's the size of a grain of rice in a $100,000+ device.  Probably hard to find! 

The story is fascinating.