Author Topic: SMCI - Super Micro  (Read 6480 times)

Foreign Tuffett

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Re: SMCI - Super Micro
« Reply #50 on: November 16, 2018, 07:31:05 AM »
@ $13 per share I think the market cap here is somewhere around $640 million. For $640 million you are buying:

$22 million in net debt (94 million cash - 116 million debt).

Based on the 6/30/17 balance sheet the company is close to being a net-net. Assuming no inventory write-offs, it probably is a net-net at this point given the growth that they showed last fiscal year.

FY 2018 results (ended 6/30/2018): $3.3 billion in revenue, at least $428 million in gross profit, and a minimum of $1 per diluted share GAAP earnings.

2 million sq feet of real estate in San Jose, CA + a manufacturing facility in Taiwan.

Obviously this is a speculative situation (do you own due diligence!), but I think a case can be made for buying this here.

To update my original post on this:

@ $14 per share the market cap is ~$700M

For ~$700M you are buying:

$24.5M in net cash

FY 2018 (ended 6/30/18) revenue that will probably come in over $3.3B. Although I expect their business will slow down, they just did at least $952M in revenue in Q1 2019. Company is consistently profitable.

2 million sq feet of real estate in San Jose, CA + a manufacturing facility in Taiwan.

On the restatement: This company was (IMO) formerly operating as a de facto privately owned Taiwanese company. This manifested in the accounting department allowing overly aggressive salespeople to ship product and book revenue in earlier periods than was appropriate. On the CC the CFO used the phrase "roll effect" to describe how the restatements are pushing revenue recognition to later Qs. I think the important thing is that the sales and revenues appear to have been real, not fraud, straw man purchases, or other financial tomfoolery.     


Foreign Tuffett

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Re: SMCI - Super Micro
« Reply #51 on: November 27, 2018, 08:35:06 AM »
Some smart thoughts on Super Micro. I agree with most of his points, but am significantly more circumspect on valuation. No affiliation.

https://twitter.com/CVCResearch/status/1063836063720857600

Foreign Tuffett

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Re: SMCI - Super Micro
« Reply #52 on: December 06, 2018, 12:08:28 PM »
No clue why this is up over 9% amidst general market weakness. I took the opportunity to lock in some gains.

writser

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Re: SMCI - Super Micro
« Reply #53 on: December 07, 2018, 06:56:41 AM »
Good for you. No clue why shares were up so much yesterday. Some people speculated it was due to good Cloudera earnings but what do I know. Seems a bit far-fetched.

I also sold some shares (was only a small position to begin with). The past few weeks we've heard nothing about the 'hacked chips'. Story has been firmly denied by everybody except for Bloomberg. Shares have creeped up and now trade around prices also seen in May and in August - before the Bloomberg article. Looks like the storm has passed. Company might still be cheap and I'm probably selling too soon but I'm too stupid / lazy to figure out the long-term value of this company.

After the storm has blown over Nate can buy my shares and make the easy money.

So, time for Nate to step in?
« Last Edit: December 07, 2018, 06:59:52 AM by writser »
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

Foreign Tuffett

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Re: SMCI - Super Micro
« Reply #54 on: December 07, 2018, 07:51:09 AM »
Good for you. No clue why shares were up so much yesterday. Some people speculated it was due to good Cloudera earnings but what do I know. Seems a bit far-fetched.

I also sold some shares (was only a small position to begin with). The past few weeks we've heard nothing about the 'hacked chips'. Story has been firmly denied by everybody except for Bloomberg. Shares have creeped up and now trade around prices also seen in May and in August - before the Bloomberg article. Looks like the storm has passed. Company might still be cheap and I'm probably selling too soon but I'm too stupid / lazy to figure out the long-term value of this company.

After the storm has blown over Nate can buy my shares and make the easy money.

So, time for Nate to step in?

I've also seen similar speculation about the pop yesterday, but I wouldn't pretend to know. I also wouldn't pretend to know what the right valuation for this company is. I wouldn't be surprised if it goes significantly higher once they finish getting the financials cleaned up. I also wouldn't be surprised if the stock goes lower on more controversy around motherboard security vulnerabilities (even though the "spy chips" story looks to be complete bunkus).

Also, I don't like SMCI management. It's not uncommon for East Asian companies to be run like they are the founders' personal fiefdoms. SMCI, although technically an American company, fits that mold really well. [Anyone reading this can insert here their favorite Munger quote about how it's really hard to change a company's culture].

writser

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Re: SMCI - Super Micro
« Reply #55 on: December 11, 2018, 03:50:44 AM »
https://www.reuters.com/article/us-supermicro-chips/super-micro-says-review-found-no-malicious-chips-in-motherboards-idUSKBN1OA12R

Quote
A person familiar with the analysis told Reuters it had been conducted by global firm Nardello & Co and that customers could ask for more detail on that company’s findings.

Nardello tested samples of motherboards in current production and versions that were sold to Apple Inc and Amazon.com Inc, which were both named in the article, the person said.

It also examined software and design files without finding any unauthorized components or signals being sent out.

Of course it's unclear if there's much added value in this research given that it was instigated by SMCI, who have denied the whole thing all along.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.