Super Micro Computer’s (SMCI) stock has been in a tailspin since Ernst & Young dumped the company as an audit client about a year after it replaced Deloitte & Touche. Super Micro didn’t release the full EY resignation letter or say what the information was that spooked EY. If Deloitte were to pull its prior audit reports, or if Super Micro disavowed its prior numbers, it would constitute an event of default under the company’s credit agreements. Super Micro has said it believes it won’t have to restate previous financial reports. Persuading another major audit firm to sign on under the current circumstances would be an impressive feat.

Source: Wall Street Journal November 15, 2024 14:17 UTC