-
You're welcome SZ. In this case we don't know exactly what the issues are but our opinions are based on the collection of evidence we can find. We actually read and digest the information (daily). We don't parrot other pundits opinions. This as opposed to the vast majority of speculation and rumour which is passed off as fact. So we can have more confidence in what the issues aren't. Delisting is very low risk. I think SM, being part of the SP500 and widely held is too big to delist unless there are serious issues and we know what EY and the Board have said about this...they have found nothing which will give rise to a material restatement. Liang and Weigand are still present too. The company must now restore confidence with their key customers and suppliers along with the banks and Wallstreet Analysts. The stock will remain range bound until further clear updates are announced.
-
It's been interesting reading articles on how Dell and HPE will take SM customers. There's a fundamental reason why that is highly unlikely. Neither have their own DLC offering. They sell limited DLC but it's not their product. It's a Foxconn server with a Dell logo on it. Why does that matter? Margin. Dell DLC will have Foxconn margin plus Dell margin. They are just too expensive. And further, US Big Tech customers want locally made solutions due to security, customisation, service and time to market. So we go full circle and look at what SM have. The best solution, a competitive price, made in USA, the total solution (a deep portfolio of solutions spanning Nvidia to Intel). This is what they have going for them. Great business, terrible management.
-
It's been interesting reading articles on how Dell and HPE will take SM customers. There's a fundamental reason why that is highly unlikely. Neither have their own DLC offering. They sell limited DLC but it's not their product. It's a Foxconn server with a Dell logo on it. Why does that matter? Margin. Dell DLC will have Foxconn margin plus Dell margin. They are just too expensive. And further, US Big Tech customers want locally made solutions due to security, customisation, service and time to market. So we go full circle and look at what SM have. The best solution, a competitive price, made in USA, the total solution (a deep portfolio of solutions spanning Nvidia to Intel). This is what they have going for them. Great business, terrible management.
-
Hi Ex IM, yes, saw that. I wouldn't see this as a positive but something to watch. They need all the liquidity they can get. Originally the plan was to take out a new revolving credit facility(RCF) (in Q1) and repay the combined $500M they owed Cathay Bank and Bank of America. The RCF never materialised due to the non filing. They've repayed the Term Loan anyway. Said banks had agreed to a variation/waiver in respect of the 10-k filing requirement deadline to 31 Dec. Clearly the company was not going to meet this revised timeline. We would think the earliest possible filing date to be 'Feb 2025'. We don't know whether the banks indicated they would not agree another waiver or whether the costs to renegotiate were just too punitive, making repayment the sensible solution. The company ended the quarter with $2.1B cash on hand . It will be interesting to see how they navigate their cash requirements. With Blackwell not arriving in volume(for them) until March they may be in luck-get compliant and regain access to capital markets. Their existing cash and inventory can support $6-7B quarters at best. When Blackwell is in full swing they will have the capacity to generate 3X that. They will need significant additional capital to take advantage of it and ideally going to shareholders would be less attractive than debt at these levels. Watch this space.
-
Dell reported earnings last night, meeting expectations. AI server shipments accounted for $2.9B and a backlog of $4.5B. We are not impressed. This is precisely why we did not entertain buying the stock. They are followers in sector, due no doubt to the fact they do not have their own proprietary solution, rather a repackaged white label offering. Dells guide is unremarkable, which also supports our opinion that recent news 'they are taking smci share' is false. Dell shares are very expensive given their net margin and modest growth. We would expect the stock to receive considerable pressure over the coming days and weeks.
-
The other thing with Dell-they exaggerate. Not a good thing. When Xai built Collosus, Dell were the first to make very public statements, crowing that they won the deal($5B). Elon Musk then corrected them by saying SMCI is a joint partner. In fact it transpired SMCI supplied 90% of the installation. Xai is currently building Collosus-phase 2 and 'news' out of Taiwan is that Dell has replaced SMCI. There was zero evidence to support this but it pumped Dells stock price higher at the time. Now looking at their guide, there is clearly no material incremental revenue on offer. Second, Dells supplier is in Taiwan, the very source of the 'news'.
-
yes, someones head was going to roll. The company embarks on the hire on new executives to strengthen the Board. No misconduct found and no restatement of any financials. Independent Counsel Cooley LLP utilised 50 attorneys and forensic accountants Secretariate Advisors devoted 11,500 hours (the cost!) reviews 9 million documents, conducted 68 interviews and met with EY and Deloitte extensive. The committee found no evidence of bad faith or improper motives. All revenue was recognised properly and there was no evidence of breaches of export controls and the company is fully compliant. Nothing in the short seller report hold water.
Happy days
-
The stock is trading up +15% real time
-
That Ex, will be determined on operations. In order to meet the demand from Blackwell they need a lot of additional capital. In order to tap those facilities they need the 10-k filing and the 10-K. Feb/March? The business is capable of turning it around. If they do without further drama, the stock in time will follow.
-
The short seller should be on the hook for all their costs ….but I guess not
-
Difficult call, how big are your balls?
I have a few shares as you will be aware, my next selling point is still not reached...yet!
-
Difficult call, how big are your balls?
I have a few shares as you will be aware, my next selling point is still not reached...yet!
@ferret50 said in SMCI:
Difficult call, how big are your balls?
>ChecksDownTheFrontOfTheChinos<
They look to be pretty normal sized. But if the company has a good product and there are no signs of either misconduct or financial irregularities then it looks like a good bet to me. Their shares can command significantly more than they currently do, as we can see from 6 months ago.
I'm very tempted to splash a bit more pocket money on them. An amount small enough for it not to hurt too much if it all goes tits up, but an amount large enough to make checking the share price interesting.
-
Well done!
