Troubles continue mounting for server maker Super Micro Computer. The company’s auditors, Ernst & Young, resigned on Wednesday, signaling deep financial issues within the company and causing its stock to plunge by more than 32%.
In an official statement shared with the media, Ernst & Young said that the resignation was prompted by new information and the company’s unwillingness to be associated with “financial statements prepared by management.” The accounting firm previously raised concerns about Super Micro’s internal control process and the board’s independence.
“We are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management’s and the Audit Committee’s representations and to be unwilling to be associated with the financial statements prepared by management, and after concluding we can no longer provide the Audit Services in accordance with applicable law or professional obligations,” Ernst & Young stated.
Super Micro responded by saying that it “disagrees” with Ernst & Young’s assessment while adding that it doesn’t expect it will have the need to reassess its quarterly results for previous fiscal years. The company is already in the process of securing a new auditor.
Super Micro Computer was previously the subject of a report by short-seller Hindenburg Research and was accused of accounting manipulation that included “glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.”
Following the news about Ernst & Young’s resignation, Super Micro’s stock plunged by 32.68% and closed at $33.07 per share. The stock still remains 15.83% up year-to-date.