SCIENCE

Super Micro Computer has announced first quarter fiscal 2011 financial results for the quarter ended September 30, 2010.

Fiscal 1st Quarter Highlights

Quarterly net sales of $207.2 million, up 2.7% from the fourth quarter of fiscal year 2010 and up 39.5% from the same quarter of last year. Net income of $7.2 million, down 6.5% from the fourth quarter of fiscal year 2010 and up 86.8% from the same quarter of last year. Gross margin of 15.9%, up from 15.3% in the fourth quarter of fiscal year 2010 and down from 16.5% from the same quarter of last year. Server Solutions accounted for 35.7% of net sales compared with 32.2% in the fourth quarter of fiscal year 2010 and 34.5% in the same quarter of last year.

Net sales for the first quarter ended September 30, 2010 totaled $207.2 million, up 39.5% from $148.5 million in the first quarter of fiscal year 2010. No customer accounted for more than 10% of net sales during the quarter.

Net income for the first quarter of fiscal year 2011 was $7.2 million or $0.17 per diluted share, an increase of 86.8% from the net income of $3.9 million, or $0.10 per diluted share in the same period a year ago. Included in net income for the quarter were $1.8 million of stock-based compensation expense (pre-tax) and $0.7 million of litigation related expense (pre-tax). Excluding these items and the related tax effect, non-GAAP net income for the first quarter was $9.3 million, or $0.22 per diluted share, compared to non-GAAP net income of $5.8 million, or $0.15 per diluted share, in the same quarter of last year. On a sequential basis, non-GAAP net income increased from the fourth quarter of fiscal year 2010 by $0.2 million or $0.01 per diluted share.

Gross margin for the first quarter was 15.9%, compared to 16.5% in the same period a year ago. Non-GAAP gross margin for the first quarter was 16.0% compared to 16.6% in the same period a year ago. Non-GAAP gross margin was 15.4% for the fourth quarter of fiscal year 2010.

The Company's cash and cash equivalents, short and long term investments at September 30, 2010 were $89.4 million compared to $79.4 million at June 30, 2010. Free cash flow in the three months ended September 30, 2010 was $9.7 million.

Business Outlook & Management Commentary

The Company expects net sales of $220 million to $230 million for the second quarter of fiscal year 2011 ending December 31, 2010. The Company expects non-GAAP earnings per diluted share of approximately $0.23 to $0.27 for the second quarter.

"During the past year, we made strategic decisions to grow internationally and to further invest in our research and development to extend our position as the leader in server technology innovation. Our growth strategy is proving successful as we again achieved another record for growth while improving our margin performance," said CEO Charles Liang. "Supermicro is better positioned in our geographic regions to support the strong demand globally for our best in class performing product lines that feature best performance per watt, per square foot, and per dollar. In particular, we are pleased to see the improvement in our total systems revenue this quarter."

It is currently expected that the outlook will not be updated until the Company's next quarterly earnings announcement, notwithstanding subsequent developments. The Company may update the outlook or any portion thereof at any time. Such updates will take place only by way of a news release or other broadly disseminated disclosure available to all interested parties in accordance with Regulation FD.

Conference Call Information

Super Micro Computer will discuss these financial results in a conference call at 2:00 p.m. PT, today. To participate in the conference call, please call 888-240-1251 (international callers dial 913-312-1268) 10 minutes prior. A recording of the conference will be available until 11:59 p.m. ET on Tuesday, November 9, 2010 by dialing 877-870-5176 (international callers dial 858-384-5517) and entering replay PIN 1980946.