Super Micro Computer, Inc. Announces 3rd Quarter Fiscal Year 2008 Financial Results

April 29, 2008

SAN JOSE, Calif., Apr 29, 2008 (BUSINESS WIRE) -- Super Micro Computer, Inc. (NASDAQ:SMCI), a leader in application optimized, high performance server solutions, today announced third quarter financial results for fiscal year 2008. The final results are in line with the preliminary results announced by the Company on April 9, 2008.

Q3 Fiscal Year 2008 Highlights

-- Quarterly net sales of $136.8 million, approximately flat with the second quarter fiscal year 2008 but up 29.4% from a year-ago third quarter in fiscal year 2007.

-- Net income of $5.0 million, down 35.1% from the second quarter fiscal year 2008 primarily due to business mix, high profile customer, seasonal factors and investment in engineering and up 23.4% from year-ago third quarter in fiscal year 2007.

-- Server Solutions accounted for 35.0% of net sales

-- SuperBlade(TM) and 1U-Twin(TM) servers set performance-per-watt milestones in the world, enabling Supermicro customers to grow market share.

Q3 Fiscal Year 2008 Financial Results

Net sales for the third quarter ended March 31, 2008 totaled $136.8 million, up 29.4% from $105.7 million in the third quarter of fiscal year 2007. Net sales from server solutions comprised 35.0% of net sales, down from 36.7% in the third quarter of fiscal year 2007. No customer accounted for more than 10% of net sales during the quarter.

Net income for the third quarter of fiscal year 2008 was $5.0 million, or $0.13 per diluted share, a growth of 23.4% from the net income of $4.1 million, or $0.13 per diluted share, in the same period a year ago. Included in net income for the quarter was $1.0 million of stock-based compensation expense (pre-tax). Excluding stock-based compensation expense and the related tax effect, non-GAAP net income for the third quarter was $6.0 million, or $0.15 per diluted share, compared to non-GAAP net income of $4.5 million, or $0.14 per diluted share, in the same period a year ago. On a sequential basis, non-GAAP net income decreased from the second quarter of fiscal year 2008 by $2.6 million or $0.07 per diluted share.

Gross margin for the third quarter grew to 18.2%, compared to 17.1% in the same period a year ago. Non-GAAP gross margin for the third quarter was 18.2% compared to 17.2% in the same period a year ago. Third quarter of fiscal year 2008 gross margin was higher than the same period a year ago due to sales of new products such as the 1U Twin and Universal IO solutions offset in part by a lower percentage server solution revenue. On a sequential basis, non-GAAP gross margin decreased by 1.8% from 20.0% in the second quarter of fiscal year 2008. The decrease was primarily due to lower product mix of server solutions, high profile customer and seasonality.

The Company ended the third quarter of fiscal year 2008 with $41.8 million in cash and cash equivalents and short term investments compared to $65.9 million at the end of fourth quarter of fiscal year 2007. The reduction was primarily due to the reclassification of approximately $18.2 million of auction rated securities which had been previously classified as short-term investment.

9-Month Summary

Net sales for the nine months ended March 31, 2008 were $391.6 million, up 26.6% from $309.4 million for the first nine months of fiscal year 2007. Net income for the first nine months of fiscal year 2008 grew to $18.6 million or $0.48 per diluted share, a growth of 34.2% from $13.8 million or $0.43 per diluted share in the same period a year ago. Excluding stock based-compensation expense and related tax effect, non-GAAP net income for the first nine months was $21.1 million or $0.54 per diluted share, compared to $15.3 million or $0.47 per diluted share in the same period a year ago.

Business Outlook & Management Commentary

The Company has historically seen seasonal net sales growth in our fiscal fourth quarter, which has typically resulted from new product introductions. We believe that this should continue this quarter as new products introduced during the prior quarters and historically seasonal strength of the server market should provide additional net sales during the fourth quarter of fiscal year 2008. The Company expects net sales at least to be in the range of $142 million to $147 million for the fourth quarter of fiscal year 2008 ending June 30, 2008 which will represent approximately 28% to 32% growth compared with last year. In addition, we expect non-GAAP earnings per diluted share of approximately $0.17 to $0.18 for the fourth quarter of fiscal year 2008 ending June 30, 2008. It is currently expected that the outlook will not be updated until the release of the Company's next quarterly earnings announcement, notwithstanding subsequent developments; however, the Company may update the outlook or any portion thereof at any time.

"We continue to invest aggressively in research and development with the goal of building the Company for long term growth and profitability. We strongly believe that our technology foundation and leadership has been and will be the key for our and customers' success. Our high-efficiency building block architecture, incorporated with our expertise in technology and design is highly demanded by partners and customers, who are seeking for maximum optimization, performance per watt, and cost effectiveness," said Charles Liang, President and Chief Executive Officer of Super Micro Computer. "For examples, our SuperBlade(TM), which is just in volume production, outperforms others in the x86 space in term of performance per watt, computing density, storage capacity and our 1U Twin(TM), a truly innovative product, is shipping in high volume today. I am confident that our revenue and net income will benefit from those investments. Our business has never been as strong as it is today."

Conference Call Information

Super Micro Computer will discuss these financial results and its outlook for the fourth quarter of fiscal year 2008 in a conference call at 2:00 p.m. PT, today. Those wishing to participate in the conference call should call 800-835-9927 (international callers dial 913-312-1464) 10 minutes prior to registering. A replay of the call will be available until 11:59 p.m. ET on May 6, 2008 by dialing 888-203-1112 (international callers dial 719-457-0820) and entering replay PIN 9556654. The live web cast and replay of the call will be available on the Investor Relations section at www.supermicro.com, with the replay beginning approximately two hours after the conclusion of the call and will remain available until the Company's next earnings call.

Cautionary Statement Regarding Forward Looking Statements

Statements contained in this press release that are not historical fact may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may relate, among other things, to our expected financial and operating results, our ability to build and grow Super Micro Computer, the benefits of our products and our ability to achieve our goals, plans and objectives. Such forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from those anticipated. These include, but are not limited to: our dependence on continued growth in the market for X86 and blade servers, increased competition, difficulties of predicting timing, introduction and customer acceptance of new products, poor product sales, difficulties in establishing and maintaining successful relationships with our distributors and vendors, shortages or price fluctuations in our supply chain, our ability to protect our intellectual property rights, our ability to control the rate of expansion domestically and internationally, difficulty managing rapid growth and general political, economic and market conditions and events. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in our filings with the Securities and Exchange Commission, including those factors discussed under the caption "Risk Factors" in such filings.

Use of Non-GAAP Financial Measures

Non-GAAP gross margin discussed in this press release excludes stock-based compensation expense. Non-GAAP net income and net income per share discussed in this press release exclude stock-based compensation expense and the related tax effect of the applicable items. Management presents non-GAAP financial measures because it considers them to be important supplemental measures of performance. Management uses the non-GAAP financial measures for planning purposes, including analysis of the Company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management also believes that the non-GAAP financial measures provide additional insight for analysts and investors in evaluating the Company's financial and operational performance. However, these non-GAAP financial measures have limitations as an analytical tool, and are not intended to be an alternative to financial measures prepared in accordance with GAAP. Pursuant to the requirements of SEC Regulation G, detailed reconciliations between the Company's GAAP and non-GAAP financial results is provided at the end of this press release. Investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in the Company's SEC filings.

About Super Micro Computer, Inc.

Established in 1993, Supermicro emphasizes superior product design and uncompromising quality control to produce industry-leading serverboards, chassis and server systems. These mission-critical Server Building Block solutions provide benefits across many environments, including data center deployment, high-performance computing, high-end workstations, storage networks and standalone server installations. For more information on Supermicro's complete line of advanced motherboards, SuperServers, and optimized chassis, visit www.Supermicro.com, email Marketing@Supermicro.com or call the San Jose, CA headquarters at +1 408-503-8000.

                      SUPER MICRO COMPUTER, INC.
                CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)
                             (Unaudited)

                                                   March 31, June 30,
                                                     2008      2007
ASSETS
Current assets:
  Cash and cash equivalents                        $ 41,354  $ 50,864
  Short-term investments                                456    15,055
  Accounts receivable, net                           42,141    33,426
  Inventories, net                                   93,378    66,772
  Deferred income taxes - current                     7,954     5,630
  Prepaid expenses and other current assets           2,014     1,759
                                                   --------- ---------
    Total current assets                            187,297   173,506
                                                   --------- ---------
Long-term investments                                17,564         -
Property, plant and equipment, net                   45,564    31,089
Deferred income taxes - noncurrent                    1,374       624
Restricted assets                                     1,727        57
Other assets                                            128       307
                                                   --------- ---------
    Total assets                                   $253,654  $205,583
                                                   ========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                 $ 79,756  $ 61,453
  Accrued liabilities                                14,038    14,074
  Income tax payable                                      -     1,489
  Advances from receivable financing arrangements     1,379       982
  Current portion of capital lease obligations           48       118
  Current portion of long-term debt                     294       304
  Other current liabilities                             257         -
                                                   --------- ---------
    Total current liabilities                        95,772    78,420

Long-term capital lease obligations-net of current
 portion                                                 30        40
Long-term debt-net of current portion                10,080    11,251
Other long-term liabilities                           4,384         -
                                                   --------- ---------
    Total liabilities                               110,266    89,711
Stockholders' equity:
  Common stock and additional paid-in capital        67,918    58,239
  Deferred stock-based compensation                    (859)   (1,500)
  Accumulated other comprehensive loss                 (386)        -
  Retained earnings                                  76,715    59,133
                                                   --------- ---------
    Total stockholders' equity                      143,388   115,872
                                                   --------- ---------
    Total liabilities and stockholders' equity     $253,654  $205,583
                                                   ========= =========

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          (In thousands, except share and per share amounts)
                             (Unaudited)

                      Three Months Ended         Nine Months Ended
                   ------------------------- -------------------------
                    March 31,    March 31,    March 31,    March 31,
                       2008         2007         2008         2007
                   ------------ ------------ ------------ ------------
Net sales          $   136,755  $   105,659  $   391,637  $   309,448
Cost of sales          111,929       87,592      316,511      254,381
                   ------------ ------------ ------------ ------------
Gross profit            24,826       18,067       75,126       55,067
Operating
 expenses:
  Research and
   development           8,050        5,143       21,743       15,637
  Sales and
   marketing             4,602        3,485       12,891        8,968
  General and
   administrative        3,903        3,278       10,799        8,789
  Reversal of
   litigation loss           -            -            -         (120)
                   ------------ ------------ ------------ ------------
Total operating
 expenses               16,555       11,906       45,433       33,274
Income from
 operations              8,271        6,161       29,693       21,793
Interest income            327           69        1,319          190
Interest expense          (248)        (369)        (748)      (1,040)
                   ------------ ------------ ------------ ------------
Income before
 income taxes
 provision               8,350        5,861       30,264       20,943
Income tax
 provision               3,326        1,790       11,693        7,105
                   ------------ ------------ ------------ ------------
Net income         $     5,024  $     4,071  $    18,571  $    13,838
                   ============ ============ ============ ============
Net income per
 share:
  Basic            $      0.16  $      0.18  $      0.60  $      0.62
                   ============ ============ ============ ============
  Diluted          $      0.13  $      0.13  $      0.48  $      0.43
                   ============ ============ ============ ============
Shares used in per
 share
 calculation:
  Basic             31,759,958   22,277,339   30,958,660   22,226,460
                   ============ ============ ============ ============
  Diluted           38,961,284   32,434,182   38,780,837   32,373,284
                   ============ ============ ============ ============


Stock-based compensation is included in the
 following cost and expense categories by
 period (in thousands):
                      Three Months Ended         Nine Months Ended
                   ------------------------- -------------------------
                    March 31,    March 31,    March 31,    March 31,
                       2008         2007         2008         2007
                   ------------ ------------ ------------ ------------
  Cost of sales    $       124  $        84  $       354  $       168
  Research and
   development             465          304        1,220          785
  Sales and
   marketing               161           81          453          270
  General and
   administrative          291          215          822          450

                      SUPER MICRO COMPUTER, INC
             CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
                            (In thousands)
                             (Unaudited)
                                                    Nine Months Ended
                                                        March 31,
                                                   -------------------
                                                     2008      2007
                                                   --------- ---------
OPERATING ACTIVITIES:
Net income                                         $ 18,571  $ 13,838
Reconciliation of net income to net cash provided
 by operating activities:
   Depreciation and amortization                      1,921     1,179
   Stock-based compensation expense                   2,849     1,673
   Allowance for doubtful accounts                      174       172
   Allowance for sales returns                        4,150     2,950
   Loss on disposal of property, plant and
    equipment                                             -         2
   Deferred income taxes                             (2,824)      (98)
   Gain on short-term investments                      (616)        -
   Changes in operating assets and liabilities:
     Accounts receivable, net                       (13,039)  (13,647)
     Inventories, net                               (26,606)  (15,384)
     Prepaid expenses and other current assets         (205)     (715)
     Other assets                                        89         -
     Accounts payable                                17,080    14,177
     Income tax payable                               3,565       538
     Accrued litigation loss                              -      (575)
     Accrued liabilities                                241     5,457
     Other long-term liabilities                      3,395         -
                                                   --------- ---------
Net cash provided by operating activities             8,745     9,567
                                                   --------- ---------
INVESTING ACTIVITIES:
Proceeds from investments                            19,390        53
Purchases of investments                            (22,425)        -
Purchases of property and equipment                 (15,056)   (2,642)
Restricted assets                                    (1,670)      (43)
                                                   --------- ---------
Net cash used in investing activities               (19,761)   (2,632)
                                                   --------- ---------
FINANCING ACTIVITIES:
Repayment of long-term debt                          (1,181)     (458)
Proceeds from exercise of stock options               2,417     1,157
Payment of obligations under capital leases            (107)     (137)
Advances under receivable financing arrangements        397       144
Payment of offering costs                               (20)   (3,322)
                                                   --------- ---------
Net cash provided by (used in) financing
 activities                                           1,506    (2,616)
                                                   --------- ---------
Net increase (decrease) in cash and cash
 equivalents                                         (9,510)    4,319
Cash and cash equivalents at beginning of year       50,864    16,509
                                                   --------- ---------
Cash and cash equivalents at end of year           $ 41,354  $ 20,828
                                                   ========= =========
Supplemental disclosure of cash flow information:
  Cash paid for interest                           $    748  $    852
  Cash paid for taxes                              $  7,685  $  6,665
Non-cash investing and financing activities:
  Equipment purchased under capital leases         $     27  $    109
  Reversals of deferred stock-based compensation
   for cancellation of stock options               $     22  $    133
  Accrued costs for property, plant and equipment
   purchases                                       $  1,223  $    112
  Accrued offering costs                           $      -  $    706
 Changes in fair values of investments             $    636  $      -

                      SUPER MICRO COMPUTER, INC
        RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
          (In thousands, except share and per share amounts)
                             (Unaudited)

                      Three Months Ended         Nine Months Ended
                   ------------------------- -------------------------
                    March 31,    March 31,    March 31,    March 31,
                       2008         2007         2008         2007
                   ------------ ------------ ------------ ------------
GAAP GROSS PROFIT  $    24,826  $    18,067  $    75,126  $    55,067
  Add back stock-
   based
   compensation
   (a)                     124           84          354          168
                   ------------ ------------ ------------ ------------
Non-GAAP GROSS
 PROFIT            $    24,950  $    18,151  $    75,480  $    55,235
                   ============ ============ ============ ============

GAAP GROSS MARGIN         18.2%        17.1%        19.2%        17.8%
  Add back stock-
   based
   compensation
   (a)                     0.0%         0.1%         0.1%         0.0%
                   ------------ ------------ ------------ ------------
Non-GAAP GROSS
 MARGIN                   18.2%        17.2%        19.3%        17.8%
                   ============ ============ ============ ============

GAAP INCOME FROM
 OPERATIONS        $     8,271  $     6,161  $    29,693  $    21,793
  Add back stock-
   based
   compensation
   (a)                   1,041          684        2,849        1,673
                   ------------ ------------ ------------ ------------
Non-GAAP INCOME
 FROM OPERATIONS   $     9,312  $     6,845  $    32,542  $    23,466
                   ============ ============ ============ ============

GAAP NET INCOME    $     5,024  $     4,071  $    18,571  $    13,838
  Add back stock-
   based
   compensation
   (a)                   1,041          684        2,849        1,673
  Add back
   adjustments to
   tax provision
   (b)                     (94)        (219)        (334)        (175)
                   ------------ ------------ ------------ ------------
Non-GAAP NET
 INCOME            $     5,971  $     4,536  $    21,086  $    15,336
                   ============ ============ ============ ============

GAAP NET INCOME
 PER SHARE - BASIC $      0.16  $      0.18  $      0.60  $      0.62
  Add back stock-
   based
   compensation
   and adjustments
   to tax
   provision (a)
   (b)                    0.03         0.02         0.08         0.07
                   ------------ ------------ ------------ ------------
Non-GAAP NET
 INCOME PER SHARE
 - BASIC           $      0.19  $      0.20  $      0.68  $      0.69
                   ============ ============ ============ ============


GAAP NET INCOME
 PER SHARE -
 DILUTED           $      0.13  $      0.13  $      0.48  $      0.43
  Add back stock-
   based
   compensation
   and adjustments
   to tax
   provision (a)
   (b)                    0.02         0.01         0.06         0.04
                   ------------ ------------ ------------ ------------
Non-GAAP NET
 INCOME PER SHARE
 - DILUTED         $      0.15  $      0.14  $      0.54  $      0.47
                   ============ ============ ============ ============

SHARES USED IN
 COMPUTING NET
 INCOME PER SHARE
  BASIC - GAAP      31,759,958   22,277,339   30,958,660   22,226,460
                   ============ ============ ============ ============
  BASIC - Non-GAAP  31,759,958   22,277,339   30,958,660   22,226,460
                   ============ ============ ============ ============

  DILUTED - GAAP    38,961,284   32,434,182   38,780,837   32,373,284
                   ============ ============ ============ ============
  DILUTED - Non-
   GAAP             39,136,112   32,570,359   38,984,024   32,533,713
                   ============ ============ ============ ============


(a) Amortization of SFAS No. 123R, APB 25 and SFAS No. 123 stock-based
 compensation for the three and nine months ended March 31, 2008 and
 2007.
(b) The provision of income taxes used in arriving at the non-GAAP net
 income was computed using an income tax rate of 36.4% and 30.7% for
 the three months ended March 31, 2008 and 2007, respectively and
 36.3% and 32.2% for the nine months ended March 31, 2008 and 2007,
 respectively.

SMCI-F

SOURCE: Super Micro Computer, Inc.

Super Micro Computer, Inc.
Howard Hideshima, 408-503-8000
Chief Financial Officer
ir@supermicro.com
or
Kalt Rosen Group/Ruder Finn
Howard Kalt, 415-317-0092
Investor Relations
ir@supermicro.com

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