Super Micro: A “Show-Me Story” with Potential for Expanding Gross Margins
Super Micro Computer, Inc. (SMCI), a leading innovator in high-performance, high-efficiency server technology and green computing, has been a “show-me story” for some analysts. However, Rosenblatt Securities’ analyst, Hans Mosesmann, believes that there is more to this company than meets the eye.
Super Micro’s Current Position
Super Micro has been facing challenges in recent years, including declining revenues and profits. In the third quarter of 2021, the company reported a 14.3% year-over-year decline in revenues to $825.3 million. This decline was primarily due to lower sales in its Enterprise Business Unit (EBU), which accounted for 78% of the company’s total revenues in the quarter.
Enterprise Customers: A Growing Opportunity
Despite these challenges, Mosesmann sees room for optimism. He believes that Super Micro’s enterprise business, which has traditionally accounted for a smaller portion of the company’s revenues, could become a significant growth driver. According to him, “Super Micro’s enterprise business has been growing faster than the overall market, and we believe there is room for it to expand further.”
Expanding Gross Margins
One of the reasons why Mosesmann is bullish on Super Micro’s enterprise business is the potential for expanding gross margins. Super Micro’s gross margins have been under pressure due to intensifying competition and rising costs. However, the company’s enterprise business tends to have higher gross margins than its consumer business. By selling more to enterprise customers, Super Micro could increase its overall gross margins, which would help improve its profitability.
Impact on Individuals
For individuals, the potential expansion of Super Micro’s enterprise business could lead to greater innovation and better technology solutions. Super Micro has been a pioneer in high-performance, energy-efficient servers, and its enterprise customers often demand the latest and most advanced technology. By focusing more on the enterprise market, Super Micro could invest more in research and development, leading to new and improved products that could benefit consumers as well.
Impact on the World
On a larger scale, the expansion of Super Micro’s enterprise business could have a positive impact on the technology industry and the world as a whole. Super Micro’s servers are used in a variety of applications, from cloud computing and data centers to artificial intelligence and machine learning. By providing more advanced and efficient technology solutions to enterprise customers, Super Micro could help power the digital transformation of businesses and organizations around the world.
Conclusion
Super Micro’s “show-me story” may have been a source of concern for some analysts, but there are signs of potential for growth, particularly in the enterprise business. By focusing more on this segment, Super Micro could expand its gross margins and improve its profitability. For individuals, this could lead to better technology solutions, while for the world, it could help power the digital transformation of businesses and organizations.
- Super Micro’s enterprise business has been growing faster than the overall market
- Expanding enterprise business could help improve Super Micro’s profitability
- Greater focus on enterprise business could lead to more innovation and better technology solutions
- Super Micro’s servers are used in a variety of applications, from cloud computing to artificial intelligence
