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06-04-2007 SMCI - Super Micro Computer Inc.

CURRENT PRICE: $10.21

TYPE OF PLAY: VALUE/GROWTH/UNDISCOVERED

* Super Micro Computer has been in business since 1993 and achieved profitability every year since inception.

* Price/Sales Ratio is ~ .76, showing a severe discount to other companies with similar server offerings such as HPQ (p/s 1.26), DELL (p/s 1.4), RACK (p/s 1), SUNW (p/s 1.3).

* 39% year over year revenue growth with an extensive customer base. No single customer accounts for more than 10% of their business, which indicates revenue stability.

* The single analysts currently following it (Needham), maintains a buy rating with a $14.00 price target. Merrill Lynch and UBS were also part of the IPO underwriting team with Needham, and could initiate coverage of the stock at any time. Additionally, the low institutional ownership reported most recently, indicates they would have to buy in as growth continues. This situation presents the classic case of a very stable and expanding company that simply lacks coverage. These are precisely the types of opportunities we look for.

* Three new and innovative product offerings: SuperBlade(TM) servers, the 1U Twin(TM) server (recognized for the excellence of innovation by Intel), and the newly defined Universal I/O(TM) (UIO) architecture for optimized storage and networking flexibility. Their SuperServer 5015M-MR also earned the top honor from CRN 2006 Products of the Year in the Server category. * The CEO owns a substantial amount of the outstanding shares, which gives an added incentive for the company's stock to perform.

* Future plans for assembly/production in China which should cut costs and expand margins accordingly.

Super Micro Computer's products are based on processors from Intel Corp. and Advanced Micro Devices Inc. and can run on the Linux and Windows operating system. This gives it the flexibility for any customer to implement with their preferred chip vendor and operating system.

The company has also begun to shift their product mix more toward the higher margined server offerings. Their new products should continue to enhance this shift and add to the bottom line.

They are very active in promoting the benefits of their offerings and becoming a public company further solidifies the confidence that is instilled in potential customers. They will be presenting at Computex Taipei 2007 in Taipei, Taiwan on June 5th - 9th .

Super Micro Computer 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.



LINKS FOR FURTHER READING:
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