Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Super Micro Computer Inc. FQ1 2012 conference call. The company’s news release issued earlier today is available from its website at www.supermicro.com. In addition, during today’s call the company will refer to a slide presentation that it has made available to participants which can be accessed in a downloadable PDF format on its website at www.supermicro.com in the Investor Relations section under the Events & Presentations tab. (Operator instructions.) As a reminder this call is being recorded Tuesday, October 25th, 2011. A replay of the call will be accessible until midnight November 8th by dialing 1-877-870-5176 and entering conference ID #4551906. International callers should dial 1-858-384-5517. With us today are Charles Liang, Chairman and Chief Executive Officer; Howard Hideshima, Chief Financial Officer; and Perry Hayes, Senior Vice President Investor Relations. And now I would like to turn the conference over to Mr. Hayes. Mr. Hayes, please go ahead, Sir.

Good afternoon and thank you for attending Super Micro’s conference call on financial results for the FQ1 2012, which ended September 30th, 2011. Before we begin I’d like to advise you of upcoming investor conferences in which Super Micro will be participating. On November 9th we will attend the Wells Fargo Technology Conference in New York and on November 17th we will attend the Southwest Ideas Conference in Dallas where we will present and participate in one-on-one meetings. By now you should have received a copy of today’s news release that was distributed at the close of regular trading and is available on the company’s website. As a reminder, during today’s call the company will refer to a presentation that is available to participants in the Investor Relations section of the company’s website under the Events & Presentations tab. Please turn to Slide 2. Before we start I’ll remind you that our remarks include forward-looking statements. There are a number of risk factors that could cause Super Micro’s future results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon, our Form 10(k) for fiscal 2011 and our other SEC filings. All of those documents are available from the Investor Relations page of Super Micro’s website at www.supermicro.com. We assume no obligation to update any forward-looking statements. Most of today’s presentation will refer to non-GAAP financial results and outlooks. For an explanation of our non-GAAP financial measures, please refer to Slide 3 of this presentation or to our press release published earlier today. In addition, a reconciliation of GAAP to non-GAAP results is contained in today’s press release and in the supplemental information attached to today’s presentation. I’ll now turn the call over to Charles Liang, Chairman and Chief Executive Officer.

Thank you, Perry, and good afternoon everyone. Please turn to Slide 4. First let me provide you with the highlights of our FQ1. FQ1 revenue was $247.9 million or 4.8% lower than last quarter, and 19.6% higher year-over-year. After-tax net income was $10.5 million or 19.3% lower quarter-over-quarter and 13.2% higher compared to last year. Super Micro’s diluted earnings per share was $0.24 per diluted share compared to $0.29 last quarter or $0.22 last year. Slide 5, please. With this FQ1 results we have demonstrated a strong start to our earnings fiscal year in the seasonally soft quarter. We anticipated this softness in our August guidance and this quarter unfolded as expected by achieving approximately 20% revenue growth year-over-year. In the past two quarters we have sold more than $0.5 billion of server and storage products, indicating good growth momentum, although in these past quarter there were lots of macroeconomic concerns in the United States and in Europe in addition to somewhat seasonal softness. This impact was relatively minor to our business. From a geographic productive perspective, the United States accounted for 62.1% of revenue and Asia was 15.8%. While both regions were lower quarter-over-quarter the European share rose to 18.8% last quarter as a strong September was offset by a generally slower summer period. Last quarter OEM and Direct customers accounted for over 44% of revenue and both groups continued to grow steadily. Internet Data Center reached 16.4% of total revenue in FQ1 as certain new products were deployed as the result of the higher OEM and Direct business. System sales also continues to be strong and accounted for over 39% of sales. I will start with details regarding the progress of our new Generation X9 Sandy Bridge dual processor and H8 Interlagos solutions. As most of our customers…

Thank you, Charles, and good afternoon everyone. I will focus my remarks on earnings, gross margin, operating expenses and similar items on a non-GAAP basis, which reflect adjustments to exclude stock compensation expenses. Reconciliation of GAAP and non-GAAP is included in the financial statements of the company and in today’s earnings release, and in the supplemental detail in the slide presentation accompanying this conference call. Let me begin with a review of the FQ1 income statement. Please turn to Slide 8. Revenue was $247.9 million, up 19.6% from the same quarter a year ago and down 4.8% sequentially. The increase in revenue from last year was primarily due to server solutions which incorporated our growing Blade, GPU forged product lines, as well as the ramp up of our full rack solutions. The sequential decrease in revenues from last quarter was primarily due to seasonal weakness in the industry. On a percentage basis, whole rack solutions and switches were the fastest growing product lines from the prior quarter. These products continue to gain traction as well as our new MicroCloudTM. Turning to product mix, the portion of revenue from server systems was 39.4%, which was an increase from 35.7% a year ago and a decrease from 40.4% last quarter. ASPs for servers was $1700 per unit, which is up from $1500 per unit last year and down from $1800 last quarter. We shipped approximately 57,000 servers in FQ1 and 973,000 subsystems and accessories. We continue to maintain a diverse revenue base with over 500 customers with none of these customers representing more than 10% of our quarterly revenues. Internet Data Center revenue was 16.4%, which was an increase from 16% in the prior quarter. Furthermore, 62.1% of our revenues came from the US and 55.8% from our distributors and resellers. Slides…

Thank you, Howard. Our results for FQ1 were strong when compared to the same quarter last year and we have made a good start to the new fiscal year. We look forward to moving into our Taiwan facility this quarter and beginning production. We are continuing to prepare our various product lines for the upcoming launch of Sandy Bridge. We have a strong foundation and base from which to execute our strategy to grow our revenue and increase our profitability. Operator, at this time let’s open to questions.

Thank you, Sir. (Operator Instructions.) At this time I’ll go first to Mark Kelleher with Dougherty & Company.

Great, thanks for taking the question. Congratulations on a good quarter. Howard, you mentioned the Thailand floods. Can you elaborate a little bit more on how that might be affecting your Q4 and maybe how much hard disk drive inventory you have as a cushion?

Yeah, Mark, this is Howard. Thank you for the compliment. With regards to the hard disk drive inventory situation and the Thailand floods, we do maintain safety stocks so right now we’re assessing it. We’re looking through that and we’re working our way through our hard disk drive inventory to make sure we have enough for this quarter.

So you’re still evaluating that?

We’re still looking through it. Right now it’s a developing situation but again we have maintained what I would call reserve inventories.

It looks like a certain impact for sure, but because we have a very good safety inventory control hopefully that impact won’t be too big.

Okay, and as a follow-up there was some higher priced D-RAM in inventory that you were working through. Is that all gone now?

Yeah, that situation indeed has been improving in the last two quarters. So this quarter we have less concern in that area.

Okay, thanks.

And we will move along to Aaron Rakers with Stifel Nicolaus.

Yeah, thanks guys and my congratulations as well. First question, I guess more of a clarification – you had referenced Internet Data Center vertical as being 16.4% of revenue. I’m a little bit unclear. I think your presentation kind of indicates that that was 16.4% of OEM plus Direct revenue, so can you clarify that for us? And I think upon that clarification I think you had one significantly large customer last quarter come into that vertical – can you update us on are there any large customers skewing that because it looks like an extremely continually solid number.

Hi Aaron, thanks for the compliment again. Yeah, the 16.4% refers to total revenue, that’s a percentage of total revenue.

And any thoughts or indications on is there a significant customer contribution in that? Because I think you had one customer that was very large last quarter, correct?

In the June quarter we had one customer that was 11% of total revenues and they were in the Internet Data Center area. This quarter we had no customer in any vertical that was over 10% of our revenues, so you see us being more diversified quite frankly into a number of new growing customers.

And then the other question is, I think I was surprised by the gross margin only 16.1%. By my math it would seem to imply that you had a fairly solid increase in the actual server system gross margin. Can you touch on what trends you’re seeing between the segments and how we should necessarily think about that over the next couple quarters?

I guess the March and June quarters we both had some negative impact from higher cost of D-RAM price and however I’ve mentioned that that situation has been improved this quarter.

So you say both systems and subsystems gross margin increased sequentially?

For September and June quarter, yes, we saw it from a little bit of higher memory costs.

Okay, thank you.

At this time we’ll move along to Rajesh Ghai with ThinkEquity.

Yes, thanks. Congratulations from my side, too. On the Romley ramp up, what’s the timing that you’re assuming at this point in time? I noticed that your guidance for the December quarter is a little neutered compared to the historical growth rate. Are you assuming some sort of a pause ahead of a big ramp in the first half of next year, calendar year?

Okay. Yeah, our December quarter growth, we tried to be more conservative for two reasons. One is the Thailand flood. We are closely inspecting and surveying the impacts, and the second is our Sandy Bridge going into very high-volume production in Q1. So this quarter we will see some seeding but not really high volume.

And in case, you said you were evaluating the Thailand situation – I just want to make sure that right now it looks like you have significant hard drive capacity that’s going to be impaired. Is it a possibility that it impacts your ability to produce product this quarter or do you think that you might just have an opportunity to address that situation? And what kind of pricing impact are you modeling in your gross margin assumption for this quarter?

Yeah, this quarter we have some safety inventory for sure but it is concerning about if the impact will become bigger; then we may have to pay a higher price to fulfill some demand especially by December. That’s why we tried to be more conservative.

So what kind of price increase have you modeled in the gross margin assumption for next quarter?

At the moment we have… And I don’t know if people are talking differently but it can be 10% higher in some hard drive costs, and some other models may even be 20%. But as of this moment still none, not quite solid.

Okay, and then one last clarification. You said the Taiwan facilities will ramp – is that going to be in the March quarter of 2012 or is that going to be in the September quarter of 2012? I just want to clarify that.

Hi, Rajesh. We’re on schedule as I think Charles mentioned also. We’re on schedule for complete construction by the end of this quarter in the December timeframe so then we’ll begin to ramp right after that, and taking off (inaudible) of that and putting in lines and beginning to ramp that.

Great, thank you so much.

(Operator Instructions.) Moving along we’ll go to Glenn Hanus with Needham.

Hi, and congrats as well. Let’s see, so gross margins this quarter, should we look for some sequential growth in gross margins in the December quarter and can you talk about the puts and takes on the gross margin this quarter?

Yeah, Glenn, I think one of the main things that we talked about is the Japan inventory, that being behind us. It was pretty good in the June quarter. We saw less with that as we talked about in the September quarter so we think we’re beyond that per se. Obviously as we have new products onboard and starting to sample and getting ready for the Romley and Interlagos, that’s always a good thing for us. On the flipside of that, and I’ll say also that the memory pricing or UM pricing was pretty stable this quarter so that was also good for us. We’ve talked about the hard disk drive situation – that can go plus or minus, let’s put it that way, depending on how it turns out at the end of the quarter. And then on the negative side I guess… Like I said, we’re on schedule to ramp the Taiwan facility, we look pretty good there but we’ll still be incurring some costs to ramp that, to get it ready for production capabilities in Q1.

Okay. Can you give us any color directionally on whether we can see some gross margin expansion this quarter or should we more think about that in March in conjunction with Romley?

I guess the December quarter probably margins will be slightly better than before, but how much? You have something more Howard?

Yeah, again Charles is pointing to like I said the benefits from some of the sampling we’re doing with Interlagos and with Romley, also with some of the componentry that we do have in stock, the higher pricing we may be able to obtain on that and its positive effect on margins. So there’s some positive things for us that we see right now in front of us.

Okay. On the operating expenses, you came in a little ahead of what I was modeling. As you look out over the next few quarters do you think we can start to drive operating expenses back down below 9%?

Yeah, in the past three or four quarters, we did increase a lot of manpower because we had to train our head people in production, in logistics, even in the quality control and offshore. And that’s why our overhead grew quite a little bit, but so far most of the people are pretty much well trained so in the next few quarters I believe our headcount growth will be more under control.

Okay, great. And maybe at the macro level could you talk about what you’re seeing by geography? You did pretty well – do you think it was more share gain on your part or the overall macro situation was not so bad? Could you maybe talk about that by geography?

Yeah, I mean as you know we did not focus that much on the USA East Coast before but we have depended a lot on (inaudible) to develop their market in the past few quarters. So we did see some gain over there and in Europe we had to continue to grow our sales and marketing team, and we have a good feeling about it. In Asia, yes, we had spent a lot of effort to develop the market there in the last twelve months and it looks like it’s getting mature to us.

Okay, thank you.

And we do have a follow-up from Aaron Rakers with Stifel Nicolaus.

Yeah, thanks. In reference to one of your earlier comments, can you tell us how much expense overhang you’re currently deriving from the ramp of the Taiwan facility and how we should think about that after that facility comes online?

Hi, Aaron. Like I said right now there’s none on the construction part of it, the investment part, but that’s not come onboard yet. They’re still building and those will be taken over a long period of time so the load from there won’t be that heavy even when it does come onboard. And as Charles mentioned earlier we did ramp some headcount there; that’s already built into the number. So it’s a matter of basically utilizing that excess capacity if you want to call it that, or excess manpower that we have – basically fully utilizing it.

And then the final question from me is if you think about what you guys, you know, $270 million mid-point of your guidance, how are you thinking about that sequentially between the two segments? If I look back you have historically a very strong December quarter; obviously Romley timing and everything else involved here, but I think on average you’ve done over 20% sequential growth in the Systems side. How are you thinking about the mix of business given your guidance for this quarter?

I guess you are right – the Romley, Sandy Bridge will both have impacts in Q1, not December. That’s why we tried to be more conservative for the December quarter. But yes, December is usually our strong quarter.

So with that I mean are you assuming a fairly consistent mix of business that you saw this last quarter?

Yeah, I think so, Aaron. If you look through the percentages of the last couple of quarters we’ve felt pretty steady with regards to our servers versus subsystems mix, albeit we had some componentry that we had to get rid of in the June quarter. But I think you’ll see us being fairly steady.

Okay.

Moving along we’ll go to Alex Kurtz from Sterne Agee.

Hi, this is Amelia filling in for Alex today. A quick question following up on the Internet Data Center question: how did you see the competitiveness in this vertical over the quarter in terms of the deals you saw? Were they better or worse versus last quarter? Did you see any large deals or specific pricing pressure around these deals?

It looks like not a big change. It’s been competing since a long time ago and that’s why we are continuing to grow our higher-value architecture, our software value and kind of lowering our operations cost by extending our opportunities to Asia.

Okay great, thank you.

And we do have a follow up from Glenn Hanus with Needham.

Hi, yes, I think an important part of your value proposition over the years has been your first-to-market advantage and you tend to drive better margins during that time. Just given that Romley, Sandy Bridge has slipped out a bit, has that impacted your first-to-market advantage at all and sort of given some of the competitors a chance to catch up to you?

I believe we still have a very good chance in terms of TTM, time to market, because for a (inaudible) it’s a really wonderful, really high –performance but also very complicated. There are lots of technical challenges; for example, how to make the system really power saving and really pushing the performance to maximum; how to really optimize the cooling function including kind of a rather free-air cooling. So there is lots of technology there, so I don’t believe… Sandy Bridge, we have a better opportunity than before.

Great, thank you.

It appears at this time we have no further questions. I would like to turn the call back over to Mr. Liang for any additional or closing comments.

Thank you for joining us today and we look forward to talking to you again at the end of this quarter. Thank you, everyone. Have a great day.

Thank you, ladies and gentlemen. This does conclude the Super Micro FQ1 2012 conference call. We do appreciate your participation, you may disconnect at this time. Thank you.