Please standby. Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Super Micro Computer Incorporated Second Quarter Fiscal 2013 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. During the company’s presentation all participants will be in a listen-only mode. Afterwards securities, analysts and institutional portfolio managers will be invited to participate in a question-and-answer-session. But the entire call is open to all participants in a listen-only basis. As a reminder, this call is being recorded, Tuesday, January 22, 2013. A replay of the call will be accessible until midnight, February 5th, by dialing 1-877-870-5176 and entering conference ID number 3074743. 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’d 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 second quarter fiscal year 2013, which ended December 31, 2012. Before we begin, I’d like to advise you of upcoming investor conferences in which Super Micro will be participating. On February 6th, we will present at the Stifel Nicolaus 2013 Technology Conference in San Francisco, 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 two. 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 those risks in the press release we issued earlier this afternoon, our Form 10-K for fiscal 2012 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 three 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 is in the supplemental information attached 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 four. First, let me provide you with the highlights of our second quarter. We are pleased that our second quarter revenue was $291.5 million, its 7.7% higher quarter-over-quarter and 16.6% higher year-over-year. Non-GAAP net income was $7.8 million or 156.5% higher quarter-over-quarter and 29.9% lower compared to last year. Super Micro’s non-GAAP earnings per share was $0.18 per diluted share, compared to $0.07 last quarter and $0.25 last year. Slide five please. Revenue for the quarter was up 16.6% from last year and was a record high for Super Micro. We are pleased with this growth in sales when overall IT spending continued to be a cautious. With this performance we continue to demonstrate our ability to take market share even during uncertain economical times. Last quarter’s margins improved quarter-over-quarter. However, we still see opportunity for further improvement. Although, our recent (inaudible) pricing change continued last quarter in hard disk drive. We saw the market for hard disk drive and memory modules stabilized for the most part. However, because we had record high storage revenue which contained lower margin mix with hard disk drives. Our storage margins were lower than average server margins. As it turned out the overall margin for our storage solution still improved quarter-over-quarter, with the component source and price stability in place, we expect our margin performance to further improve in future quarters. Geographically, revenue in North America was 537%, Europe was 23% and Asia was 20.7% of total sales. Asia remains our fastest growing region and our Taiwan facility continues to run steadily to meet our growth for the Asian market. Now Asia revenue gross was 34% over last year, mostly due to high quality products produced from our state-of-the-art equipment at our facility…

Thank you, Charles and good afternoon everyone. I will focus my remarks on earnings, gross margins, operating expenses and similar items on a non-GAAP basis which reflects the adjustments to exclude compensation expenses. Reconciliation of GAAP-to-non-GAAP is included in the financial statements of the company in today’s earnings release and in the supplemental detail in the slide presentation accompanying this conference call. Let me begin with the review of the second quarter income statement. Please turn to slide eight. Revenue was the record $291.5 million, up 17% from the same quarter a year ago and up 8% sequentially. The increase in revenue from last year was primarily due to strong growth in MicroCloud, Storage and GPU. The sequential increase in revenue from last quarter was primarily due to seasonal strength in the industry and a growth of some of our innovative product line, offset in part by concerns about our economy. On a percentage basis, MicroCloud and Storage were the fastest growing product lines from the prior quarter. MicroCloud has been a great product for the internet Datacenter with the density and power efficiency. Storage has been away from the stabilization of hard-disk drive pricing and availability. We continue to see good ramp in the Sandy Bridge products, with an increase of 64% sequentially. Slide nine, turning to product mix, the portion of revenues from server systems was 43.3% of total revenues, which is down from 44%, the same quarter a year ago and an increase from 39.5% last quarter. ASP for servers was $2,100 per unit, which is up from $1,800 last year and $3,000 last quarter. We shipped approximately 60,000 servers in the second quarter and 1,086,000 subsystems and accessories. The increase in the server unit is also in part from an increase in our internet Datacenter business.…

Thank you, Howard. Super Micro is focused on increasing market share by leveraging our strong advantage of brand recognition for basically in cards product and innovation. Our growth story remains intact. Our people are committed to succeed and our opportunities remain as great as ever. Operator, at this time we are ready for questions.

Thank you. (Operator Instructions) And we’ll go first to Aaron Rakers of Stifel Nicolaus.

Yeah. Thanks guys for taking the question. So, first, I want to make sure I heard you right, 6% tax rate in this March quarter. If you look at that over the trailing -- the apply trailing three quarters then that would be about 19%. What’s the tax rate are you assuming on the forward basis as we think about June and beyond that?

Yeah. Aaron, this is Howard. As I mentioned, it’s not 19%, if we didn’t have the catch-up it would be about the 19% difference, so assumably we’ve about 25%...

25% of the rate, okay.

…rate, yeah.

And so underneath of that one, when we look at, assuming that you continued to maintain your OpEx discipline that you’ve been doing, are you assuming what looks to be like a 14.5% gross margin? And I think, if that’s true, how are we to think about, what’s been talked about as being a 350 basis points overhang from the hard disk drive and memory pricing, that seems to be lifting here, when you recapture or rather when you get backup into that 16% gross margin range?

Yeah. Aaron, this is Howard. I’d like to say, we’re still working our way. We still believe that there is more to be had there as you back in time. Again, we’re not all the way there yet. We -- the majority of this quarter’s margin improvement was from the hard disk drive. We see that continue to stabilize and hopefully that will continue to improve. So an opportunity is there for us to increase. Along with that for this quarter, again this is a fairly soft quarter from a seasonal basis. So if you look back historically you’ll see that there has been pressure in our margins between December and March, so we’ve put in some of that into our forecast for this quarter.

So taken that what you just said the 80 basis points sequential improvement is pretty much all hard disk drive related, was there no benefit that we saw from the mix shift between the segments?

Well, I think you saw, the mix shift primarily come, as we mentioned, some of that was in storage, which typically has a high content of hard disk drives. In addition to that we are Internet Datacenter which is usually the most competitive area of the business was also up in the quarter.

Okay. Final question and I’ll exit the floor, Taiwanese facility, what’s the utilization rate right now.

Yeah. I mean, our Taiwan facility continue in improving mode. So we had much stronger sales team, supporting team there now and we see that improving trend is there. So it will be quarter-by-quarter getting better.

And next up from Dougherty & Company, Mark Kelleher.

Great. Thanks for taking the question. Just have a few numbers questions. The -- could you give out the storage as percent of revenue?

No. We can’t Mark. It’s still less than 10% of our revenues.

Okay. And of the server sales, sorry, there is something going on on the line…

Okay.

Yeah. I’m still here. Sandy Bridge as a percent of the server sales?

As a percent of our overall sales we’re probably at about 27% overall.

Okay.

Overall revenue.

Okay. Can you give that in server sales or is that too fine?

We -- no, we haven’t broken it out separately. We gave out previously about what it would be in total.

All right. And free cash flow in the quarter?

Free cash flow in the quarter was 30…

$30 million.

… yeah, $30, I think it was $30.3 million.

Okay. That’s all I got. Thanks.

Yeah.

And moving on to Glenn Hanus of Needham

Good afternoon, guys. Well, could you start kind of high level a little bit on the demand environment you feel you’re seeing now U.S., EMEA, APAC. You mentioned, APAC being a little soft this quarter. Can you give some more color around the demand environment you’re seeing for the March quarter and June?

We still believe our Asia market, we are picking up stably, I mean, in March and June, because now our facility is there and our sales team, support team have been much stronger than before. So we have a pretty strong confidence there.

How is the U.S. market looking?

USA market I believe we are improving as well, especially we start to spend more in East Coast and kind of Texas, Chicago area. So we feel at this -- in those new territories we will have a stable again.

And Europe?

Europe kind of also consistently growing, we have facility there for system integration and supporting function since about two years ago now. So facility has been very mature and people have been well-trained. So I believe we’ll be continue stably growing in Europe as well.

And then in terms of your overall financial model of getting to 19% gross margin, 9% operating margin a low end to the range, I think you’ve talked about -- around the end of the year you talked about a one year timeframe to get to that? How are you feeling now about? It’s sound like a pretty aggressive goal but how are you feeling about those numbers for, by the end of 2013?

Yeah. Glenn, we still have lots of opportunities as we talked about before to do that. We’ve looked at basically increasing our scale, obviously stabilization of hard disk drives, Taiwan facility, increasing our content of software and services as part of it. However, we probably will look at with some of this maybe pushing out a quarter, so we’ve said before that’s been calendar end of year we may push out a quarter.

Okay. Just moving on to the operating expenses a little bit, could you go through some, again, some of the, you mentioned a write-off in the lower legal expenses, could you just kind of go through the OpEx and it seem to come down quite a bit sequentially and then for the March quarter, how should we think about OpEx?

Yeah. We had some unusual items, I think if you want to call those in the September period with regards to product promotions as we launched the FatTwin and Sandy Bridge and what have you, those didn’t reoccur in the December quarter. We’ll probably have a little bit more expenses with regards to [CBID] and some trade shows that we’ll have during the March quarter here. However, in general, we’ll still keep a tight handle on our op expenses, so we won’t see a large increase in there.

Yeah. Especially last two and half years, we have almost, I believe growth 60% of our engineering headcount, so now people are watching and we try not to hire too many people in the coming quarters.

Okay. And on the storage side, could you give a little more color like what vertical perhaps that you are seeing traction on the storage side and how your kind of positioning and differentiating on the storage side where you really getting some interaction? Thank you.

Cloud and Cloud application and Big Data, especially recently we just announced our Big Data optimizing system the 4U storage with 72 hard drive, all had swappable silicon range supported, that kind of density for sure basically in the world and I would say at least 20% higher density than any competitor. So those strong products now which we have grow our market share in storage, including effecting 1U (inaudible) hard drive also not competition in the market. So we have a very strong confidence on storages.

Thank you.

Thank you.

And we’ll move next to Alex Kurtz of Sterne, Agee.

Yeah. Thanks for taking the question guys. Just a couple of clarifications, Howard, just when you were talking Aaron, you said 6% non-GAAP for tax rate for this quarter -- for March quarter?

That is correct.

And then roughly 25% sort of go-forward type of framework around tax rate?

Yeah. Take that for the fiscal year for sure, for this fiscal year, we’ll have to review next, but for this fiscal year its looks better that way with R&D credit we have stated.

You see I think the out year to be higher than that or too hard to tell at this point?

Look, it will be a little bit hard to tell at this point, again tax credits only be extended for two years, which means it’s only half of our fiscal year, so we still need to do more work in that area.

Okay. In your presentation, Howard, I missed the number of components, can you reiterate that?

Sure. $1,086,000 subsystems and accessories...

$1 million, okay. Howard, could you just take us through the last year, about all the different, there is no lot of moving pieces on the gross margin, obviously and it will be helpful if you could just recant where the major headwinds have been and I -- and sort of maybe categorized them by weighing them on things -- certain things being bigger than others. I known, obviously, this quarter having the big Internet Datacentre was really -- was probably a headwind, but if you can sort of help us around the impact versus last year that would be great?

Yeah. So, I mean, I guess, if you want to look back during the last year, I think the biggest think we can talk about and those people who understood is basically the hard disk drives and memory have been the largest impact to our gross margin over the past year. And this past quarter we did start seeing stabilization of that and that’s where we saw some of the recapturing of our -- of gross margin, probably low point in the last the September quarter. And as that continues to stabilize further as we go forward, I think we believe we’ll see additional benefits coming from there. With regards to the…

Yeah.

I’m sorry…

No. Go ahead.

The Internet Datacentre was higher, this period of time it was about 14.8% I think and that’s comparable to about 8% in the prior year. So, again, as you know that is probably the most competitive area in our midst just that we participated, so again, it puts a little pressure on our margins. And then historic -- go ahead.

Yeah. So, just last for me, Howard, getting back to Glenn’s question about getting back to that 17% or 18%, is that still in the cards, is all of that just coming back from the hard disk drive and memory component issues, or there other things have to go right to get back to say 17% just as a bogey?

Yeah. The question is that, I mean, like what we share, I think, many years ago. We had spend lots of effort in switch especially Datacenter optimizing switch and software -- management software, as well as customer service. So these are the three areas, I mean, we will have a much higher margin and we have been investing in this area for many years and we start to have some income from three areas, switch, software and service.

So, were you saying, Charles, is that, you think product mix along with the HDD market coming back is going to help you get back to say 17% range?

Yeah. Kind of switch, yeah, every switch vendor has much bigger margin, right. Management software for sure, we invest in this area for almost 12 years and now we start, we have some income from our management software. Service, customer service on side which also good margin business. And we also invest in this area for many years and now start to see some income.

Thank you, guys.

Yeah. Thank you.

(Operator instructions) And we’ll go to Jeff Andry of Wunderlich Securities.

Hey guys. This is Jeff in for Brian. Thanks for taking the questions. Can you talk about what kind of HDD and memory pricing assumptions, you’re baking in the guidance and then also you mentioned you continue to better manage inventory and improve relationship with suppliers. Can you talk a little bit about what steps you’ve take in that regard. Thank you?

Yeah. Of course, over the past year, we’ve increased our personnel with regards to managing our components inventory and all -- basically in memory and hard disk drive and other parts of our business. So again we put more emphasis -- and more infrastructure there and that’s part of the investment that Charles has talked about in investing in our infrastructure to basically improve how we manage our inventory and also how we build relationships, straighten those relationship with our vendors and that’s hopefully going to pay dividends for us as we go forward. With regards to the other part -- can you repeat your other question please?

Yeah. I was just wondering what kind of HDD and memory pricing assumption you’re baking in your guidance, just kind of taken the midpoint of the guidance figures. It looks like about a 20 basis point sequential increase in profit margins. So I was wondering what kind of assumptions, you’re kind of baking into that guidance?

I guess, when we continue to move more complete system, especially storage that into 20, 40 or even 70 to hard drive (inaudible). However, a good thing is, we start to add bed you like to management sort of way that service barrier, so those will help us on the positive side. So that is what, how they may postpone one quarter but now original we use model, financial model, it should be spread in.

Great.

There appear to be no further questions. I’d like to turn things back over to management for any closing or additional remarks.

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.

And again, that’s concludes your conference. Thank you all for joining.