Perry Hayes – SVP, IR Charles Liang – Founder, President, Chairman and CEO Howard Hideshima – CFO

Vivek Manipadam – Thomas Weisel Partners Alex Kurtz – Merriman & Company Glenn Hanus – Needham & Company

Good day, ladies and gentlemen, and welcome to the Super Micro Computer Incorporated second quarter and fiscal year 2010 financial results conference call. One note that today’s call is being recorded. And now, I would like to turn the conference over to Mr. Perry Hayes, Senior Vice President of Investor Relations. Please go ahead, sir.

As a reminder, this call is being recorded Tuesday, January 26th, 2010. A replay of the call will be accessible until midnight, February 9th by dialing 1-888-203-1112 and entering the conference ID number, 6448603. International callers should dial 1-719-457-0820. With me today are Charles Liang, Chairman and Chief Executive Officer; and Howard Hideshima, Chief Financial Officer. And now I would like to advice you of upcoming investor conferences in which Super Micro will be participating. On February 9th, we will attend the Technology and Telecom Conference in San Francisco, sponsored by Thomas Weisel Partners, and we will present and participate in one-on-one meetings. On February 23rd, we will attend Piper Jaffray’s Clean Technology Conference in New York, where we will present and hold one-on-one meetings with investors. Our presentations at both conferences will be webcast. 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 and Presentations tab. Please turn to slide two. Before we start, I will 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 2009, 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 outlook. 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 will 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 the second quarter. We are pleased that our second quarter revenue was $182 million or 22.5% higher quarter-over-quarter, and 41.5% higher year-over-year. This result is a record high for Super Micro. Non-GAAP net income was $9.2 million or 58.4% higher quarter-over-quarter, and 37.2% higher compared to last year. Super Micro's non-GAAP earnings per share was $0.22 per diluted share compared to $0.15 last quarter or $0.17 last year. Slide 5 please. Last quarter was our strongest on record. Not only was our revenue a record high for our quarter, but we also achieved a second consecutive quarter of greater than 20% growth, making the beginning of fiscal 2010 our fastest start over. We grew in all product categories, especially in Nehalem-based served products, storage, Blades and GPUs. We also grew in all geographies, which demonstrates the increased focus we have in European and Asian business. Our growth is a result, are the strongest, (inaudible) have at Super Micro. With such a strong product, we have been asked to competitively bid by more and more companies and be in larger and larger opportunities. Super Micro continues to benefit from our offering that our customer value in this economy, especially on maximizing performance per watt and per dollar. Clearly, the December quarter provides evidence of the French cycle, that is underway. Due to the recession, companies extended their use for life of their IT system longer than new year, with system architecture and process technologies that provide the companies with higher performance and lower energy costs. The total cost of ownership is reduced to rise that our OI has tremendously improved. As an example, in recent Super Micro win, our client want an HPC cluster to access maximum energy efficiency and the computing density. We provide the client with our full-way solution containing 240 processor cores in a 7U blade enclosure, combined with our own QDR 40 gigabit per second Infiniband switch. This solution enabled the time to save 25% in energy and coding costs, with traditional document [ph] server. Because of our challenging new economic reality and the savings IT department must generate, we expect that this IT cycle will continue throughout 2010, and expect that Super Micro is a value proposition will allow us to continue our strong growth. During the quarter, we saw momentum continue to build for our products, such as our Nehalem processor based solutions, our Twin family of products including our Twin² and TwinBlade. Storage which was especially strong in this quarter, and GPU solutions which continue to grow strongly. While the first half of this fiscal year was very strong, we traditionally have an even stronger second half of fiscal year. With our growing branding strength, important OEM wins, new product launch, and the growing revenue opportunity in Europe and Asia, we have a strong position to expand in the coming quarters, in particular as we have a strong – okay, important OEM win, in particular as we have previously discussed. We are putting that integration capacity in Europe, which will serve new OEM clients as we have provided standout service for our customer base in Europe, we would reach significant capacity by the mid of this year in Europe. In the upcoming quarters, we will begin delivery of some important new products that will fully extend our leadership and innovation in the server technology. These product lines are TwinBlade, we extend our Twin architecture to our SuperBlade, and we are able to double the density providing 20 DP nodes support in a 7U blade enclosure, with 40 gigabit per second Infiniband, or 10 giga Ethernet connectivity options. Our new generation 1U and 2U enterprise optimized rack mount product line, therefore optimized for enterprise virtualization application, including 18 DIMM 94% higher efficiency redundant power supply, more I/O capability, GPU capability and 100% cooling redundancy. And our optimized rack solution for datacenter which provide a (inaudible) user-friendly cabling, and strong and real, size of module expansion. Our new generation 4-way MP systems, one was our new generation 4-way systems were based on Intel Boxboro chipset and new Nehalem EX MP CPUs, which provides a much higher memory and I/O bandwidth than the previous generation 4-way systems. And then the new process of technologies, as you may know, Intel Westmere system architecture will launch in middle of March. And AMD G34, a core named Magne-cours, and dual core architecture, also to launch in the end of March. And our storage product line expansion, Super SBB storage-free space, which use our Twin design concept that can incorporate or bridge the SATA and SAS storage solutions. And our new innovation, double-sided storage product, this support up to 45 3.5-inch hot-swappable hard drive for 4U enclosure, instead of 24 hard drive supported from competition. In summary, we continue to expand the Super Micro brand as a technology leader. Our pipeline of technology innovations and our rapid product development capability make us feel very confident that we are in the technology leading position and that we are on a strong growth trend. With that, let me hand it over to our CFO, Howard Hideshima for our financial details.

Thank you, Charles, and good afternoon everyone. I will refocus my remarks on earnings, gross margins, operating expenses and similar items on a non-GAAP basis which reflect the adjustments to exclude stock 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 details in this slide presentation accompanying this conference call. Let me begin with a review of the second quarter income statement. Please turn to slide eight. Revenue was a record $182 million, up 41.5% from the same quarter a year ago and up 22.5% sequentially. The increase in revenue from last year was fairly widespread among our customer base, which we believe was primarily attributable to the continuing improvement in the global economy and new products which were introduced since then. The sequential increase in revenue from last quarter was primarily due to increases in our storage UIO and Nehalem-based products. Slide 9. Turning to product mix, the portion of revenues from server systems was 36% of total revenues, which was a decrease from 41% a year ago and an increase from 34.5% last quarter. ASPs for servers was about $1,400 per unit, which is up from $1,300 per unit last year and comparable to the $1,400 last quarter. The increase in absolute dollars of server products from a year ago and sequentially was primarily due to increased shipments of servers to OEM and end customers. We shipped approximately 48,000 servers in the second quarter and 803,000 sub systems and accessories. We continue to maintain a diverse revenue base with none of our over 400 customers making up more than 10% of our net sales in the second quarter. Furthermore, 57.6% of our revenues came from the US, and 68.5% from our distributors and resellers. Internet data center revenue was 6.9%, which was a decrease from the prior quarter of 7.3%. Slide 10 and 11. Non-GAAP gross profit was $30.5 million, up 25.7% from $24.2 million in the same quarter of last year, and up 23.6% from $24.7 million sequentially. On a percentage basis, gross margin was 16.7%, down from 18.9% a year ago, and up from 16.6% sequentially. Price changes from Ablecom resulted in no change to the gross profit in the quarter, with total purchases representing approximately 26.5% of total cost of goods sold compared to 22.8% a year ago and 22% sequentially. The increase sequentially was primarily due to higher levels of inventory for future demand. The sequential increase in gross margin of 0.1% was primarily resulted from a higher percentage of sales in complete server solutions as noted above and a low percentage of sales of sub systems and accessories and Internet datacenter sales. Operating expenses were $16.4 million, up from $15.6 million in the same quarter a year ago, and up from $15.6 million sequentially. As a percentage of revenue, operating expenses was 9%, down from 12.2% a year ago, and down from 10.5% sequentially. Operating expenses was up on an absolute dollar basis year-over-year primarily due to additional personnel expenses related to increased headcount in R&D and sales and marketing, offset in part by higher NRE and customer-funded projects in R&D. Sequentially, we saw an increase primarily in sales and marketing expense due to higher commissions and bonuses to sales personnel as well as higher co-op market fund due to increased level of revenue. R&D expenses were about the same due to higher NRE and customer-funded projects, offset by personnel expenses related to increase in headcount and bonuses during the quarter. During the quarter, we had about 1 million of additional customer-funded projects, which reduced the overall R&D expense by this amount. We do expect to have this, this quarter, but at a lower rate. Headcount increased by 24 sequentially to 909 total employees. Overall, we have maintained good control of our operating expenses, while at the same time maximizing our opportunities by investing in our future. Operating profit was $14.1 million or 7.7% of revenue, up $5.5 million or 63.5% from $8.6 million or 6.7% of revenues a year ago, and up $5 million or 55.1% from $9.1 million or 6.1% of revenues sequentially. The increase in operating profit shows our ability to grow our topline while still maintaining control of our expenses. Net income was $9.2 million of revenues, up from $2.5 million or 37.2% from $6.7 million a year ago and up $3.4 million or 58.4% from $5.8 million sequentially. Our non-GAAP fully diluted EPS was $0.22 per share, up $0.05 from $0.17 per share a year ago and up $0.07 from $0.15 per share sequentially. The number of fully diluted shares used in the second quarter was 40,531,000. The increase in diluted shares was primarily due to the impact of options, which were previously underwater. The tax rate in the second quarter on a non-GAAP basis was 34.1% compared to 20.8% a year ago and 35.1% sequentially. The increase from last year’s tax rate was due to the R&D credit being reinstated retroactively during the second quarter of fiscal 2009. The R&D tax credit expired on January 1st, 2010. Should the credit be reinstated retroactively, then the company would adjust in the quarter the credit is reinstated. We expect the effective tax rate on a non-GAAP basis to be approximately 35% for the March quarter. We are actively working on our international tax strategy in conjunction with our plan to expand oversees as mentioned by Charles above, which we hope to lower our effective corporate tax rate in the next few years. Turning to the balance sheet on a sequential basis, slide 13. Cash and cash equivalents and short and long-term investments were $88.9 million, which is up from $85.2 million in the prior quarter. In the second quarter, free cash flow was a positive $900,000 [ph], and the net change in cash was a positive $8.7 million. The cash balance reflects the redemption at par of $5.3 million of auction rate securities. Total auction rate securities held by the company is approximately $6.6 million at the end of December. The company has no debt. For the six months period, free cash flow was a positive $9.9 million, and the net change in cash was a positive $12 million. Slide 14. Accounts receivables increased by $4.8 million to $54.9 million and the DSO was 27 days, a decrease of 3 days from the prior quarter. Inventories increased by 34.2 million to 134.3 million, with the days in inventories at 71 days, which is the same as prior quarter. Accounts payable increased by $26.3 million to $112.6 million, with the days payables outstanding increasing by one day to 60 days. Overall, our cash conversion cycle days were at 38 days, a decrease of four days from 42 days in the prior quarter. Each of these balance sheet items points to managing our working capital well during a time of revenue growth, economic and product transition, as well as positioning the company for future growth. Now, for a few comments on our outlook. As indicated previously, during the second quarter, we saw continuing improvement in the economy, but more importantly, our customers and partners continue to see the benefits that our solutions can provide them. We see this trend extending and further expanding into other markets and verticals and new customers. However, the third quarter is typically a seasonally weaker quarter for the industry, we assume there will be new product introductions at the latter part of the third quarter from Intel and AMD, which could temper demand in the quarter. We have tempered our forecast. Our margins, we will continue to invest in our customer base in order to continue to build our economies of scale, while at the same time leveraging our operating expenses. Therefore, the company currently expects net sales for the quarter ending March 31st, 2010 of $175 million to $185 million. Assuming this revenue range, the company expects non-GAAP earnings per diluted share of approximately $0.18 to $0.21 for the quarter. 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. With that, let me turn it back to Charles for some closing remarks.

Thank you, Howard. The first half beginning to our fiscal 2010 have been very strong, which is record results for Super Micro. Having our strong product line and growing brand name recognition, we are well positioned to continue this record pace into the second half of this year. I will now turn the call back to Perry.

Operator, at this time, we are ready for questions.

(Operator instructions) We will go first to Doug Reid with Thomas Weisel Partners. Vivek Manipadam – Thomas Weisel Partners: Hi, this is Vivek Manipadam in for Doug Reid. It would be great to get your thoughts on what you felt the pricing environment was in the current quarter, and whether you felt there was a lot of pressure to reduce prices in order to win business?

Yes, we fear the competition continue very strong, and (inaudible) However because we have a very strong new product line, new architecture, GPU, Twin². So, I believe we can maintain the best margin we believe it has been for us. And again, yes, we try to be aggressive in price to grow our market share. Vivek Manipadam – Thomas Weisel Partners: Speaking of the margin, would you all be able to provide some guidance regarding what you expect margins to be in the March quarter?

March, again, also new product lines still new and still popular. So, I don’t feel we will have a challenge here. So, it should be growing mostly. Vivek Manipadam – Thomas Weisel Partners: Okay, great. And just one follow-up, would you all share your opinion on how you have seen component prices react in the December quarter?

Yes, there are a lot of shortages, because our recovery of our economy. So, we are facing some shortages, but not big of an issue, because we used to keep a very good safety inventory. Vivek Manipadam – Thomas Weisel Partners: Okay, and when you say shortages, could you specify which particular component?

You know, it’s close to the product line, memory, hard drive, even capacitor, FET, but again because we keep good safety inventory, so the impact to us should be reasonable, accessible. Vivek Manipadam – Thomas Weisel Partners: Okay, great. Thank you so much.

Yes, thank you.

We will move on to Alex Kurtz with Merriman & Company. Alex Kurtz – Merriman & Company: Hi guys, can you hear me okay?

Yes. Alex Kurtz – Merriman & Company: Congratulations on a great quarter. Howard, can you just talk a bit about, you know, the strength in the servers quarter-over-quarter, what verticals, what product lines really stood out for you guys?

I think, Alex, as Charles mentioned earlier, storage area was pretty strong for us this quarter as well as GPUs. You know, we continue to gain traction there. Obviously our Nehalem line is very strong also. Alex Kurtz – Merriman & Company: And are you starting to see the, the GPUs starting to kick in on ASPs yet, is that starting to help the overall ASP as well as margin?

I think so, Alex. You know, we just introduced that probably about a quarter or so ago. So, it’s just at the very beginning of its ramp up for us, but we have seen very good traction in it. Alex Kurtz – Merriman & Company: Okay. And if you could just revisit for us what you think your long-term growth profile is for the company, and behind that, just remind us what the target operating model is, and sort of what the timing of that could be? Do you see that as something that you could accomplish exciting fiscal 2011? Just some updated color on that behind these strong results today. Thank you.

Yes. For March quarter, because both Intel and AMD have a new CPU kind of Westmere and G34, both will be launched by March, end of March indeed. So, we believe we would have to be conservative for March quarter, but you know, with so many new technologies, second half of this fiscal year should be a greater year to us. Alex Kurtz – Merriman & Company: But Charles, do you think you guys can get back to those 30% kind of growth rates again over the next couple of years?

At this moment, we feel very confident. Alex Kurtz – Merriman & Company: And Howard, just on the target operating model and sort of the timing around that?

Right. As we said before, Alex, the target operating model, you know, has basically an operating margin about 9 to 12, gross margins about 19 to 20 [ph], and we set it about one to three years out. We still feel confident. Alex Kurtz – Merriman & Company: Okay, so no comment on timing. Okay, thank you guys.

And we will move on to Glenn Hanus with Needham & Company. Glenn Hanus – Needham & Company: Good afternoon. Just a follow-up in clarifying the gross margin. You feel like gross margins going forward can be flat to slightly up, and I don’t want to put words in your mouth, and then just sort of a puts and takes on the next quarter on the gross margin?

Yes, Glenn, this is Howard. Yes, you are right. As Charles mentioned, we feel that, you know, the gross margin to be very stable. I think the puts and takes of it will be as we ramp up some of the European and overseas expansion, we will get some benefits from that as we bring that facility up, reducing our logistical costs and our shipping costs. Obviously new product introductions typically help us. And then on the other side of that would be growing our market share, still important to us basically growing our economies of scale. Glenn Hanus – Needham & Company: Okay, great. Thank you.

(Operator instructions) And it appears at this time, we have no further questions. I would like to turn the conference back over to Mr. Liang for any additional or closing comments.

Yes. 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.

Thank you, ladies and gentlemen. That does conclude the Super Micro second quarter fiscal year 2010 conference call. We do appreciate your participation. You may now disconnect at this time. Thank you.