Shares of Super Micro Computer (SMCI), which offers a range of server solutions, are falling after the company lowered its third quarter outlook below analysts' consensus estimates.

LOWERED GUIDANCE: After the market close on Thursday, Super Micro Computer lowered its Q3 adjusted earnings per share view to 33c-35c from 43c-53c, well below analysts' consensus estimates of 49c. It also narrowed its Q3 revenue outlook to $530M-$533M from $530M-$580M, also short of the consensus of $557.27M. Q3 non-GAAP gross margin is expected to be approximately 14.8%-14.9%, primarily due to lower demand with some large customers and the channel, which led to lower cost absorption based on lower utilization as well as product mix. The company anticipates that it will report non-GAAP operating expenses for Q3 between $1.8M-$2.3M lower than Q2. The decrease in expenses was primarily due to lower marketing and advertising expenses.

CEO COMMENTARY: Charles Liang, Chairman and Chief Executive Officer of Super Micro Computer said, "While we saw the market slow down a little in the March quarter, Super Micro revenue continued to grow at an industry leading pace by growing 12% to 13% year over year. However, results for this quarter were weaker than forecast due to weaker demand with some large customers and the channel than we anticipated. January and February were particularly soft while March showed improved momentum. Storage and data center continued to grow. We are confident that Super Micro will continue to gain market share consistently and grow multiple times the industry growth rate in the upcoming quarter and year."

POSITIVE STREET RESEARCH: This morning, analyst research was positive despite Super Micro's negative Q3 preannouncement. After Super Micro Computer lowered its Q3 adjusted EPS outlook, Stifel was disappointed by the news. The firm says that Intel's (INTC) product cycles may have contributed to Super Micro's EPS miss. However, the firm continues to believe that Super Micro is well-positioned for growth in the cloud/hyper-scale data center market, as well as in next-gen storage and high performance computing. It kept a $40 price target and Buy rating on the shares. After Super Micro Computer preannounced lower than expected revenue, Sterne Agee CRT said that the miss, "reflects what appears to be greater-than-normal seasonality for data center demand during March." However, the firm does not believe that Super Micro is losing share or losing any ground to competitors. The firm remains upbeat on the company's longer term outlook. It trimmed its price target on the name to $35 from $38 but kept a Buy rating on the shares. Roth Capital analyst Brian Alger continues to see "tremendous" opportunity for Super Micro Computer to rebound not only in the June quarter, but in future quarters as well. While the analyst is disappointed following the company's March revenues preannouncement at low end of prior guidance, he says his investment thesis for Super Micro Computer remains intact, seeing greater upside than risk moving forward. Alger reiterated a Buy rating and $40 price target on the shares.

PRICE ACTION: In early afternoon trading, Super Micro Computer fell $5.87, or over 17.6%, to $27.45 on over three times its average daily trading volume. Including the pullback, the stock is down approximately 25% over the past 12 months.