Feeds

Cray's Q2 revenue gigaflops

Cuts costs, staff and share price

  • alert
  • submit to reddit

High performance access to file storage

Supercomputer specialist Cray is looking far from super after posting a massive drop in second quarter revenue earlier this week that has since sent its shares tumbling.

Cray generated $27m in the second quarter, which doesn't match up terribly well with the $62m reported in the same period last year. Cray's lackluster revenue led to a net loss of $55m in this year's Q2, which compares to a net gain of $8m last year. The poor results prompted a 40 per cent drop on Cray's shares, sending it to its lowest mark in nearly two years.

"While we expected the second quarter to be weak, the weakness was compounded by a contract delay for a major order and a continued general slow-down in the defense segment," said Jim Rottsolk, CEO of Cray.

Cray managed only $9.5m in product revenue during the quarter with the vast majority of that coming from its Cascade and Red Storm projects. The Cray X1 - "the company's only current product" - led to negligible sales. Services carried the company in the quarter on $12.2m in revenue and higher margins.

As a result of its performance, Cray is now looking to cut costs by 20 per cent and will trim 15 per cent of its staff or 150 workers. This should get it to a point where quarterly costs come in between $17m and $18m. Cray expects its full year 2004 revenue to be under $200m, but hopes new products will get it to $300m in 2005.

The brightest news for Cray is an increased order backlog. It currently has a backlog of $126m, which is $51m higher than expected. "In addition to this increase in backlog, we announced major wins that will be booked in future periods," Rottsolk said.

"Basically management has suffered from a perfect storm so far this year," Alan Robinson, an analyst at Delafield Hambrecht told CBS MarketWatch. "It had a slowdown in its key defense client's spending and a delay in the rollout of two new products expected to launch in the middle of this year. That combination caused not only actual results to come in below expectations, but expectations for the rest of the year to fall below Wall Street's forecasts."

There has been some minor speculation that Sun Microsystems could acquire Cray in a bid to boost Sun's high performance computing prowess and Opteron processor-based server line.

Cray's shares are trading down almost 5 percent today at $2.90. This is a massive drop from its 52-week high of $13.99. ®

Related stories

Met Office bags shiny new supercomputer
IBM overtakes HP in top of the teraflops
Windows HPC edition in the works
Cray to buy AMD cluster maker
Cray to set Strider and Black Widow loose on server world
Cray preps new Opteron-based product line

High performance access to file storage

More from The Register

next story
Seagate brings out 6TB HDD, did not need NO STEENKIN' SHINGLES
Or helium filling either, according to reports
European Court of Justice rips up Data Retention Directive
Rules 'interfering' measure to be 'invalid'
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Cisco reps flog Whiptail's Invicta arrays against EMC and Pure
Storage reseller report reveals who's selling what
Just what could be inside Dropbox's new 'Home For Life'?
Biz apps, messaging, photos, email, more storage – sorry, did you think there would be cake?
IT bods: How long does it take YOU to train up on new tech?
I'll leave my arrays to do the hard work, if you don't mind
Amazon reveals its Google-killing 'R3' server instances
A mega-memory instance that never forgets
USA opposes 'Schengen cloud' Eurocentric routing plan
All routes should transit America, apparently
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.