This article is more than 1 year old

Cray pours Red Drizzle over anxious investors

Anxiety upgrade

Some vendors try to defuse a bad quarter by screaming at the press, demanding recognition for myriad customer wins and products shipped. This is not the model embraced by Cray. The supercomputer specialist appears to prefer a whimper over a scream.

Earlier this week, Cray watched as investors took a hatchet and reduced its stock price to a barely crooked number - $2.90 per share. The shareholders were coming to terms with the paltry $9.5m in product revenue Cray posted in its second quarter.

Cray specializes in making supercomputers for high-class, government customers. A series of product delays, however, coupled with a lack of demand from the business sector took their toll on the company during the period, resulting in an embarrassing $55m loss.

With its pre-earnings quiet period lifted, Cray did its best to counter these results in the days that followed.

For one, it announced that an unnamed customer had placed a $3.5m order for a system based on the "Red Storm" supercomputer being built for Sandia National Laboratories under a $93m Department of Energy contract. You might call this $3.5m mystery box "Red Drizzle."

Secondly, Cray said that the Sandia machine, which will be under construction this year, will be upgraded with dual-core Opteron processors from AMD in 2005, effectively doubling the computer's performance.

Both announcements were, of course, meant to convey the notion that all is going as planned at Cray. Its high profile customer is happy and looking forward to an upgrade. And smaller customers are buying into Cray's transition to the Opteron processor.

Frankly, we're a bit unmoved by these proof points. Damage control this feeble raises serious concerns.

At this point, Cray appears to be a slave to its government contracts. The Feds are dragging the company along to meet their high-performance computing needs, dangling life-sustaining grants. Business customers, however, are not stepping up to purchase the Feds' scraps.

A more savvy company may well have just made some customer wins up, but it's too late for that now at Cray. The vendor is being watched closely by investors and suitors alike. And we doubt that Red Drizzle and an upgrade can save the day. ®

Related stories

Cray's Q2 revenue gigaflops
Met Office bags shiny new supercomputer
IBM overtakes HP in top of the teraflops
Cray to buy AMD cluster maker
Cray to set Strider and Black Widow loose on server world

More about

TIP US OFF

Send us news


Other stories you might like