Cray thanks Uncle Sam for juiced revenues
Still in red
Supercomputer maker Cray pulled some big bucks from the US government in the fourth quarter, nearly tripling sales. But after writing down a few assets, the company posted a loss for the quarter - and for the year.
Cray booked $155.4m in sales in the fourth quarter, including $100m for a portion of the "Jaguar" petaflops supercomputer sold to Oak Ridge National Laboratory, one of the big centers run by the US Department of Energy.
That was nearly triple the $57.4m in sales Cray had in the fourth quarter of 2007. A $54.5m impairment charge in non-cash goodwill (because of the company's lower market capitalization) pushed the company to a $20.7m loss, compared to a $3.6m loss in the year-ago quarter.
For the full year, Cray had sales of $282.9m, up 51.9 per cent, and gross profits before the impairment charge came to $111.1m, the highest level Cray has seen since 2003. Cray's loss for all of 2008 came to $31.3m, significantly higher than the $5.7m loss it had for the 2007 year. Cray ended 2008 with $52.7m in net cash (cash and short-term investments minus convertible notes), more than double the cash it had at the end of the September quarter.
"I am very pleased to report one of the strongest years in our company's history and a record year on several fronts," said Peter Ungaro, Cray's president and chief executive officer, in a cannned statement.
"Our revenue and gross profit results for the year were both records," Ungaro continued. "We delivered on our goal of growth by posting a 52 per cent increase in annual revenue, led by the launch of our XT5 supercomputer, and we were nicely profitable except for the non-cash write-down of goodwill recorded in the fourth quarter. The XT5 'Jaguar' supercomputer at Oak Ridge, which was delivered and accepted in 2008, is the largest system in our history and was the first and only system in the world to break the petaflops performance hurdle on real, scientific applications."
That is a dig at IBM's Roadrunner Opteron-Cell hybrid running at Los Alamos National Laboratory, which is rated slightly higher on the Linpack Fortran benchmark tests at this point. Ungaro said in a conference call with Wall Street analysts that the XT5 massively parallel Linux supercomputer started shipping to customers in the third quarter, and thus far has sold 400 new cabinets of the XT5 machines plus another 100 cabinets of XT5 upgrades. The Jaguar machine at Oak Ridge makes up 284 of the XT5 cabinets sold to date.
Cray said that it had sold another three XT5 machines to the U.S. Department of Defense in the fourth quarter and has another $45m in outstanding Uncle Sam invoices for the Jaguar machine, which will help in 2009.
The XT5 machines are based on Advanced Micro Devices' Opteron processors, and while Cray has not said (yet) that it is abandoning Opterons, Ungaro reminded Wall Street that the company was working to get high-end supers based on Intel processors into the field by 2012. In the meantime, Cray is going to upgrade the XT5 two times in 2009 and two times again in 2010, presumably as AMD ships new chips.
Ungaro said that Cray was focused on selling custom engineering services and its CX1 baby supercomputer, which runs the HPC variant of Windows Server 2008 and which started selling in the fourth quarter, to expand its business in 2009. The Custom Engineering group at Cray has finished the first phase of a multi-phase contract for an unnamed U.S. government agency to "design and develop the infrastructure and system software for a specialized high performance computer." How this is different from what Cray does every day is not exactly clear. But apparently there is money in it. Cray did not divulge how much this custom project or the CX1 baby super brought in during the quarter.
But estimating revenues and profits this year is a bit difficult to do because of the inherent choppiness of the supercomputer market - which has few customers and relatively big ticket items that have long sales, installation, and qualification cycles - and the turbulence in the global economy. Nonetheless, Cray said that it expects sales in the range of $260m for 2009, which is about an 8 per cent decline. So it's expecting to report a small operating loss. The company added that it expected a more even distribution for revenues across the four quarters of the year than it saw in 2008. ®