Feeds

Cray has ups and downs in Q3

Gears up for 2010 XT5 upgrades - and profits

Maximizing your infrastructure through virtualization

High-end parallel supercomputer maker Cray, which has been trying for the past year to round out its business by peddling entry-level HPC gear, is still not quite making it up in volume. But some big deals and system upgrades, as well as an expanding custom engineering business and the entry-level HPC product line are making Cray feel pretty pumped about 2010.

In the third quarter ended September 30, Cray reported product sales of $32.4m, down 15 per cent, and were it not for the growth in its services business, which shot up by 58.5 per cent to $26.2m in sales, it would have reported a pretty dismal quarter. But services - including custom supercomputer engineering contracts - saved the day, and Cray was able to boost sales by 7.3 per cent, to $58.6m.

There was no trick to save profits in the quarter, however. Product manufacturing costs and research and development costs both went up in the third quarter, and Cray also had to write down $4.5m in inventories, which cut product margins by 14 percent. These factors swung Cray to a $2.1m loss compared to a $3.6m profit this time last year. Product margins were 51 per cent in the third quarter of 2008, but were hammered down to 21 per cent in the quarter just ended by the inventory write down and other factors; services margins came in at 59 per cent.

Through the first nine months of 2009, Cray had $195.8m in overall sales, up 53.6 per cent compared to the similar period in 2008, with product sales up 64.1 per cent and services sales up 34.9 per cent. And losses have shrunk to $3.6m for the nine months, compared to $14.8m a year ago.

For Cray, then, 2009 is turning out to be a lot better than 2008, which is not something a lot of server makers can say. Brian Henry, Cray's chief financial officer, said in a conference call with Wall Street analysts that for all of 2009, Cray expects to have sales of about $285m, with about $195m coming from products and $90m coming from services. He added that Cray expected to have a modest operating profit as well, but did not elaborate about net income or losses (as public companies generally do not). That is off a bit from the guidance that Cray gave in August with its second quarter numbers, when it raised its expectations for the year by $30m to $290m.

Cray reported sales of $282.9m and a net loss of $31.3m for all of 2008.

Looking ahead to 2010, Henry said that Cray expects to have modest growth and profitability, with revenues heavily weighted towards the second half of the year. (Perhaps as much as two-thirds of sales could be booked in the second half, depending on when supers are accepted by their labs and when Uncle Sam gets various budgets passed.) Cray inked a deal to upgrade the Jaguar XT5 system at Oak Ridge National Laboratory to the six-core "Istanbul" Opteron processors from Advanced Micro Devices (a $20m contract), plus it sold a $50m XT5 massively parallel system to Lawrence Berkeley National Laboratory's DOE-funded National Energy Research Scientific Computing (NERSC). Revenue is trickling in for the Jaguar upgrade now, and the NERSC deal as well as a $40m XT5 system that Cray just sold in early September to the Korea Meteorological Administration will generate revenues in 2010.

While this is not quite like money in the bank, the NERSC and KMA deals are the closest thing you can get in the supercomputer racket.

Peter Ungaro, president and chief executive officer at Cray, said in the call that Cray had just begun shipping XT5 and XT5m (the so-called "mini" super) with the Istanbul processors in Q3, and that three installed systems have been upgraded to the processors already and that Cray has also sold two new systems based on Istanbuls since they started shipping. Ungaro said that the response to the XT5m was "strong," but did not quantify what that could possibly mean, and he continued to champion the CX1 line of baby supers, saying that Cray now has 30 resellers certified to peddle the baby blade supers (which you can read about here and there), up from 25 last quarter and the goal of 15 that the company had set. But Cray declined to say how many machines had actually sold or whether the revenue was material yet. If it had been, you can bet that Ungaro would have said something.

In addition to the big deals mentioned above that Cray is pretty sure will generate substantial revenues in 2010, Ungaro said that the company was in the middle of developing two upgrades to its XT5 and XT5m lines. Cray is being a bit vague here because it wants to make announcements at the Supercomputing 09 event in Portland, Oregon, next month. But Ungaro said that in the first half of 2010, Cray would deliver a board upgrade and new software for the XT5 machinery, boards that are being beta tested right now and that "seem to be going very well."

These are probably some variant of the future Opteron 6000 (Mangy-Cours) or Opteron 4000 (Lisbon) processors and chipsets coming from AMD. The Magny-Cours chips will sport eight or twelve cores and are due in the first quarter; the Lisbons come to market later - AMD has not said when. (You can read about the future AMD chips here and the chipsets here.)

Later in the second half of 2010, Cray will be putting out a kicker to the current generation of its SeaStar2 interconnect, which plugs into the HyperTransport links of the Opteron sockets and allows hundreds of thousands of cores to be lashed together in a massively parallel cluster. The new chip, presumably called the SeaStar3 interconnect, is still going through testing. The XT5's SeaStar2 interconnect links the server nodes through a 3D torus configuration, while the XT5m has a smaller number of nodes in a 2D torus.

"Both are going very well," said Ungaro, referring to the two XT5 upgrades for 2010. "But as you know, there is always a risk that you find something that can cause delays."

That's how you know this is the computer business still. ®

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
Carbon tax repeal won't see data centre operators cut prices
Rackspace says electricity isn't a major cost, Equinix promises 'no levy'
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.