Original URL: http://www.theregister.co.uk/2010/01/12/darpa_cuts_cray/
DARPA cuts back on Cray super project
Say goodbye to $60m
As the market was getting ready to open this morning Cray told Wall Street that the US Defense Advanced Research Projects Agency, which funds all kinds of advanced systems and networks, is scaling back its contract for a future petaflops-scale supercomputing system being designed by Cray under DARPA's High Productivity Computing Systems program. And that is going to chop $60m out of future revenues.
DARPA is up to phase three of the HPCS contracts, where systems go into production. In 2003 during phase one of the HPCS program, DARPA shelled out $43.1m for Cray to start development on its future "Cascade" line of converged massively parallel supers, which will cram the company's x64, FPGA, Cray vector, and Tera multithreaded processors all into the same system linked by a next-generation interconnect, codenamed "Gemini". (Sun got $49.7m to work on programming tools in HPCS phase one under its Hero project, and IBM got $53m for its PERCS Power-based programming environment.)
Sun did not make the phase two cut of the HPCS program, which awarded contracts in 2006, but Cray brought home $250m in funding to work further on Cascades, a related parallel programming environment called Chapel, and bring them to production; IBM got $244m to bring Power7-based machines and the PERCS programming environment to fruition. (The DARPA box is not the same as the "Blue Waters" HPC cluster that was the star of the SC09 supercomputing trade show back in November, which is being installed at the University of Illinois. But the two machines no doubt share technology.)
Cray did not explain the nature of the changes that DARPA is making during phase three of the HPCS program, and has never divulged exactly what Uncle Sam is buying. But the company did say that a contract modification was not finalized during the fourth quarter of 2009 and therefore a milestone was not reached, which meant it did not get $7m earmarked to cover research and development expenses already incurred.
"Substantive talks regarding this contract are ongoing and the company expects to complete a contract modification and milestone in the first quarter of 2010," Cray said in a statement.
The company went on to say that DARPA and Cray are engaged in "substantive talks" regarding the HPCS contract and Cray expects to have a modified contract, with a new set of milestones, inked sometime in the first quarter of 2010. This contract will have milestones that kick in payments as they are reached and accepted and will culminate in the delivery of a prototype system in 2012.
Cray said that "certain deliverables" had been eliminated from the contract, reducing the overall scope and revenue generated from the project. Specifically, Cray said it anticipated that of the remaining $152.5m in phase three HPCS money it was counting on, $60m will be removed once the contract modifications are done, leaving $92.5m. The good news is that Cray expects R&D costs related to the HPCS program to be lower than anticipated, too.
In the meantime, Cray says that DARPA has not put the kibosh on 2010. "While a wide range of results remains possible, we expect revenue growth and profitability for 2010," the company's statement continues.
"Based on current opportunities and previously announced 2010 contracts, we believe we could have a strong year. Many variables may impact this outlook, but one significant item is the timing of the availability and release of our next generation supercomputer."
That would be the first iteration of Cascades, code-named "Baker" and using the Gemini interconnect chip, and Cray now says that development of the Baker/Gemini system will be completed in the third quarter. With the delays in the delivery of the Baker/Gemini box, Cray now says that "a significant majority" of revenues will be pushed into the fourth quarter of this year.
Back in October 2009 when Cray reported its third quarter results, the company said that it was working on system board upgrades for the XT5 and XT5m parallel supers (which are based on Opteron chips), due in the second half of 2010 and that later in the second half it would get a kicker to the SeaStar2 interconnect to market. This is no doubt what the company is today calling Gemini, and what Cray's techies were calling the XT6 systems and the SeaStar2+ interconnect at the SC09 event in November.
Cray told Wall Street that it now expected sales for 2009 to be about $284m and that it might report a small loss or push towards breakeven for the year, with cash and short-term investments of around $110m as the year ended. (Cray reported sales of $282.9m and a net loss of $31.3m for all of 2008.) In the summer of 2009, as Cray was landing some big deals, the company raised its revenue guidance for 2009 by $30m to $290, but in October cut it back to $285m with a modest operating profit.
Cray's shares were down 5.4 per cent to $6.12 per share as El Reg goes to press, giving the company a market capitalization of $227.4m. ®