APPLICATIONS

SEATTLE -- Cray Inc. (CRAY) raised its revenue and profit guidance for 2003 based upon its current order flow and the development milestones it has achieved with its Cray X1 supercomputer system. In a press release Tuesday, the computer systems company boosted its 2003 revenue guidance to at least $220 million from its previous guidance of at least $200 million and expects profitability to be at the high end of its previously announced range of 5% to 10%. A Thomson First Call survey of six analysts yielded a mean revenue estimate of $219.35 million. "This has been a record first quarter for orders, in excess of $100 million, and we believe we are well positioned to achieve the increased revenue number this year. Deliveries for the Cray X1 are proceeding on schedule and the initial delivery under our $30 million contract with Oak Ridge National Laboratory will begin this month," noted Jim Rottsolk, Cray's chairman and chief executive. The company also said that even though it is too early to provide specific guidance, it expects growth in 2004. Shares of Cray closed at Tuesday at $6.61, down $1.89. The shares moved lower in after-hours trading and last changed hands at $6.44. As reported by DJ newswire earlier Tuesday, shares fell as investors worried that the company's $30 million contract with Oak Ridge National Laboratory may be in jeopardy. Oak Ridge recently learned that the proposed federal government budget for fiscal 2004 will allocate less money for its supercomputer project than it had requested, said James McIlree, an analyst at C.E. Unterberg Towbin. Ron Walli, a spokesman for Oak Ridge National, said Tuesday the contract still stands with Cray, but declined to comment on the budget for 2004. He said concerns that a lower budget would mean the contract with Cray was void is unfounded. "The contract is still good," said the spokesman.