APPLICATIONS
Cray reports Q3 profit
Cray Inc. has announced financial results for the third quarter ended September 30, 2007. Revenue for the quarter grew to $55.0 million compared to $32.6 million in the prior year period. The company reported net income for the quarter of $5.1 million or $0.16 per share compared to a net loss of ($8.3 million) or ($0.37) per share in the third quarter of 2006. 
Total gross margin for the third quarter of 2007 was 40.3 percent compared to 35.0 percent in the prior year period. Product margin was 40.1 percent compared to 27.0 percent in the third quarter of 2006. Service margin of 41.0 percent for the third quarter was in line with the company's target level. Operating expenses were $17.8 million in the third quarter compared to $18.8 million in the prior year period. Included in third quarter 2007 results were non-cash items of $3.2 million for depreciation and amortization and $0.6 million related to stock compensation. For the nine month period ended September 30, 2007, Cray reported total revenue of $128.7 million compared to $119.6 million in the prior year period. Net loss was reduced dramatically year-over-year to ($2.1 million) or ($0.07) per share for the nine month period ended September 30, 2007 compared to a net loss of ($20.8 million) or ($0.93) per share for the nine month period ended September 30, 2006. Cash and short-term investment balances as of September 30, 2007 were $139.7 million. "We are very pleased to report solid profit and revenue growth," said Peter Ungaro, president and CEO of Cray. "Third quarter benefited from strong international contributions, the largest being the successful installation and acceptance of the HECToR Cray XT4 supercomputer at the University of Edinburgh's Parallel Computing Centre in Scotland." Ungaro added, "With recent wins, we are again furthering our momentum in the marketplace. Our priorities, as we close 2007 and move into 2008, are to continue to win new business, execute on product development initiatives, and to establish a foundation for sustained profitability and supercomputing market leadership." Outlook Cray continues to anticipate 2007 revenue will likely be below $190 million, with a loss for the year. The company expects an improved gross margin for 2007 compared to 2006. For the fourth quarter of 2007, Cray anticipates higher research and development expense compared to previous quarters. For 2008, while there is a wide range of potential outcomes, Cray targets profitability for the year and expects improved revenue over 2007. The company anticipates initial revenue from quad-core Cray XT4 and BlackWidow systems in the first half of 2008, potentially in the first quarter, and initial Cray XMT system revenue mid-2008. Additionally, Cray anticipates increased operating expenses 2008 compared to 2007, principally in the area of research and development. 2007 and 2008 quarterly and annual results will be affected by many factors, including the level and timing of government funding, the timing and success of planned product rollouts, the timing and success of meeting certain product development milestones and the timing of customer orders, shipments, acceptances and revenue recognition. Recent Highlights
Total gross margin for the third quarter of 2007 was 40.3 percent compared to 35.0 percent in the prior year period. Product margin was 40.1 percent compared to 27.0 percent in the third quarter of 2006. Service margin of 41.0 percent for the third quarter was in line with the company's target level. Operating expenses were $17.8 million in the third quarter compared to $18.8 million in the prior year period. Included in third quarter 2007 results were non-cash items of $3.2 million for depreciation and amortization and $0.6 million related to stock compensation. For the nine month period ended September 30, 2007, Cray reported total revenue of $128.7 million compared to $119.6 million in the prior year period. Net loss was reduced dramatically year-over-year to ($2.1 million) or ($0.07) per share for the nine month period ended September 30, 2007 compared to a net loss of ($20.8 million) or ($0.93) per share for the nine month period ended September 30, 2006. Cash and short-term investment balances as of September 30, 2007 were $139.7 million. "We are very pleased to report solid profit and revenue growth," said Peter Ungaro, president and CEO of Cray. "Third quarter benefited from strong international contributions, the largest being the successful installation and acceptance of the HECToR Cray XT4 supercomputer at the University of Edinburgh's Parallel Computing Centre in Scotland." Ungaro added, "With recent wins, we are again furthering our momentum in the marketplace. Our priorities, as we close 2007 and move into 2008, are to continue to win new business, execute on product development initiatives, and to establish a foundation for sustained profitability and supercomputing market leadership." Outlook Cray continues to anticipate 2007 revenue will likely be below $190 million, with a loss for the year. The company expects an improved gross margin for 2007 compared to 2006. For the fourth quarter of 2007, Cray anticipates higher research and development expense compared to previous quarters. For 2008, while there is a wide range of potential outcomes, Cray targets profitability for the year and expects improved revenue over 2007. The company anticipates initial revenue from quad-core Cray XT4 and BlackWidow systems in the first half of 2008, potentially in the first quarter, and initial Cray XMT system revenue mid-2008. Additionally, Cray anticipates increased operating expenses 2008 compared to 2007, principally in the area of research and development. 2007 and 2008 quarterly and annual results will be affected by many factors, including the level and timing of government funding, the timing and success of planned product rollouts, the timing and success of meeting certain product development milestones and the timing of customer orders, shipments, acceptances and revenue recognition. Recent Highlights - Cray and the U.S. Department of Energy (DOE) announced the successful installation and recent acceptance of one of the world's largest supercomputers. Housed at DOE's National Energy Research Scientific Computing Center (NERSC), the powerful Cray XT4 system utilizes 20,000 processor cores and has a top processing speed of more than 100 teraflops (trillion floating point operations per second). This acceptance occurred in late October, so was not included in third quarter or year-to-date 2007 results.
- In October, Cray announced the selection of a Cray XT4 system by Japan's Yokohama City University. The Cray supercomputer will be housed at the University's Division of Structural Bioinformatics to aid two of Japan's most prominent academic researchers in their efforts to expand on the principle of three-dimensional structures and functions of biomolecules, proteins and nucleic acids.
- In addition to other announced contracts, Cray received orders totaling over $40 million from various government customers over the first three quarters of 2007. These orders include over $30 million for BlackWidow and Cray XMT systems.
- In September, Cray announced that the DOE's Pacific Northwest National Laboratory took delivery of an early-release Cray XMT supercomputer. The Cray XMT system has a unique "massively multithreaded" architecture and large global memory that is configured for applications that require access to terabytes of generally unstructured data, such as data discovery, business intelligence, bioinformatics and power grid analysis.
- In September, Cray announced the appointment of Andrew Wyatt to the position of vice president for the Asia Pacific region. Mr. Wyatt, who has twenty years of high performance computing experience, will be responsible for leading sales and customer support activities across the region.
- In July, Cray announced that two Cray supercomputers, one installed at Oak Ridge National Laboratory and the other at Sandia National Laboratories, achieved top-three status on the industry-standard TOP500 benchmark. Each system achieved computational performance of over 100 teraflops.