APPLICATIONS

Cray Inc. today announced that due to recent information with respect to the timing of volume parts availability, the company now believes that 2007 revenue associated with quad-core Cray XT4 systems will likely be less than previously anticipated. Cray continues to anticipate deliveries of quad-core Cray XT4 systems and upgrades to begin during the fourth quarter of 2007; however, the timing is such that most or all of the planned acceptances, and associated revenue recognition, will likely be deferred until early 2008. Cray's last outlook, dated May 3, 2007, noted that anticipated revenues from quad-core Cray XT4 systems and upgrades were an important factor within the company's overall revenue plan for the year, and a key risk. While there continues to be a wide range of potential outcomes, total revenue for 2007 is now likely to be at or below $200 million, and consequently, there is an increased probability that the company will not achieve profitability for the year. "We are disappointed with the implications of this change in timing to our Cray XT4 system rollout schedule and the impact on our 2007 outlook," stated president and CEO Peter Ungaro. "Two of our most important goals have been to grow and achieve profitability, both of which are now in jeopardy for 2007. We are actively working to achieve the best results possible for 2007 and continue to work to establish the foundation for longer-term sustained profitability and growth."