SCIENCE

Cray has announced financial results for the third quarter ended September 30, 2010.  Revenue for the quarter was $42.8 million compared to $58.6 million in the prior year period.  The company reported a net loss for the quarter of ($18.8 million) or ($0.55) per share compared to a net loss of ($2.1 million) or ($0.06) per share in the third quarter of 2009.

Total gross profit margin for the third quarter was 25 percent, compared to 39 percent in the third quarter of 2009.  Product margin in the third quarter of 2010 was 22 percent, which was driven by a limited number of transactions.  The third quarter 2010 service margin of 29 percent was negatively impacted by a delayed Custom Engineering (CE) contract.

Operating expenses increased in the third quarter of 2010 to $29.2 million compared to $27.1 million in the prior year period.  As expected, third quarter 2010 operating expenses were higher than in the first and second quarters of 2010 due to R&D reimbursement milestones passed in the first two quarters of 2010.  The third quarter 2010 results included non-cash items of $2.3 million for depreciation and amortization and $1.1 million related to stock compensation expense. 

Revenue for the nine-month period ending September 30, 2010 was $100.0 million compared with $195.8 million in the prior year period.  As previously disclosed, this is consistent with expectations for revenue concentration late in the year driven by the introduction of the Cray XE6 supercomputer in mid-2010.  For the first nine months of the year, total operating expenses were $65.1 million compared to $72.5 million in the prior year period.  Net loss was ($37.0 million) or ($1.08) per share for the first nine months of 2010, compared to a net loss of ($3.6 million) or ($0.11) per share in the prior year period.  The nine-month period ending September 30, 2010 results included non-cash items of $6.8 million for depreciation and amortization and $3.6 million related to stock compensation expense.

As of September 30, 2010, cash balances totaled $73.5 million.  Inventory at the end of the third quarter was $149.3 million, including $108.2 million at customer sites.

“While we have a lot of work left to do, we remain on track to deliver strong results for 2010, including revenue growth and profitability for the year,” said Peter Ungaro, president and CEO of Cray.  “We have been shipping our new Cray XE6 supercomputers for the past several months and we are in the installation and acceptance process for all of the largest systems included in our 2010 outlook.  In addition to our continued strength at the high-end of the supercomputing market, including exciting new wins at the University of Stuttgart and the University of Chicago, I am also pleased with the progress of our Custom Engineering initiative and the leverage it drives in our business model.  Our momentum continues to build with the recent release of our latest generation Cray XE6 supercomputer and its two major upgrades planned for next year, and with our growing CE business we are positioned for continued growth and profitability.”