Cray’s annual revenue projections took a hit on Tuesday as processor delays, market uncertainties, and a recent “smoke event” lead the supercomputing company to reduce its FY16 guidance by $175 million. Cray now expects total yearly revenue to be in the $650 million range, down from its previous estimate of $825 million. In 2015, the company had a banner year: booking $724.7 million up from $561.6 million in 2014. Major wins in the last few years have included US and European weather forecasting systems, as well as US leadership-class systems: Cori at NERSC, Trinity at Los Alamos and and Aurora at Argonne.

Wide year-to-year revenue swings certainly aren’t unusual in the supercomputing space on account of uneven procurement cycles, but in this case, the revised expectations were the result of specific challenges, detailed by CEO Peter Ungaro on the Tuesday Q2 earnings call.

The electrical smoke event, which happened very recently at the smaller of Cray’s two Chippewa Falls, Wisc., facilities, was caused by a high-resistance condition within a facility power subcomponent. While the issue did not originate from a Cray system, the smoke damaged five “relatively smaller” customer systems, which were undergoing pre-shipment testing. Cray expected acceptances on these machines to take place before the end of the year, and now the timing is uncertain. Cray stands to lose between $20 and $60 million in FY16 on account of the damage, but says that revenue would be captured in 2017. The process of evaluating the ramifications is still ongoing, but most of the loss should be insured, said Ungaro.

Revenue for the third quarter was most impacted by the smoke event and the current projection now stands at $80 million. Cray Executive Vice President and Chief Financial Officer Brian Henry expects that Cray will see more than 50 percent of its yearly revenue in the fourth quarter.

It wasn’t just the smoke damage that contributed to the revised numbers. The change in outlook was also driven by delays of three key third-party components — Broadwell, Knights Landing and Pascal — and the related impact of those delays both on getting systems built and deployed and on customer decision-making. Ungaro also pointed to a slowdown in the traditional government/academic supercomputing market as well as a downsizing in the commercial segment.

Citing reduced growth expectations in IDC’s supercomputing market forecast (which includes systems starting at $500 million and higher), Ungaro, said, “At the highest end of the supercomputing market, where we focus, we believe that our addressable market is down year-over-year. We are not sure how long this slowdown will last, but at this point we believe it will continue through the rest of the year and possibly into 2017.”

All these factors are adding up to a period of unusually diminished visibility. As a result, the $650 million figure is a really a guideline at this point. Even without third-party component delays and market headwinds, supercomputing system revenue is tied to acceptance. For the largest systems in particular — Cray’s specialty — getting a lock on the precise timeline is challenging. Accordingly, Cray says it is too early to give guidance on 2017. “We just don’t know when the market is going to wrap out of this slower period and lead to stronger deal flow,” Ungaro shared.

“We’re in this kind of period of very limited visibility and a lot of changes going on in the market right now,” said CFO Henry. “It’s very hard to know exactly when that’s going to play out, but I feel very confident that that’s going to play out over time which is why I feel good. I don’t think that there’s been any fundamental shift in the market or in the need for supercomputing technology or in the convergence of supercomputing and big data, all those themes that we’ve been talking about for quite a while.”

Cray’s revised guidance was delivered along with the company’s Q2 earnings report. Revenue for the quarter came in at $100.2 million, a net loss of $13.1 million. Cray’s stock price has taken a tumble on account of the diminished 2016 projections, dropping 32 percent since Tuesday morning.