Cray Posts Best-Ever Quarter, Visibility Still Limited

By Tiffany Trader

February 10, 2017

On its Wednesday earnings call, Cray announced the largest revenue quarter in the company’s history and the second-highest revenue year. The Seattle-based supercomputer maker recorded $346.6 million in revenue for the fourth quarter of 2016, a 30 percent year-over-year improvement. For the full year, Cray booked $629.8 million in total revenue, a shortfall of $94.9 million compared with 2015, a banner year for the company. Net income for 2016 was $10.6 million compared with $27.5 million in 2015. This marks the seventh consecutive year of profitability for Cray.

As we noted in August, wide year-to-year revenue swings are par for the course in the supercomputing space owing to uneven procurement cycles, but there are some specific challenges that the company has had to contend with this year. During its 2016 second quarter earnings call, Cray downsized the year’s revenue forecast by $175 million, citing damage from an electrical event at a Chippewa Falls factor, processor delays and market slowdown.

The greatest short-term fiscal impact was to the company’s third quarter projection. The quarter’s take was $77.5 million compared to a recorded $191.4 million in revenue for the third quarter of 2015. In August, Cray said that missed earnings for Q3 would move to Q4 or into 2017, and indeed the shift amplified their fourth quarter numbers.

While the July 2016 smoke event that damaged several systems that were undergoing pre-shipment testing impacted the company’s balance sheet short-term, the company was fully insured to recoup the losses. More problematic for Cray is market sluggishness and uncertainty, resulting in continued limited visibility.

“While our market can be lumpy, we are continuing to see very slow conditions in supercomputing, as we discussed on our last earnings call, with fewer opportunities, both in total numbers and dollars. In fact, we believe the high-end of the market which we service, also known as our serviceable addressable market for the high-end, was down by more than 25 percent on a revenue basis in 2016 and down even more on a bookings basis. This clearly had a significant impact on our results for the year, despite continued strong win rates and industry-leading market share,” said CEO Peter Ungaro on the Feb. 8 earnings call.

“Further, the timing of a rebound in our market is uncertain, which has significantly reduced our forward-looking visibility. As a result, we are not able to provide a reasonable range of revenue expectations for the full year of 2017 at this point,” he continued.

Cray had several big installations in 2016 with XC40 systems going to Los Alamos National Laboratory, the National Energy Research Scientific Competing Center in California and Kyoto University in Japan. It also completed the installation of the Pascal-based XC50 system at the Swiss National Supercomputing Centre.

Ungaro said that Cray’s cluster business was shy of projections, but the fourth quarter saw notable installations for a U.S. based aerospace manufacturer, the National Oceanic and Atmospheric Administration, Kyoto University, and a financial services firm. The CEO added that the fourth quarter was a strong one for data analytics and the company’s new Urika-GX platform. It installed two Urika-GX systems at the University of Stuttgart, which will support the aerospace and automotive industries.

Winning new business continues to be a primary goal for Cray. “While we’ve begun to some positive signs in customer activity, it has continued to lag our expectations for the past few quarters, primarily driven by reduced bid activity across the board,” said Ungaro.

The company’s second focus goal is to expand into commercial and big data markets. Cray said that commercial customers have roughly doubled its addressable market, and the company expects the commercial sector to continue to be a significant growth driver going forward. Specifically it sees growth opportunities in energy, manufacturing, financial services, and life sciences.

“We’re taking multiple steps in this area including broadening our product set to be more commercially acceptable, overlying sales and marketing plans to address commercial companies and solutions, and honing our service and support organization to align with commercial company expectations. We’ve done each of these things while also maintaining focus on our traditional, government and academic customers that are at the heart of what we do,” said Cray.

The overall tone struck by Cray as it heads into 2017 is one of cautious optimism.

“We have begun to see some positive signs in the market with new opportunities beginning to open up that were not there a few months ago. However, these opportunities are continuing to evolve slowly, and we haven’t seen this pace accelerate yet. This slowdown in the market is a main driver behind our lack of visibility for the year. We continue to believe that the market is going to rebound, especially at the high end,” said Ungaro.

Cray’s successful fourth quarter has helped to settle the market with several investment firms moving their recommendation from “sell” to “hold” or “buy.” Going into Wednesday’s report, Cray’s shares were at a three and a half year low. By market close on Thursday, the price had jumped 19 percent. But the company still has some work to do to regain investor confidence. The stock has a 12-month low of $16.10 and a 12-month high of $43.79. It is currently trading around $22.

Subscribe to HPCwire's Weekly Update!

Be the most informed person in the room! Stay ahead of the tech trends with industy updates delivered to you every week!

Tuning InfiniBand Interconnects Using Congestion Control

July 26, 2017

InfiniBand is among the most common and well-known cluster interconnect technologies. However, the complexities of an InfiniBand (IB) network can frustrate the most experienced cluster administrators. Maintaining a balan Read more…

By Adam Dorsey

NSF Project Sets Up First Machine Learning Cyberinfrastructure – CHASE-CI

July 25, 2017

Earlier this month, the National Science Foundation issued a $1 million grant to Larry Smarr, director of Calit2, and a group of his colleagues to create a community infrastructure in support of machine learning research Read more…

By John Russell

DARPA Continues Investment in Post-Moore’s Technologies

July 24, 2017

The U.S. military long ago ceded dominance in electronics innovation to Silicon Valley, the DoD-backed powerhouse that has driven microelectronic generation for decades. With Moore's Law clearly running out of steam, the Read more…

By George Leopold

HPE Extreme Performance Solutions

HPE Servers Deliver High Performance Remote Visualization

Whether generating seismic simulations, locating new productive oil reservoirs, or constructing complex models of the earth’s subsurface, energy, oil, and gas (EO&G) is a highly data-driven industry. Read more…

Graphcore Readies Launch of 16nm Colossus-IPU Chip

July 20, 2017

A second $30 million funding round for U.K. AI chip developer Graphcore sets up the company to go to market with its “intelligent processing unit” (IPU) in 2017 with scale-up production for enterprise datacenters and Read more…

By Tiffany Trader

Tuning InfiniBand Interconnects Using Congestion Control

July 26, 2017

InfiniBand is among the most common and well-known cluster interconnect technologies. However, the complexities of an InfiniBand (IB) network can frustrate the Read more…

By Adam Dorsey

NSF Project Sets Up First Machine Learning Cyberinfrastructure – CHASE-CI

July 25, 2017

Earlier this month, the National Science Foundation issued a $1 million grant to Larry Smarr, director of Calit2, and a group of his colleagues to create a comm Read more…

By John Russell

Graphcore Readies Launch of 16nm Colossus-IPU Chip

July 20, 2017

A second $30 million funding round for U.K. AI chip developer Graphcore sets up the company to go to market with its “intelligent processing unit” (IPU) in Read more…

By Tiffany Trader

Fujitsu Continues HPC, AI Push

July 19, 2017

Summer is well under way, but the so-called summertime slowdown, linked with hot temperatures and longer vacations, does not seem to have impacted Fujitsu's out Read more…

By Tiffany Trader

Researchers Use DNA to Store and Retrieve Digital Movie

July 18, 2017

From abacus to pencil and paper to semiconductor chips, the technology of computing has always been an ever-changing target. The human brain is probably the com Read more…

By John Russell

The Exascale FY18 Budget – The Next Step

July 17, 2017

On July 12, 2017, the U.S. federal budget for its Exascale Computing Initiative (ECI) took its next step forward. On that day, the full Appropriations Committee Read more…

By Alex R. Larzelere

Women in HPC Luncheon Shines Light on Female-Friendly Hiring Practices

July 13, 2017

The second annual Women in HPC luncheon was held on June 20, 2017, during the International Supercomputing Conference in Frankfurt, Germany. The luncheon provid Read more…

By Tiffany Trader

Satellite Advances, NSF Computation Power Rapid Mapping of Earth’s Surface

July 13, 2017

New satellite technologies have completely changed the game in mapping and geographical data gathering, reducing costs and placing a new emphasis on time series Read more…

By Ken Chiacchia and Tiffany Jolley

Google Pulls Back the Covers on Its First Machine Learning Chip

April 6, 2017

This week Google released a report detailing the design and performance characteristics of the Tensor Processing Unit (TPU), its custom ASIC for the inference Read more…

By Tiffany Trader

Nvidia Responds to Google TPU Benchmarking

April 10, 2017

Nvidia highlights strengths of its newest GPU silicon in response to Google's report on the performance and energy advantages of its custom tensor processor. Read more…

By Tiffany Trader

Quantum Bits: D-Wave and VW; Google Quantum Lab; IBM Expands Access

March 21, 2017

For a technology that’s usually characterized as far off and in a distant galaxy, quantum computing has been steadily picking up steam. Just how close real-wo Read more…

By John Russell

HPC Compiler Company PathScale Seeks Life Raft

March 23, 2017

HPCwire has learned that HPC compiler company PathScale has fallen on difficult times and is asking the community for help or actively seeking a buyer for its a Read more…

By Tiffany Trader

Trump Budget Targets NIH, DOE, and EPA; No Mention of NSF

March 16, 2017

President Trump’s proposed U.S. fiscal 2018 budget issued today sharply cuts science spending while bolstering military spending as he promised during the cam Read more…

By John Russell

CPU-based Visualization Positions for Exascale Supercomputing

March 16, 2017

In this contributed perspective piece, Intel’s Jim Jeffers makes the case that CPU-based visualization is now widely adopted and as such is no longer a contrarian view, but is rather an exascale requirement. Read more…

By Jim Jeffers, Principal Engineer and Engineering Leader, Intel

Nvidia’s Mammoth Volta GPU Aims High for AI, HPC

May 10, 2017

At Nvidia's GPU Technology Conference (GTC17) in San Jose, Calif., this morning, CEO Jensen Huang announced the company's much-anticipated Volta architecture a Read more…

By Tiffany Trader

Facebook Open Sources Caffe2; Nvidia, Intel Rush to Optimize

April 18, 2017

From its F8 developer conference in San Jose, Calif., today, Facebook announced Caffe2, a new open-source, cross-platform framework for deep learning. Caffe2 is the successor to Caffe, the deep learning framework developed by Berkeley AI Research and community contributors. Read more…

By Tiffany Trader

Leading Solution Providers

How ‘Knights Mill’ Gets Its Deep Learning Flops

June 22, 2017

Intel, the subject of much speculation regarding the delayed, rewritten or potentially canceled “Aurora” contract (the Argonne Lab part of the CORAL “ Read more…

By Tiffany Trader

Reinders: “AVX-512 May Be a Hidden Gem” in Intel Xeon Scalable Processors

June 29, 2017

Imagine if we could use vector processing on something other than just floating point problems.  Today, GPUs and CPUs work tirelessly to accelerate algorithms Read more…

By James Reinders

Russian Researchers Claim First Quantum-Safe Blockchain

May 25, 2017

The Russian Quantum Center today announced it has overcome the threat of quantum cryptography by creating the first quantum-safe blockchain, securing cryptocurrencies like Bitcoin, along with classified government communications and other sensitive digital transfers. Read more…

By Doug Black

MIT Mathematician Spins Up 220,000-Core Google Compute Cluster

April 21, 2017

On Thursday, Google announced that MIT math professor and computational number theorist Andrew V. Sutherland had set a record for the largest Google Compute Engine (GCE) job. Sutherland ran the massive mathematics workload on 220,000 GCE cores using preemptible virtual machine instances. Read more…

By Tiffany Trader

Google Debuts TPU v2 and will Add to Google Cloud

May 25, 2017

Not long after stirring attention in the deep learning/AI community by revealing the details of its Tensor Processing Unit (TPU), Google last week announced the Read more…

By John Russell

Groq This: New AI Chips to Give GPUs a Run for Deep Learning Money

April 24, 2017

CPUs and GPUs, move over. Thanks to recent revelations surrounding Google’s new Tensor Processing Unit (TPU), the computing world appears to be on the cusp of Read more…

By Alex Woodie

Six Exascale PathForward Vendors Selected; DoE Providing $258M

June 15, 2017

The much-anticipated PathForward awards for hardware R&D in support of the Exascale Computing Project were announced today with six vendors selected – AMD Read more…

By John Russell

Top500 Results: Latest List Trends and What’s in Store

June 19, 2017

Greetings from Frankfurt and the 2017 International Supercomputing Conference where the latest Top500 list has just been revealed. Although there were no major Read more…

By Tiffany Trader

  • arrow
  • Click Here for More Headlines
  • arrow
Share This