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 factory, 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!

RSC Reports 500Tflops, Hot Water Cooled System Deployed at JINR

April 18, 2018

RSC, developer of supercomputers and advanced HPC systems based in Russia, today reported deployment of “the world's first 100% ‘hot water’ liquid cooled supercomputer” at Joint Institute for Nuclear Research (JI Read more…

By Staff

New Device Spots Quantum Particle ‘Fingerprint’

April 18, 2018

Majorana particles have been observed by university researchers employing a device consisting of layers of magnetic insulators on a superconducting material. The advance opens the door to controlling the elusive particle Read more…

By George Leopold

Cray Rolls Out AMD-Based CS500; More to Follow?

April 18, 2018

Cray was the latest OEM to bring AMD back into the fold with introduction today of a CS500 option based on AMD’s Epyc processor line. The move follows Cray’s introduction of an ARM-based system (XC-50) last November. Read more…

By John Russell

HPE Extreme Performance Solutions

HPC and AI Convergence is Accelerating New Levels of Intelligence

Data analytics is the most valuable tool in the digital marketplace – so much so that organizations are employing high performance computing (HPC) capabilities to rapidly collect, share, and analyze endless streams of data. Read more…

Hennessy & Patterson: A New Golden Age for Computer Architecture

April 17, 2018

On Monday June 4, 2018, 2017 A.M. Turing Award Winners John L. Hennessy and David A. Patterson will deliver the Turing Lecture at the 45th International Symposium on Computer Architecture (ISCA) in Los Angeles. The Read more…

By Staff

Cray Rolls Out AMD-Based CS500; More to Follow?

April 18, 2018

Cray was the latest OEM to bring AMD back into the fold with introduction today of a CS500 option based on AMD’s Epyc processor line. The move follows Cray’ Read more…

By John Russell

IBM: Software Ecosystem for OpenPOWER is Ready for Prime Time

April 16, 2018

With key pieces of the IBM/OpenPOWER versus Intel/x86 gambit settling into place – e.g., the arrival of Power9 chips and Power9-based systems, hyperscaler sup Read more…

By John Russell

US Plans $1.8 Billion Spend on DOE Exascale Supercomputing

April 11, 2018

On Monday, the United States Department of Energy announced its intention to procure up to three exascale supercomputers at a cost of up to $1.8 billion with th Read more…

By Tiffany Trader

Cloud-Readiness and Looking Beyond Application Scaling

April 11, 2018

There are two aspects to consider when determining if an application is suitable for running in the cloud. The first, which we will discuss here under the title Read more…

By Chris Downing

Transitioning from Big Data to Discovery: Data Management as a Keystone Analytics Strategy

April 9, 2018

The past 10-15 years has seen a stark rise in the density, size, and diversity of scientific data being generated in every scientific discipline in the world. Key among the sciences has been the explosion of laboratory technologies that generate large amounts of data in life-sciences and healthcare research. Large amounts of data are now being stored in very large storage name spaces, with little to no organization and a general unease about how to approach analyzing it. Read more…

By Ari Berman, BioTeam, Inc.

IBM Expands Quantum Computing Network

April 5, 2018

IBM is positioning itself as a first mover in establishing the era of commercial quantum computing. The company believes in order for quantum to work, taming qu Read more…

By Tiffany Trader

FY18 Budget & CORAL-2 – Exascale USA Continues to Move Ahead

April 2, 2018

It was not pretty. However, despite some twists and turns, the federal government’s Fiscal Year 2018 (FY18) budget is complete and ended with some very positi Read more…

By Alex R. Larzelere

Nvidia Ups Hardware Game with 16-GPU DGX-2 Server and 18-Port NVSwitch

March 27, 2018

Nvidia unveiled a raft of new products from its annual technology conference in San Jose today, and despite not offering up a new chip architecture, there were still a few surprises in store for HPC hardware aficionados. Read more…

By Tiffany Trader

Inventor Claims to Have Solved Floating Point Error Problem

January 17, 2018

"The decades-old floating point error problem has been solved," proclaims a press release from inventor Alan Jorgensen. The computer scientist has filed for and Read more…

By Tiffany Trader

Researchers Measure Impact of ‘Meltdown’ and ‘Spectre’ Patches on HPC Workloads

January 17, 2018

Computer scientists from the Center for Computational Research, State University of New York (SUNY), University at Buffalo have examined the effect of Meltdown Read more…

By Tiffany Trader

Fast Forward: Five HPC Predictions for 2018

December 21, 2017

What’s on your list of high (and low) lights for 2017? Volta 100’s arrival on the heels of the P100? Appearance, albeit late in the year, of IBM’s Power9? Read more…

By John Russell

Russian Nuclear Engineers Caught Cryptomining on Lab Supercomputer

February 12, 2018

Nuclear scientists working at the All-Russian Research Institute of Experimental Physics (RFNC-VNIIEF) have been arrested for using lab supercomputing resources to mine crypto-currency, according to a report in Russia’s Interfax News Agency. Read more…

By Tiffany Trader

How the Cloud Is Falling Short for HPC

March 15, 2018

The last couple of years have seen cloud computing gradually build some legitimacy within the HPC world, but still the HPC industry lies far behind enterprise I Read more…

By Chris Downing

Chip Flaws ‘Meltdown’ and ‘Spectre’ Loom Large

January 4, 2018

The HPC and wider tech community have been abuzz this week over the discovery of critical design flaws that impact virtually all contemporary microprocessors. T Read more…

By Tiffany Trader

How Meltdown and Spectre Patches Will Affect HPC Workloads

January 10, 2018

There have been claims that the fixes for the Meltdown and Spectre security vulnerabilities, named the KPTI (aka KAISER) patches, are going to affect applicatio Read more…

By Rosemary Francis

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

Leading Solution Providers

Deep Learning at 15 PFlops Enables Training for Extreme Weather Identification at Scale

March 19, 2018

Petaflop per second deep learning training performance on the NERSC (National Energy Research Scientific Computing Center) Cori supercomputer has given climate Read more…

By Rob Farber

Lenovo Unveils Warm Water Cooled ThinkSystem SD650 in Rampup to LRZ Install

February 22, 2018

This week Lenovo took the wraps off the ThinkSystem SD650 high-density server with third-generation direct water cooling technology developed in tandem with par Read more…

By Tiffany Trader

AI Cloud Competition Heats Up: Google’s TPUs, Amazon Building AI Chip

February 12, 2018

Competition in the white hot AI (and public cloud) market pits Google against Amazon this week, with Google offering AI hardware on its cloud platform intended Read more…

By Doug Black

HPC and AI – Two Communities Same Future

January 25, 2018

According to Al Gara (Intel Fellow, Data Center Group), high performance computing and artificial intelligence will increasingly intertwine as we transition to Read more…

By Rob Farber

New Blueprint for Converging HPC, Big Data

January 18, 2018

After five annual workshops on Big Data and Extreme-Scale Computing (BDEC), a group of international HPC heavyweights including Jack Dongarra (University of Te Read more…

By John Russell

Google Chases Quantum Supremacy with 72-Qubit Processor

March 7, 2018

Google pulled ahead of the pack this week in the race toward "quantum supremacy," with the introduction of a new 72-qubit quantum processor called Bristlecone. Read more…

By Tiffany Trader

Momentum Builds for US Exascale

January 9, 2018

2018 looks to be a great year for the U.S. exascale program. The last several months of 2017 revealed a number of important developments that help put the U.S. Read more…

By Alex R. Larzelere

HPE Wins $57 Million DoD Supercomputing Contract

February 20, 2018

Hewlett Packard Enterprise (HPE) today revealed details of its massive $57 million HPC contract with the U.S. Department of Defense (DoD). The deal calls for HP Read more…

By Tiffany Trader

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