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!

Cray Completes ClusterStor Deal, Sunsets Sonexion Brand

September 25, 2017

Having today completed the transaction and strategic partnership with Seagate announced back in July, Cray is now home to the ClusterStor line and will be sunsetting the Sonexion brand. This is not an acquisition; the ClusterStor assets are transferring from Seagate to Cray (minus the Seagate ClusterStor IBM Spectrum Scale product) and Cray is taking over support and maintenance for the entire ClusterStor base. Read more…

By Tiffany Trader

China’s TianHe-2A will Use Proprietary Accelerator and Boast 94 Petaflops Peak

September 25, 2017

The details of China’s upgrade to TianHe-2 (MilkyWay-2) – now TianHe-2A – were revealed last week at the Third International High Performance Computing Forum (IHPCF2017) in China. The TianHe-2A will use a proprieta Read more…

By John Russell

SC17 Preview: Invited Talk Lineup Includes Gordon Bell, Paul Messina and Many Others

September 25, 2017

With the addition of esteemed supercomputing pioneer Gordon Bell to its invited talk lineup, SC17 now boasts a total of 12 invited talks on its agenda. As SC explains, "Invited Talks are a premier component of the SC Read more…

By Tiffany Trader

HPE Extreme Performance Solutions

HPE Prepares Customers for Success with the HPC Software Portfolio

High performance computing (HPC) software is key to harnessing the full power of HPC environments. Development and management tools enable IT departments to streamline installation and maintenance of their systems as well as create, optimize, and run their HPC applications. Read more…

GlobalFoundries Puts Wind in AMD’s Sails with 12nm FinFET

September 24, 2017

From its annual tech conference last week (Sept. 20), where GlobalFoundries welcomed more than 600 semiconductor professionals (reaching the Santa Clara venue’s max capacity and doubling 2016 attendee numbers), the one Read more…

By Tiffany Trader

Cray Completes ClusterStor Deal, Sunsets Sonexion Brand

September 25, 2017

Having today completed the transaction and strategic partnership with Seagate announced back in July, Cray is now home to the ClusterStor line and will be sunsetting the Sonexion brand. This is not an acquisition; the ClusterStor assets are transferring from Seagate to Cray (minus the Seagate ClusterStor IBM Spectrum Scale product) and Cray is taking over support and maintenance for the entire ClusterStor base. Read more…

By Tiffany Trader

China’s TianHe-2A will Use Proprietary Accelerator and Boast 94 Petaflops Peak

September 25, 2017

The details of China’s upgrade to TianHe-2 (MilkyWay-2) – now TianHe-2A – were revealed last week at the Third International High Performance Computing Fo Read more…

By John Russell

GlobalFoundries Puts Wind in AMD’s Sails with 12nm FinFET

September 24, 2017

From its annual tech conference last week (Sept. 20), where GlobalFoundries welcomed more than 600 semiconductor professionals (reaching the Santa Clara venue Read more…

By Tiffany Trader

Machine Learning at HPC User Forum: Drilling into Specific Use Cases

September 22, 2017

The 66th HPC User Forum held September 5-7, in Milwaukee, Wisconsin, at the elegant and historic Pfister Hotel, highlighting the 1893 Victorian décor and art o Read more…

By Arno Kolster

Stanford University and UberCloud Achieve Breakthrough in Living Heart Simulations

September 21, 2017

Cardiac arrhythmia can be an undesirable and potentially lethal side effect of drugs. During this condition, the electrical activity of the heart turns chaotic, Read more…

By Wolfgang Gentzsch, UberCloud, and Francisco Sahli, Stanford University

PNNL’s Center for Advanced Tech Evaluation Seeks Wider HPC Community Ties

September 21, 2017

Two years ago the Department of Energy established the Center for Advanced Technology Evaluation (CENATE) at Pacific Northwest National Laboratory (PNNL). CENAT Read more…

By John Russell

Exascale Computing Project Names Doug Kothe as Director

September 20, 2017

The Department of Energy’s Exascale Computing Project (ECP) has named Doug Kothe as its new director effective October 1. He replaces Paul Messina, who is stepping down after two years to return to Argonne National Laboratory. Kothe is a 32-year veteran of DOE’s National Laboratory System. Read more…

Takeaways from the Milwaukee HPC User Forum

September 19, 2017

Milwaukee’s elegant Pfister Hotel hosted approximately 100 attendees for the 66th HPC User Forum (September 5-7, 2017). In the original home city of Pabst Blu Read more…

By Merle Giles

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

NERSC Scales Scientific Deep Learning to 15 Petaflops

August 28, 2017

A collaborative effort between Intel, NERSC and Stanford has delivered the first 15-petaflops deep learning software running on HPC platforms and is, according Read more…

By Rob Farber

Oracle Layoffs Reportedly Hit SPARC and Solaris Hard

September 7, 2017

Oracle’s latest layoffs have many wondering if this is the end of the line for the SPARC processor and Solaris OS development. As reported by multiple sources Read more…

By John Russell

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

IBM Clears Path to 5nm with Silicon Nanosheets

June 5, 2017

Two years since announcing the industry’s first 7nm node test chip, IBM and its research alliance partners GlobalFoundries and Samsung have developed a proces 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

Leading Solution Providers

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

Google Releases Deeplearn.js to Further Democratize Machine Learning

August 17, 2017

Spreading the use of machine learning tools is one of the goals of Google’s PAIR (People + AI Research) initiative, which was introduced in early July. Last w Read more…

By John Russell

EU Funds 20 Million Euro ARM+FPGA Exascale Project

September 7, 2017

At the Barcelona Supercomputer Centre on Wednesday (Sept. 6), 16 partners gathered to launch the EuroEXA project, which invests €20 million over three-and-a-half years into exascale-focused research and development. Led by the Horizon 2020 program, EuroEXA picks up the banner of a triad of partner projects — ExaNeSt, EcoScale and ExaNoDe — building on their work... Read more…

By Tiffany Trader

Amazon Debuts New AMD-based GPU Instances for Graphics Acceleration

September 12, 2017

Last week Amazon Web Services (AWS) streaming service, AppStream 2.0, introduced a new GPU instance called Graphics Design intended to accelerate graphics. The Read more…

By John Russell

Cray Moves to Acquire the Seagate ClusterStor Line

July 28, 2017

This week Cray announced that it is picking up Seagate's ClusterStor HPC storage array business for an undisclosed sum. "In short we're effectively transitioning the bulk of the ClusterStor product line to Cray," said CEO Peter Ungaro. Read more…

By Tiffany Trader

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

IBM Advances Web-based Quantum Programming

September 5, 2017

IBM Research is pairing its Jupyter-based Data Science Experience notebook environment with its cloud-based quantum computer, IBM Q, in hopes of encouraging a new class of entrepreneurial user to solve intractable problems that even exceed the capabilities of the best AI systems. Read more…

By Alex Woodie

GlobalFoundries: 7nm Chips Coming in 2018, EUV in 2019

June 13, 2017

GlobalFoundries has formally announced that its 7nm technology is ready for customer engagement with product tape outs expected for the first half of 2018. The Read more…

By Tiffany Trader

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