Cray is as busy as ever, looks forward to 2012
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Jul. 29, 2011
Attempting to pack six months' worth of business into the final few weeks of a fiscal year isn't easy
for some companies, especially when your name is Cray.
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But as it turns out, 2010 was a much tougher year, engineering-wise, than 2011 will be.
The "Gemini" XE interconnect and Cray Linux Environment, a tweaked Linux operating system that can make enterprise and scientific applications
think they are running on an Ethernet-based cluster even though they are running on the Gemini network, were the hard
bits of hardware and software engineering that went into the XE6 systems that allowed Cray to make its numbers last
year.
This year, all that Cray had to do was drop a new 16-core Interlagos Opteron 6200 processor into the XE6 system
and deliver a variant, called the XK6, that puts Nvidia Tesla GPU coprocessors on the XE6 servers, one per CPU socket
at a time, and delivering no less than 83 teraflops. Now that's a very fast super-computer by any standard.
In a conference call with Wall Street analysts going over Cray's second quarter financial results, Cray president
and CEO Peter Ungaro said that the updated XE6 with the Opteron 6200s and the XK6 hybrids would both ship before
Cray hosts its third quarter conference call in October.
And these high-powered super computers are a big part of Cray hitting its targets of between $300 million and
$340 million in revenues and being profitable for 2011.
In the second quarter, things look a lot better this time around then they did a year ago, but Cray still booked
a loss, even with the U.S. Defense Advanced Research Projects Agency kicking in $12 million of new R&D offset
some cash for the future "Cascade" kicker to the XE6 system.
These Cascade computers will be based on a new interconnect system called Aries, which will have much more
bandwidth, more scalability, and allow for Cray to support both Xeon and Opteron processors. However, we are still
awaiting confirmation on that.
Cray booked almost $48 million in product sales in the last quarter, more than a factor of five higher than in
the year-ago period when Cray was in the middle of launching the XE6 machines and no one was buying anything. And
services revenues in the quarter, including products from its Custom Engineering division, were up just a paltry
four percent, to $20.3 million.
Total sales came in at almost $68 million, up by a factor of 2.4 percent when compared to Q2 2010. Cray had a net
loss of just under $3 million, which was better than the $6.6 million loss it had a year ago.
Cray ended the quarter with $131.8 million in cash, and Ungaro said that the company would be burning cash to
build up parts of its inventory for the onslaught of sales in the fourth quarter, which will comprise more than half
of Cray's total revenues for 2011.
Brian Henry, Cray's CFO, said in the conference call to expect sales of around $35 million in the third quarter,
which means Q4 should have somewhere between $157 million and $197 million.
But one of the biggest deals that Cray is trying to land, and has not yet landed according to Ungaro, and is
getting closer, was upped from an estimated $50 million last quarter to $60 million this quarter. The deal, which
presumably is for an XE6 system but which could be an XK6 or a combination of machines, is expected to result in the
delivery and acceptance of the system in the fourth quarter, which means Cray will get paid then.
Cray is expecting Custom Engineering to deliver about $40 million in sales this year, and one of the key
products, there is the XMT massively threaded parallel super computer, which Cray is trying to position as a big
data server that can compete with other data crunchers like Hadoop clusters and Big Blue's iron.
But the one big issue here is the current U.S. federal budget deficit impasse in Washington. While Ungaro said
that the delay in passing the budget earlier this year put the damper on some projects, particularly in Custom
Engineering, the big HPC projects that Cray is taking down in Q3 and Q4 of this year already have their money
and momentum behind them.
"Like most of America, we are watching this unfold in front of us without much clarity," Ungaro said of the new
budget impasse about raising the U.S. government's debt ceiling and cutting expenses in future budgets. "But the
projects we have in place right now have already begun so we don't see a lot of impact at this time."
Of course, next year could be a whole different story, and Ungaro admitted to that when asked the question by
some of the analysts on the call.
Source: Cray Research Inc.
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