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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

February 27, 2007 at 11:55 AM

Cray: Time to productize

I’ve been wondering how Seattle supercomputer maker Cray would fare as commodity PCs are supersized by multicore processors.

That’s actually creating opportunity for Cray, according to Peter Ungaro, the former IBMer who has led Cray’s turnaround over the past two years.

Processors are plenty powerful. The bottleneck in high-performance computing is now data throughput, an area where Cray has leading technology, he said during an RBC Dain Rauscher investment conference in Seattle today.

“It’s not anymore about how fast is the processor. At the high end of the market it’s how fast you can feed the processor,” he said.

That creates an opportunity for Cray to productize and sell its technologies, as well as systems.

Cray is also offering its supercomputer customers more products, including technology services and storage solutions.

Those new thrusts could expand the company’s potential market from $1.5 billion to $5 billion in the coming years, he said.

That’s part of why Cray is so upbeat. The core business is also doing pretty well. Cray signed $600 million worth of contracts last year, and already in 2007 it has signed $100 million. It’s also rolling out three new systems.

The revenue includes a big defense research contract that runs through 2010.

CFO Vic Chynoweth said the company expects sales growth of 5 percent to 20 percent in 2007, and the long-term forecast is 10 to 20 percent growth.

Operating income this year is expected to grow 3 percent to 7 percent, he said, and long-term it’s projected to grow 10 to 15 percent.

In the short-term, Cray withstood much of today’s stock market correction. It was down 0.95 percent this afternoon at $13.55.

As a supplier of proprietary technology used by secretive U.S. government agencies, it doesn’t have much exposure in China.

Comments | More in | Topics: Enterprise

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