Cray

Performance Indicators

2018: Losses in $71.7 million

In 2018 Cray received $455.9 million revenue against $392.5 million the previous year. For sales of products, including directly supercomputers, the company earned $312.9 million whereas in 2017 this income was measured by $250.2 million. Service revenue during this time increased slightly — from $142.3 million to $143.1 million.

Cray remains the non-profitable company two years in a row. In 2018 net losses were equal $71.7 million, having risen from $133.8 million in the 2017th.

Financial performance of Cray

In the financial statement the reasons of financial regress of Cray are not specified. Earlier the CEO of the company Peter Ungaro spoke about decline in demand for supercomputers in all segments and regions in the market.

Within the publication of the annual accounts Cray announced use of the Intel processors Cascade Lake in the systems, since 2019. Intel Xeon Scalable chips at first appeared in CS500 line, and in 2020 implementation of the Shasta platform in new generation of the equipment with an eksaflopsny performance is expected (the supercomputer with a power of 10 in the 18th extent of transactions with a floating comma per second).

2018 will be remembered by Cray start of the world's largest supercomputer on ARM processors — a system under the code name Isambard works in Britain and is used for scientific research and studying of new computer architecture.

Besides, in 2018 Cray provided the new software tools Urika AI and Analytics which help data processing specialists to train AI models more precisely and with smaller time expenditure.

Since the beginning on May 17, 2019 the stocks Cray rose in price for 38%, and market capitalization reached $1.23 billion.

To the middle of May, 2019 Cray has about 1300 employees working in the different countries.^[1]

History

2019: HPE purchased Cray for $1.3 billion

On May 17, 2019 Hewlett Packard Enterprise (HPE) officially announced acquisition of Cray for $1.3 billion. It is about the largest purchase by HPE company which appeared as a result of separation of Hewlett-Packard.

Under the terms of the agreement, HPE will pay from own means (without attraction of own actions) $35 for each stock Cray which is in circulation. It is 17.4% more than a quotation rate at the time of closing of the exchange on May 16, 2019. After the declaration of Cray sale securities of the company at preliminary biddings rose in price on May 17 for 16.6%, and the quotations of HPE dropped by 0.2%, notes the MarketWatch edition.

The largest acquisition of HPE: for $1.3 billion the producer of the Cray supercomputers is purchased

HPE is going to close the transaction within a quarter which will come to the end in January, 2020, and hopes that it will increase profit according to the results of all financial year.

Merger of Cray will allow HPE to strengthen a portfolio of the equipment and the software for high-performance computing (HPC) and also will accelerate growth of business in the field of artificial intelligence.

According to forecasts of HPE, the volume of the world market of HPC-solutions will grow from $28 billion in 2018 to $35 billion in the 2021st. The computing equipment with an eksaflopsny performance  will create the market of $4 billion within five years, said in the press release devoted to sale of Cray of HPE company.

The Cray supercomputer installed in Britain

The products Cray, including solutions for work with Big Data and AI tools, will complement the range of technologies developed by HPE for high-performance computing. This integration will provide HPE resources for satisfaction of the growing demand for the HPC-products offered in service quality through the HPE GreenLake program consider in the company.^[2]

By May, 2019 the HPE supercomputers are installed at the Notre Dame University, the Pittsburgh supercomputer center and at chemical giant BASF. Also the company creates for the Pentagon of a system for design of helicopters and forecasting of weather.

It is supposed that merger of Cray will strengthen positions of Hewlett Packard Enterprise in the market of high-performance computer systems in fight against IBM, Fujitsu, Bull and Hitachi. The buyer will be able to receive more contracts from state bodies and the research organizations and also will sell supercomputers to commercial clients.

Expenses on Cray integration the HPE company will include in the report for 2020 financial year. How much restructuring will cost, it is not specified. HPE only say that money for it will be taken from free cash flow, the forecast for which for 2020 a fiscal year is left without changes — $1.9-2.1 billion.

To the transaction with Cray purchase of the decision maker for Nimble Storage data storage a little more than for $1 billion in 2017 was the largest acquisition for HPE.

Several Cray supercomputers by May, 2019 are among the world's largest. Having absorbed this company, HPE can become the largest producer of such computing systems.

According to the CEO of HPE Antonio Neri, supercomputers became important means for processing and data analysis which help to solve crucial problems in such areas as health care, climate change, space, etc.

Having integrated our commands and world-class technologies, we will be able to use new generation of high-performance computing and to play an important role in improvement of a way of life and work of people — Antonio Neri said.

Supercomputer systems of Cray and the Shasta platform are capable to process huge data arrays and AI - and analytical workflows, to provide convergent modeling and simulation experiments, notes the CRN edition.

2017: The first losses in 8 years

In 2017 Cray received a loss, the first for eight years, which in the company was explained with tax reform in the USA and problems in the market of supercomputers.

At the end of 2017 net losses of Cray made $133.8 million against $10.6 million profit the previous year. The company recorded the first losses since 2009 which size was the second in value in the history.

Cray xc30 ac supercomputer

Monetary losses are caused by single expenditure of $108 million in connection with the new legislation in the USA, however there is one more factor which negatively is reflected in revenues of the producer.

As the CEO of Cray  Peter Ungaro reported, in the market of the equipment for high-performance computing the "considerable recession" concerning all segments and regions is observed.

This regress led to significant drop in sales of Cray — from $629.8 million in 2016 up to $392.5 million in the 2017th. Explained easing of demand for supercomputer systems of Ungaro with five reasons: a difficult situation with financing of similar projects by the governments in the different countries of the world, decrease in rates of improvement of technologies in processors, increase in expenses on memory, falling of the energy market and the postponed replacement of the old systems on new large customers. Many supercomputers began to be operated longer than normal four-year service life, he noted.

The positive moment for Cray Peter Ungaro called strengthening of positions in a corporate segment: it brings to the company more and more income and a share in revenue. In 2017 commercial clients brought to Cray more than 12% of turnover that is several percent more than indicators of year prescription.

Besides, optimism of Cray adds domination of the company in the sector of systems for modeling of weather and climate. The last for February, 2018 successful projects of the producer in this area are implemented in India.^[3]

2012

On April 24, 2012 Intel announced intention to purchase for $140 million network assets of Cray – the famous producer of supercomputer systems. The transaction is directed to strengthening of positions of processor giant in a segment of high-performance computing (HPC – High Performance Computing).

The division of Cray purchased by Intel was engaged in development of high-speed connections for consolidation of supercomputers. On the account of engineers of the company Gemini technology and a product family of Aries which are intended for the computer system of the next generation Cascade created in a subsoil of Cray laboratories based on Intel Xeon processors. Together with intellectual property the team of 74 employees of Cray occupied in network division will pass into the order of Intel.

Cray the transaction with Intel is profitable only from the financial point of view. The company intends to spend proceeds for implementation of the projects on creation of supercomputers begun earlier. Thus, there are all bases to believe that Cray will manage to sustain terms of creation of products in strict accordance with the road map. At least, Peter Ungaro, the president and the chief executive of Cray, promised to save one and all projects in current status.

Anyway, so far Cray remains the key system provider for high-performance computing. Some of its supercomputers are based on processors of the closest competitor of Intel – AMD company. For example, in Okridzhsky national laboratory (Oak Ridge National Laboratory, ORNL) in the State of Tennessee there is Jaguar. In the list of 500 largest supercomputers of the world for November, 2011 he took the third place.

IBM, HP and Fujitsu act as the closest competitors of Cray. In the fourth quarter 2011 profitability indicators and profitability of Cray significantly worsened in comparison with the same period of previous year. In many respects because of interruptions in deliveries of Opteron AMD processors.

The Intel company (INTC) announced in April, 2012 the agreement with Cray on acquisition of the assets connected with its technologies of high-performance computing (HPC). Having signed this agreement, Intel receives personnel and the intellectual property of Cray in the order.

Under the terms of the transaction worth 140 million dollars about 74 employees of Cray will work in Intel. According to Peter Ungaro (Peter Ungaro), the president and the CEO (CEO) of Cray, this agreement is the certificate of the forefront come by Cray in the field of high-performance computing and also profitable advantage to her clients, the company and its shareholders. Cray will reserve the certain rights to use assets and intellectual property transferred to Intel together with the products. Having expanded the relationship with Intel, the company had an opportunity of further market promotion of HPC and expansion of the dominant industry technologies. The plan of product strategy (product roadmap) of the company will remain without changes as Cray will continue to create the high-differentiated, closely integrated supercomputers expected by her clients. This agreement will also allow to strengthen seriously a financial position of Cray and to raise possibilities of its further growth and also profitability and shareholder value.

Notes

Notes