Cray Swings to Loss, Revenue Decline as Challenges Mount
The supercomputer maker, dealing with a market slowdown, new chips from Intel and Nvidia and smoke damage at a facility, lowers its outlook for 2016.The first half of year has not been easy for supercomputer maker Cray. The company not only has been working in a high-end supercomputing market that is seeing a slowdown in demand, but also has been dealing with issues integrating new technologies—in particular chips from Intel and graphics technology from Nvidia—that could impact the delivery timetables of some systems, according to President and CEO Peter Ungaro. Some of the commercial segments Cray is targeting also are pulling back on orders due to outside influences. And all that was before an incident in a Wisconsin manufacturing facility caused by equipment problems that resulted in smoke damage to some systems that were being tested and readied for shipping. The delivery of those systems will be delayed while Cray engineers fix the damage caused by the smoke. The impact of all of this was a difficult second quarter and a downward change in the company's forecast for the rest of the year, all of which Ungaro talked about during a conference call Aug. 2 to discuss the company's latest quarterly financial numbers. The CEO said that while the cumulative issues have challenged the company in recent months, they all can be overcome and that the company's strategy is still sound.
"While it is difficult to quantify the precise financial impact of these three issues [the market slowdown, work with third-party chips and the smoke incident] on an individual basis, each of them is significant and ultimately has driven us to revise our outlook for 2016," Ungaro said during the conference call, according to a transcript on Seeking Alpha. "I do not believe that there's been any change in the strength of our products and solutions, our competitive position, or in our ability to take additional market share and grow the new markets over time."