Just saw this piece from DowJones MarketWatch last week profiling Cray with the title “Cray feeling super amid company turnaround.”
Cray Inc., on the heels of a major $50 million customer installation at Lawrence Berkeley National Laboratory, expects to be profitable in 2008, which would be its first profitable year since 2003. That would be a major feat for a company that makes some of the world’s costliest computers in a niche market of high-performance computing.
Therese Poletti actually does a pretty good job of summarizing where the company is now, and where it could be going. What are analysts saying about the company?
The company swung to a profit of $5.1 million for the third quarter after losing $8.3 million a year ago. Revenues grew to $55 million, from $32.6 million a year ago. James McIlree, an analyst with Collins Stewart, said the stock lacks a near-term catalyst and he lowered his 2008 estimates to 25 cents from 45 cents a share, due to expected higher research costs.
“It is tempting to get back in the stock at current levels,” he wrote in a recent report. “But we prefer to wait, since there are substantial risks ahead.”
Others are slightly more optimistic. Kevin Hunt of Thomas Weisel believes the stock could reach $9 a share in the next 12 months, with potential risks including product delays, government funding issues and slower growth in the high performance market.
“Cray goes first class when we build a machine,” said Jan Silverman, senior vice president, corporate strategy and business development, at Cray. “We build them like people build a fine automobile.”
Sure Cray is aiming at the high end, and they’re being very up front about it (see my coverage in this week’s HPCwire special issue where I talk about this with CEO Pete Ungaro). But there’s a difference between paying $10,000 for a watch because it’s the best time piece in the world, and $10,000 because it is encrusted with diamonds. In the first case you’re buying a piece of high end equipment that suits your very particular needs; in the second you’re being an elitist show-off.
Cray is (perhaps surprisingly) not an elitist company. Silverman’s quote brings visions of diamond-encrusted watches to my mind. I’ve met Jan several times, though, and for what it’s worth I’m sure that this is not what he intended to convey.