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Cray completes debt buy back, signals extraordinary financial health

Supercomputing stalwart Cray Inc. filed documents with the SEC today that reveal it has (nearly) completely bought back all of its convertible note debt — Cray has been taking advantage of its creditors desire for cash to buy back its debt at a discount since October of last year. In each of the three previous purchases Cray bought back its convertible notes at 92%, 91.5%, and 88.75% of face value, respectively. From the filing

Cray logoOn May 27, 2009, we repurchased an additional $13,269,000 in principal amount of our 3.0% Convertible Senior Subordinated Notes due 2024 (the “Notes”) at a price equal to 98.5% of par value plus accrued interest. The holders of the Notes have the right to put the Notes to us on December 1, 2009. Following this repurchase, we have an aggregate principal amount of $164,000 of Notes outstanding compared to the original $80,000,000 principal amount of Notes issued in December 2004.

We had a quick email exchange with Cray CEO Peter Ungaro and found him proud as a new papa

“This is a huge milestone for us as it strengthens our balance sheet/financial position and enables us to continue to increase the investment in our business and drive more quickly to our goals of growth and sustained profitability. Also, since we bought it back at a discount we saved well over $5M in retiring it early which is great for us and our shareholders.”

While the rest of the HPC hardware market reels from major disruptions — three  hardware vendors on the auction block in the space of a single quarter — Cray continues to execute with incredible discipline, and has put itself in a very enviable position in the market. They have a solid high end HPC line built on proven technologies with regular injections of performance-improving enhancements, they are taking healthy steps to diversify their business with the CX1 and XT5m, and they are treating their employees like they matter. This is the kind of operational excellence you read about in business books.

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