Pure play supercomputer maker Cray Inc. reported final results for Q4 and the full fiscal 2009 yesterday. The news is quite good, with a profit for Q4 and a loss of only $600,000 for the year.
The company reported net income for the fourth quarter of 2009 of $3.0 million, or $0.08 per share, compared to a net loss of ($26.0 million), or ($0.79) per share, in the fourth quarter 2008. A non-cash, goodwill impairment of $54.5 million was taken in the fourth quarter of 2008.
For 2009, Cray reported record revenue of $284.0 million and a net loss of ($0.6 million), or ($0.02) per share. For 2008, revenue was $282.9 million and net loss was ($40.7 million), or ($1.25) per share.
In context, that $600,000 loss looks even better at more than $40M better than results for 2008. Revenue for Q4 was significantly down year over year ($88.2 million compared to $155.4), but this is because Jaguar was booked in Q4 2008 and was a $100M deal. You only do a Jaguar once in a while.
In January the company announced preliminary fiscal results. How did those compare to the final numbers? The revenue number was right, and cash is above $110M as predicted. Cray predicted “break-even to a small loss from operations,” and that’s what they delivered. So, kudos on the value of the preliminary announcement.
Margins look pretty good overall
For the fourth quarter 2009, overall gross profit margin was 41 percent compared to 36 percent in the fourth quarter 2008. Product margin for the quarter was 43 percent compared to 36 percent in the prior year period, and fourth quarter 2009 service margin was 37 percent. Overall gross profit margin for 2009 was 37 percent compared to 39 percent in 2008. Product margin for 2009 was 34 percent compared to 39 percent in 2008 and service margin for 2009 was 44 percent compared to 40 percent for 2008.
Though expenses were up slightly with about $113.2 million cash and equivalents on hand
Core operating expenses, consisting of research and development, sales and marketing, and general and administrative expenses, increased to $106.1 million in 2009 from $93.5 million in 2008. The increase in operating expenses in 2009 was primarily due to increased research and development (“R&D”) expenses resulting from a delayed Defense Advanced Research Projects Agency (“DARPA”) contract modification and related development milestones.
Looking forward to 2010 Cray is expecting revenue to be up only slightly from 2009, but depressed early in the year as customers await the next generation hardware (codenamed “Baker”) expected in Q3
Assuming a successful release of Baker in the third quarter of 2010 as currently planned, we anticipate revenue in the range of $305 to $325 million for 2010. As a result of the timing of the Baker system release, we expect a significant majority of 2010 revenue to be recognized in the fourth quarter.
As we pointed out before, Baker uses a new interconnect codenamed “Gemini”, which involves new silicon. If they miss on Baker or the interconnect, 2010 results could be a nightmare. Pete comes from IBM, so here’s hoping he learned what causes supercomputing companies to be late with interconnects and can avoid a delay.