Cray posts loss but expects profit in Q1 2001Seattle 05 March 2001 For the fourth quarter ended December 31, 2000, Cray reported revenues of $33.4 million, compared to revenues of $343,000 for the fourth quarter of 1999. The company's net loss for the fourth quarter was $13.9 million.
As the company announced in early January
2001, fourth quarter results were impacted by a delay in the timing of
orders, which resulted in some product revenue slipping into the first
quarter 2001. The loss from operations in the fourth quarter 2000 was
increased by one-time non-cash adjustments totaling $5.6 million, of
which $3.1 million was added to the cost of product revenue and $2.5
million to research and development expenses. These adjustments were
related to Cray SV1 processor ``end-of-life'' inventory during the
transition to the enhanced Cray SV1ex processor, and Cray MTA-1
gallium arsenide inventory and equipment due to the successful testing
of the all-CMOS components for the Cray MTA-2. Exclusive of these
adjustments and imputed interest and amortization of expenses related
to the acquisition of the Cray business unit assets, the company
reported a net loss of $6.3 million. Including
these adjustments and imputed interest and amortization expenses, the
company's net loss for the fourth quarter was $13.9 million.
For the year ending December 31, 2000, the company reported
revenues of $118.1 million, compared to revenues of $1.8 million for
the prior year. The company reported a net loss of $25.4 million for the year ended December 31, 2000, compared to a
loss of $34.6 in the prior year.
``Cray has now laid the foundation for industry leadership and
strong growth,'' said Jim Rottsolk, company president and CEO. ``We have
recently taken dramatic steps to increase our revenue opportunities
with the broadest range of product offerings in the industry. Our
Alpha Linux-based Cray SuperCluster® systems will offer
industry-leading speed with increasingly powerful data center features
and attractive price-performance. Our marketing agreement with NEC
will fill an important gap in our vector supercomputer offerings with
the high-end vector NEC SX-5 Series and its successors. We expect
these products to contribute moderately to our results in the second
half of 2001, followed by a strong ramp in 2002 and beyond. We expect
that eventually each of these products will add up to $100 million of
annual revenues to the company.
The company expects to report a profitable first quarter 2001,
with total revenues in the range of $46-$48 million, assuming the
successful completion of acceptance testing of a $21 million T3E
system by the Department of Defense--a 30-day test which is due to be
completed in the second half of March. Gross product margins for the
first quarter 2001 are expected to rebound to a range of 46 to 48
percent. Service margins are expected to be in the same range. The
June 2001 quarter is expected to be down from these levels, with
revenues expected in the range of $31 to $35 million. The second half
of 2001 is expected to show renewed revenue strength as the Cray
SV1ex, Cray SuperCluster and Cray MTA-2 products come on line.
For the full year 2001, the company expects total revenues in the
range of $170 to $185 million, depending on the successful
introduction of new products and continued strength of legacy
products. Service revenues are expected to be approximately $80
million, with product revenues making up the remainder. These revenue
expectations do not include any contribution from the NEC agreement.
Assuming the closing occurs as anticipated in the second quarter, the
company would expect some slight revenue in the second half for the
NEC SX-5 vector supercomputers, with more substantial revenues from
NEC products in 2002 and beyond. Gross product margins are expected to
decline somewhat over the year, as new products, such as the
SuperCluster®, carry lower margins. Service margins are expected to
be slightly down from 2000 levels, given the expected lower revenues
as the company de-installs older Cray vector systems. Total R and D
expenditures are expected to decrease from the 2000 run rate, with
planned expenses in the range of $50-54 million, with the highest
levels anticipated in the first half of the year, as major prototyping
and other non-recurring engineering expenses for the Cray SV1ex, Cray
MTA-2 and Cray SV2 are incurred. Sales and Marketing expenses are
expected to be in the range of $16-18 million for the year, and
General & Administrative expenses are anticipated to be in the range
of $7-8 million. The company expects to report a net profit from
operations and to be cash flow positive for the full year at these
revenue and expense levels.
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