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Technology Stocks : Cray, Inc. CRAY

CRAY 35.01

0.0%

Sep 25 5:00 PM EST

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From: FJB	5/4/2007 12:38:26 PM
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Well this execution hiccup was not good at all. I think I might be married to this one for a while now. Outlook Quarterly and annual results for 2007 will be affected by many factors, including the timing and success of the Cray XT4(TM) and "BlackWidow" product rollouts. The Cray XT4 system is currently available and shipping, with an important upgrade to a quad-core Opteron processor from AMD planned in late 2007. Planned ASIC re-spins for the BlackWidow and Cray XMT(TM) systems will likely result in initial BlackWidow deliveries in late 2007 and initial Cray XMT system deliveries in 2008. These changes in the anticipated timing of product availability have impacted the company's outlook for 2007. While there continues to be a wide range of potential outcomes for quarterly and annual results, Cray now estimates the mid-point for the 2007 revenue range to be about $230 million. This estimate assumes a significant contribution from quad-core Cray XT4 systems and upgrades, as well as a contribution from initial BlackWidow sales. The company anticipates as much as 50% of full-year product revenue could be recognized in the fourth quarter, while second and third quarter results are expected to be mixed, with the third quarter likely benefiting from a very large product acceptance of about $40 million and the second quarter potentially having minimal product revenue. Cray continues to expect improved gross margins for 2007, modestly higher operating expenses compared to 2006 and profitability for the year. "We are clearly disappointed with the impact of the re-spins on our 2007 outlook, particularly so given the progress made over the past two years," stated Peter Ungaro. "We are actively working to further improve development and other business processes, continuing to add capability and breadth to our product portfolio. We remain very positive about the opportunities we see ahead."

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