Cray Blames 2007 Revenue Shortfall on Barcelona Opteron Delays

Published: June 12, 2007

by Timothy Prickett Morgan

Supercomputer maker Cray, which has had its share of financial and technical woes over the past few years, says that its prospects for 2007 have been diminished by what it says will be the delays in Advanced Micro Devices's next-generation of quad-core Opteron processors, code-named "Barcelona."

In a statement that the company put out last week, Cray said revenue that it had been banking on for its XT4 clustered systems, which are based on the Opteron processors and which run Linux, will be lower than it expected for the year. The company said that it anticipated the delivery of quad-core XT4 systems in the fourth quarter, but because of timing issues--presumably having to do with qualification of the Barcelona processors for use in the XT4 systems and certification of the Linux and related HPC software stack on these processors--Cray is now expecting that most or all of the pending contracts that it has for quad-core XT4 systems will now be pushed into early 2008, which means it cannot recognize the revenue until then even if customers get the boxes on their floor before the end of 2007. The next effect is that Cray's sales are expected to be at or below $200 million for the year.

"We are disappointed with the implications of this change in timing to our Cray XT4 system rollout schedule and the impact on our 2007 outlook," said Peter Ungaro, Cray's president and chief executive officer, "Two of our most important goals have been to grow and achieve profitability, both of which are now in jeopardy for 2007. We are actively working to achieve the best results possible for 2007 and continue to work to establish the foundation for longer-term sustained profitability and growth."

The XT4 machine is based on the single-socket variant of the Opteron 1000 series of processors, which means that Cray does not have to deal with cache coherency overhead and issues in the XT4 server. (The XT4 is the upgrade to the "Red Storm" XT3 machine that Cray built for the U.S. Department of Energy.) The XT4, as well as a special massively parallel machine called the XMT, were announced in November 2006.

AMD has been adamant that it will announce the Barcelona chips in "mid-2007" and has been showing off two-socket boxes in recent weeks. Cray's irritation would seem to suggest that the lag between announcement of a Barcelona 1000 series chips and production is larger than expected. Most vendors who will talk about the future Opterons are saying they do not expect to ship boxes until September or so.

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