Cray Jumps to Decade-High as Supercomputer Sales Top Estimates

Feb 15, 2014 12:01 am ET

Feb. 15 (Bloomberg) -- Cray Inc., one of the pioneers of supercomputers, jumped to its highest price in a decade after reporting fourth-quarter revenue that exceeded analysts’ estimates.

The shares of the Seattle-based company rose 39 percent to $41.66 at yesterday’s close in New York, the highest since January 2004. Revenue in the fourth quarter rose 63 percent to $307.4 million, Cray said in a statement Feb. 13, exceeding analysts’ average estimate of $300.8 million, according to data compiled by Bloomberg.

International Business Machines Corp.’s agreement last month to sell part of its supercomputer business to Lenovo Group Ltd. opens up a chance for Cray to sell more of its products, Chief Executive Officer Peter Ungaro said during a conference call. A high-performance computing pioneer, Cray’s machines are used for research and simulation for climate models, genomics, defense, energy and seismic imaging.

“Investors are getting more excited about the longer-term prospects for the company, and especially the growth potential for Cray’s big data offerings over time,” Sid Parakh, an analyst at McAdams Wright Ragen Inc., wrote in an e-mail. He rates the shares a hold.

Net income rose to $51 million, or $1.27 a share, from $14 million, or 36 cents, a year earlier.

The sales figures, along with Ungaro’s comments, are helping to fuel the rise in shares, according to Glenn Hanus, an analyst at Needham & Co. who rates the shares a buy.

Seymour Cray, who died in 1996, invented supercomputers, large machines capable of taking on the most complex tasks. His vision was overtaken by distributed computing, which uses many processors linked together to solve big tasks. Renewed demand for supercomputers that can analyze big data, or large amounts of information, along with software improvements, are driving demand, Ungaro said.

“That’s an exciting change for us that we hope to be able to capitalize on,” he said.

--Editors: Reed Stevenson, Stephen West