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Cray's New T3E

WSJ, Nov 27, 1995

Cray Research to Unveil 2nd-Generation Parallel Processor
for Technical Market

By William M. Bulkley

Cray Research Inc., bidding to reassert its dominance of
high-end scientific supercomputing, is expected to unveil
tomorrow a new parallel-processing supercomputer with
unprecedented speed.

The Eagan, Minn., computer maker has been best-known for
its multimillion-dollar vector supercomputers that use
just a few very powerful processors. The new Cray T3E
will be its second-generation parallel processor. Unlike
its predecessor the T3D, it operates without being
connected to a traditional vector supercomputer.

People familiar with the machine say it will have a
theoretical top speed of more than one trillion
operations a second, or one teraflops, a measure of
supercomputer speed. Currently the only planned teraflops
machine is one that Intel Corp. is building for the
Energy Department's Sandia National Laboratories.

'Back in the Game'

"We look at this as evidence of Cray reasserting its
franchise in the technical computing market," said Debra
Goldfarb, who follows supercomputers for International
Data Corp., a market research firm in Framingham, Mass.
"Cray's back in the game."

The smallest models are likely to be priced at well under
$1 million. Buyers will be able to increase power by
adding just a few processors at a time in the future
making the systems "highly scalable" in industry
parlance. The T3E can be built with as few as 16
processors or as many as 2,048 processors.

"This reconfirms Cray's capabilities to build very
efficient high-performance computers," said Philip
Samper, chairman and chief executive officer, who was
hired last spring. Cray has said it will report a net
loss for the current year, reflecting restructuring
charges as Mr. Samper cuts costs, and sales are weak as
customers have been waiting for new generations of both
Cray's T90 vector supercomputers and the T3E. Mr. Samper
said that Cray will be profitable in the current fourth
quarter on an operating basis before an expected
restructuring charge, and "We expect to be profitable in
1996. That's very important for this company."

Mr. Samper, who declined to discuss details of the T3E,
said in an interview, "We have $100 million in orders
already in house. When customers get so excited they put
money on the line, that's the ultimate test." The T3E
won't be available for sale until the end of the first
quarter of 1996. Cray's total backlog was $355 million at
the end of the third quarter, including orders for the

Cray, the longtime leader in scientific supercomputing,
faced challenges from a host of smaller companies in the
late 1980s as well as three big Japanese computer makers.
But with the end of the Cold War, military need for
supercomputers diminished, Cray's sales plateaued and
several of the smaller companies went out of business.

Offsetting Some Declines

Analysts estimate the high-performance-computer market at
about $3 billion a year, with growth in commercial
markets for large databases and video-servers for
interactive-media, offsetting declines in government
business. International Business Machines Corp. and
Silicon Graphics Inc. have both grown rapidly by selling
parallel-processing systems in those markets.

Cray sells small commercial supercomputers and commercial
servers for computer networks of Sun Microsystems Inc.
workstations. However, analysts say it needs revenue from
the high-performance scientific market to rebound. Jay P.
Stevens, an analyst with Dean Witter, says sales in the
current year will fall 27% to $615 million from $921.6
million. Next year he forecasts a 20% rise to $808
million. Mr. Stevens predicts a net loss before charges
for 1995 of $73 million, or $1.25 a share, compared with
net income of $55.7 million, or $2.32 a share, in 1994.

Mr. Samper said that during the year, Cray has reduced
research-and-development spending by 16% and lowered
overheads. He said it plans to buy more parts from
outside suppliers, and is also controlling costs by
negotiating with government agencies to have them pick up
certain research and support costs.