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 T3E. 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. -----