The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (Magic Diligence) -- When you say the word "super-computer," one name comes to mind: Cray (CRAY). The firm is synonymous with high performance computing. Founded in the early 1970s by Seymour Cray, the company's first computer, the Cray-1, was renowned as the world's fastest computer, achieving fame during the Cold War when the first unit was installed at Los Alamos during the height of nuclear proliferation.
The firm has been through quite a few changes since those days. After merging with Silicon Graphics in the late 1990s, SGI then sold it to Tera Computer in 2000, after which Tera changed its name to Cray and operates as the stock we review here.
Cray still is focused on the super-computer market, specifically the top-of-the line units usually costing more than $500,000. Super-computers are used by governments, academic institutions, and some commercial entities for solving the worlds' most complex problems. The key market segments are in scientific research (National Science Foundation, NASA), national security (Department of Defense, Department of Energy), earth sciences (for weather and climate modeling), and in computer-aided design (especially for aeronautics and automobile design).Super-computers require special design in both hardware and software to ensure parallel processing with a minimum of data bottlenecks in interconnection. The density and compute power of these systems is pretty amazing. Cray's XE6 can support 192 AMD (AMD) 8 or 12-core Opteron processors, with a total computer power of 20 trillion floating point operations per second! Super-computing is a growing market. IDC estimates the addressable market in 2009 at about $3.4 billion, and sees it growing about 6.5% per year through 2014. Evolving scientific areas, such as bio-engineering, nanotechnology, clean energy technologies, climate modeling (think global warming), and terrorism prevention all depend on super-computing assets. Cray is also pushing its Custom Engineering services, where the firm utilizes its significant know-how to develop specialized high performance platforms for discrete tasks. The company has seen solid revenue growth over the past 5 years (about 11% annualized), and I don't think revenue growth will be a huge problem here.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV