Shares of computer maker
sunk Tuesday on concerns one of its orders could be affected by the fiscal 2004 federal budget.
A report by an analyst at Needham & Co. argued that the company could face a reduction in orders after Oak Ridge National Laboratory received news the proposed federal budget would offer less funding than initially requested for its supercomputer project.
The research sent shares down 22% to $6.61.
Although other analysts that cover the stock disagree the cuts in funding will have an immediate impact on the Oak Ridge order, investors still sold off on the news.
"It's way too early in budgeting to come to the conclusion that they won't get the order," said James McIlree, an analyst at C.E. Unterberg Towbin.
In the initial order announced last week, Cray put the order at $30 million for supercomputer equipment and services.
Steve Conway, a spokesman for Cray, said Tuesday that "the $30 million contract still stands with Oak Ridge National and it is under no kind of jeopardy." Conway said the company does not yet have a budget assigned for 2004.
Analysts say that the initial $100 million Oak Ridge had expected to receive from the government could fall to $86 million.
McIlree said Cray would receive from $20 million to $50 million of that initial budget, which is still within the company's expectations, according to Conway.