Intel is paying $140 million in cash to buy some networking assets from Cray, its interconnect technology and some intellectual property.  This will provide support for supercomputers and Cray will move ahead with the development and commercialization of its next-generation supercomputers.  It will also do so with a much stronger balance sheet and without the expense of about 74 workers that will join Intel as a part of the deal.

The news that is really sending shares up is the chasing-factor after Cray beat earnings and raised its 2012 guidance on Thursday night.  Revenue for the last quarter was $112.3 million versus $39.9 million a year earlier and net income was $5.0 million or $0.13 EPS versus a loss the year before.  As of March 31, 2012, cash balances totaled $112.3 million compared to $54.2 million as of December 31, 2011, and that is before the Intel cash infusion.

Cray shares rose almost 21% to $8.51 on the Intel asset deal, but then shares rose to $8.90 the following day.  After earnings we now have another 21% gain to $10.84 and Cray is back up in the double-digit share prices for the first time since May of 2007.

Cray is back and a $385 million market capitalization suddenly does not sound that expensive.  Still, shares have jumped a massive amount this week and this company does not pay a dividend of any sort.

If the stock gets a pullback it may be worth reviewing but for now let’s just say that the move has been impressive and then some.

JON C. OGG

When it comes to enterprises from government agencies to large corporations, the world of supercomputers is safe.  Supercomputer orders do not get announced every day, nor every week, so when these orders are announced it often makes the news.

Cray Inc. (NASDAQ: CRAY) did announce an order from General Electric Co. (NYSE: GE), but before we head into that we want to consider one potential issue down the road.  Oracle Corporation (NASDAQ: ORCL) has a long history of making acquisitions that will assist it in winning enterprise business.  By acquiring Sun Microsystems, Larry Ellison effectively inherited a supercomputing platform that had gone under the names TSUBAME and Ranger.  Recent news about supercomputers and Sun Microsystems in the same sentence has gone dry for the most part.  Last year the Red Sky Supercomputer was featured at Sandia National Labs in New Mexico, but investors still generally think of Oracle for enterprise software suites.

Back to Cray and GE… Cray has freshly announced that it has sold a Cray XE6m supercomputer to GE Global Research, the technology development arm for the General Electric Company (NYSE: GE). The new Cray supercomputer will be used to support simulation-based engineering and science across various disciplines at GE Global Research. The Cray system will give GE Global Research the ability to run forward-generation simulations in science and product development.

Industry observers see high performance computing resources supporting increasingly sophisticated computational simulations and modeling.  These here-to-fore unobtainable simulations and experiments that will enable corporate giants like GE to take product development to higher levels. The sale of a Cray XE6m system to GE Global Research marks another significant step in Cray’s return to the manufacturing segment.

Cray has also announced pacts this year with industrial research and scientific centers such as GE Global Reasearch; Swiss National Supercomputing Centre; Center for Applied High Performance Computing (Danville, VA); the University of Edinburgh; and the Partnership for Advanced Computing in Europe.

Cray shares are up nearly 4% at $6.32 and its 52-week trading range is $4.95 to $8.38. The current market cap is almost $220 million and its shares have not surpassed $10.00 since back before the recession.

There are many organizations which use storage farms and which daisy-chain computing power to get around having to have formal supercomputers.  That is unfortunately a cost issue against and efficiency issue.  It is also far from being as efficient in most cases.  That also brings up the old memories of Skynet from the Terminator series.

Ordering a supercomputer is not something that an enterprise goes to their local electronics store to order.  These are generally giant systems in size and computing and the orders generally tend to run into the millions of dollars per system.  When news occurs in supercomputer orders, it tends to linger for some time.

JON C. OGG

On earnings previews we have included Thomson Reuters estimates and we have given color on the valuation and other metrics.  On the non-earnings stocks, we have given previews for what lies ahead on many of the straggling issues that will go into next week and on upcoming events.

Apple Inc. (NASDAQ: AAPL) did it.  The iPad is out.  Now we can get on with our lives.  Apple shares kept putting in new all-time highs and its Thursday high was $238.73 despite a $235.97 close.  We highlighted how Apple had surpassed Wal-Mart for #3 position in U.S. market caps.  With the options speculation being active in April for $240 and $250 Calls, there is still much interest here.  Buying some protection for a ‘sell the news’ is rather cheap for the April $230 Puts at $2.50.

Bed Bath & Beyond, Inc. (NASDAQ: BBBY) is up for its fourth quarter earnings on Wednesday this coming week.  Thomson Reuters has estimates of $0.73 EPS, which would compare to $0.55 a year ago; revenues are expected to be $2.11 billion, up from $1.92 billion a year ago.  What is interesting here is that the upside earnings surprises have been huge: 34.9%, 8.3%, 36.0%, and 25.0% in the last 4 sequentially ending quarters.  The stock closed out the week at $44.18 and the 52-week range is $25.28 to $44.64.  This trades at almost 18-times FEB-2011 earnings.

Blockbuster Inc. (NYSE: BBI) was in the news because Carl Icahn is unwinding his stake.  It turns out that the billionaire doesn’t know a hill of beans from movie rentals, and by our take he may have only added to problems here rather than helped them.  Nothing is going right at Blockbuster, and bankruptcy seems and feels as though it is imminent.  Despite a $0.25 close, shares were up 11.9% at $0.28 in the after-hours session according to the last print.

Borders Group, Inc. (NYSE: BGP) rose a whopping 47% to $2.54 on over 25 million shares Thursday after securing a new credit line, posting earnings, and saying its e-Bookstore was on track.  This weekend came the Barron’s pan with a story called “Borders’ Story Lacks a Happy Ending.”  Barron’s noted, “Though the stock is up more than 50% today, its long-term investment narrative isn’t nearly so positive.”

Cray Inc. (NASDAQ: CRAY) is showing that supercomputing is still alive and well with a $45 million supercomputer order from the National Nuclear Security Administration after the close of trading on Thursday.  That compares to what Thomson Reuters has as $314.78 million for all the 2010 revenues.  Shares were up over 10% at $6.70 in after-hours trading on Thursday and the 52-week range is $3.54 to $9.49.

Discover Financial Services (NYSE: DFS) did not go anywhere this last week and would have been down had it not been for a recovery rally on Friday.  This was one of the top picks from Morningstar in the bank and financial services arena with an estimate to fair value upside of nearly 80% to its target of $27.00.

Energy Conversion Devices, Inc. (NASDAQ: ENER) might be one of those companies listed on the old defunct website of “F’d Company dot come” if it was still around.  Barron’s already panned this one recently, and this weekend it went after it and First Solar Inc. (NASDAQ: FSLR) all over again.  The writing was particularly harsh on ENER… “Energy Conversion’s stock has fallen by half since last March, to 7.68. Superficially, it looks cheap at half of book value, but… is a solar-powered value trap, whose share value will continue to erode.”  Death predictions loom.

General Growth Properties Inc. (NYSE: GGP) has filed its plan to exit bankruptcy and laid out bidding rules to allow others than just Simon Property Group Inc (NYSE: SPG) to jump in with rival offers.  The #2 mall owner/operator has set a two round bidding process with the initial bids due as soon as April 19.

InterOil Corporation (NYSE: IOC) had a big day on Thursday and the controversial oil company still has many fighting over whether this one is a bust or a boom.  The company rose on a Platts’ news story signaling that it “may be close” to signing a partnership with a Japanese company that could allow it to exploit the energy resources it believes it has found in Papua New Guinea. Some have noted hat even the story may be a planted story.  This one is going to remain in controversy for some time.

The Cray CX1 product reflects NVIDIA and Cray’s goal to drive highproductivity computing solutions into a broad array of marketsincluding financial services, oil and gas, life sciences, governmentand academia.

Each Tesla processor has hundreds of processor cores that delivernearly one teraflop of peak computing performance. The Cray CX1delivers up to four teraflops of performance at the desktop,when configured with four Tesla processors.

The Cray CX1 product is called an "affordably priced" desk-sizedsupercomputer.  Unfortunately, most industries are cutting spending at a time when computers are reaching above andbeyond what most people will ever need for their computing requirements.

Fortunately, there are many companies, organizations, universities, andgovernment agencies which are always in need of faster and faster andmore and more computing power. 

Jon C. Ogg
November 19, 2008

Compugen (CGEN) Company says it will not issue new equity. Market may not believe it. Off to $.50 from 52-week high of $2.80.

Cray (CRAY) Super computer business must be weak. Tough quarter. Down to $2.42 from 52-week high of $6.99.

Silicon Graphics (SGIC) Bad quarter. New CFO. Sells off to $3.55 from 52-week high of $23.12.

Douglas A. McIntyre