SGI plummets following FQ2 warning; Cray unfazed

SGI (SGI -13.9%) warns it expects to report FQ2 (Dec. quarter) revenue of $116M (-32% Y/Y) and EPS of -$0.21 to -$0.24, below a consensus of $128M and -$0.14. (PR)

Unsurprisingly, U.S. federal sales ($44M vs. $65M a year ago), hurt by last year's government shutdown, were a major culprit. But core revenue (non-federal HPC, big data, storage, and services sales) also fell ($63M vs. $68M). Legacy cloud revenue (commodity hardware for cloud infrastructure) tumbled ($9M vs. $38M).

However, SGI expects sales in the second half of FY14 (a seasonally weaker period) to be in the $260M-$300M range, with non-federal core revenue rising 30% Y/Y. The company is also reaffirming its 12-24 month margin targets.

While SGI dives, supercomputer rival Cray (CRAY) is close to breakeven. Both SGI and Cray rallied sharply a week ago after Cray reiterated its 2013 sales guidance.

Separately, SGI has announced it's partnering with SAP to build a server appliance that runs SAP's popular Hana in-memory database.

SGI suspended guidance back in October, citing a lack of visibility into government orders. FQ2 results are due on Jan. 29.

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