jolly singh

Network Engines: Like Venture Capital Investing in Public Markets

I have SHORTED it at 12.80 before close. let's see what happens tomorrow morning.

Reports Q2 (Jun) loss of $0.32 per share, $0.14 better than the Reuters Estimates consensus of ($0.46); revenues fell 27.9% year/year to $38.5 mln vs the $30 mln consensus. Cray continues to anticipate annual revenue for 2006 will be higher than 2005 levels. Due to the size of a few large orders and the difficulty in predicting the timing of customer acceptances, there remains a large range of potential revenue results in 2006, ranging from modest to potentially 20% growth. The co expects that 2H06 will be stronger than 1H, with a possibility for 60% of 2006 product revenue being recognized in Q4. Operating expenses will increase in 2H primarily due to higher research and development expenses associated with the Cascade program and sales and marketing costs associated with higher anticipated revenue... In the second quarter of 2006, Cray submitted a proposal to participate in the third phase of the Defense Advanced Research Projects Agency (DARPA) High Productivity Computing Systems initiative. Phase III participants may receive up to $250 mln of research and development co-funding through 2010 with the goal of enabling a breakthrough in the capability of the next generation of supercomputers, providing for sustained petaflops levels of performance on real applications and dramatically improving user productivity. The outcome and timing of this award will affect Cray's operating results in the 2H06, specifically in the form of increased research and development expense associated with the Cascade program -- Q3 research and development expense could now be double Q2 levels, with Q4 levels dependent upon the status of the award. The co expects the outcome to be announced within the next few months and can give no assurance as to whether it will participate in Phase III of the DARPA HPCS program.