Cray Research Posts Sharply Lower Profit

Shares of America’s only remaining supercomputer maker, Cray Research Inc., tumbled in heavy trading Tuesday after the company reported sharply lower earnings and forecast another quarter of weak results.

Cray stock skidded $6.125 to close at $49 on volume of over 1 million shares on the New York Stock Exchange.

Cray’s first-quarter earnings dropped to $1.5 million, or 5 cents a share, from $26.4 million, 85 cents a share, a year ago. Revenue fell to $116.1 million from $145.9 million.

The company said the next quarter’s revenue will be about the same as the prior year’s second-quarter total of $134 million.

The U.S. high-tech industry was rocked last week by the announcement that the only other supercomputer maker, Control Data Corp., was getting out of the business after years of big losses, at a cost of $350 million.

U.S. officials have expressed worries over any threats to the industry, seen as vital to U.S. competitiveness and for defense applications.

Cray, a Minneapolis-based company that until two years ago had carved out an enviable record of earnings growth in the supercomputer field, began experiencing a slowdown due to slack demand, new competition from Japanese computer giants and product changeovers.

The company said Tuesday that it continues to have a strong backlog and retains its target of a 10% rise in 1989 full year revenue from the $756.3 million in 1988.

Marcelo Gumucio, president and chief operating officer, said Cray began the year expecting computer deliveries to be much higher in the second half of the year than the first, and the poor results were not a shock. Cray had previously warned that the results would be poor.

“The revenue results for the first quarter are consistent with that outlook,” he said. “Current delivery schedules indicate that more systems have shifted to the last half of the year, and we now expect revenue for the second quarter to be similar to last year’s second quarter.”