TECHNOLOGY : Cray Research Plans to Split Into Two Units
Cray Research Inc., the big supercomputer company struggling with high development costs, said Monday that it would restructure into two companies, putting its founder at the helm of a new entity that will focus on bringing one key computer, the CRAY-3, to market.
The new company will be called Cray Computer Corp. and will be formed around CRAY-3 operations based in Colorado Springs, Colo., where the company has about 200 employees out of a worldwide force of 5,400.
CRAY-3 is the company’s most powerful supercomputer, but its development costs have been staggering, running to an estimated $50 million to date. Its current product lines will remain with the original Cray Research.
“We’re convinced that this is the best way for us to maximize the two distinct, exciting technological thrusts that have developed within Cray Research,” Cray Research Chairman John Rollwagen said.
Seymour Cray, who founded Cray Research in 1972, will become chairman of the new company, and Neil Davenport, now vice president of the Colorado operation, will become chief operating officer, it said.
Rollwagen said the new company will resemble Cray Research in its early days. “Seymour (Cray) will once again be in the kind of environment in which he thrives, and in which he and his team can aggressively pursue completion of the CRAY-3 and bring it to market,” Rollwagen said.
Help Maintain Dominance
Cray took a body blow in 1987 when computer designer Steve Chen left it, forcing the cancellation of a major project.
“Our board decision today to create a second U.S. supercomputer company will help this country maintain its dominance in this vital technology. This is one American industry that is not walking away from global competition,” Rollwagen said in a statement.
Control Data Corp. announced last month that it was withdrawing from the supercomputer business, leaving Cray the sole American entry in the highly competitive international market, which Japanese makers threaten to overtake.
Cray’s action was approved by the company’s board and was to be announced in a more detailed form to shareholders at the annual meeting today in Minneapolis.
The original company, Cray Research Inc., will focus on the company’s current product lines, the CRAY-X-MP EA, CRAY-2, and CRAY Y-MP, and on completing the C-90 project, an outgrowth of the CRAY Y-MP that is under development in Chippewa Falls, Wis.
Cray plans to distribute 90% of the stock in the new company to shareholders of Cray Research Inc. on a tax-free basis, it said. Cray Research would retain the remaining 10%.
