HPE buys Cray for $1.3bn

HPE is buying the supercomputer company Cray for $1.3bn cash.

The deal is expected to be accretive to HPE non-GAAP operating profit and earnings in the first full year following the close. HPE expects to incur one-time integration costs that will be absorbed within its FY20 free cash flow outlook of $1.9bn to $2.1bn. The transaction is expected to close by the first quarter of HPE’s fiscal year 2020.

Cray, headquartered in Seattle WA, has a strong position in the top 100 worldwide supercomputer installations. In March 2019 it jointly won with Intel a $500m contract by the US Department of Energy to build the Aurora exascale supercomputer.

Cray employs 1,300 employees worldwide, and reported revenue of $456m for its most recent fiscal year, up 16 per cent on the previous year. It builds XC and CS supercomputers with Shasta representing the next generation.

Cray-Intel Aurora exascale system mock-up.

HPE is an established player in high performance computing and bought Cray’s smaller rival SGI in 2016. The Cray acquisition gives its the full spectrum of HPC compute, storage, system interconnects, software and services to layer on top of its existing capabilities. HPE will deliver future HPC-as-a-Service and AI / ML analytics offerings through its GreenLake subscription scheme.

Exascale future

The HPC market is growing steadily as organisations adopt more AI and machine learning applications, which need faster processing and access to larger amounts of data.

HPE estimates the HPC-supercomputing market will grow from $28bn in 2018 to $35bn in 2021, a nine per cent compound annual growth rate. It anticipates more than $4bn of Exascale opportunities will be awarded over the next five years.

IHP reckons it can deliver higher revenue growth by selling into the HPC/supercomputing market as it heads towards exascale requirements, and also accelerate commercial supercomputer adoption. It hopes to realise cost savings by using the Cray technologies such as Slingshot interconnect as well as other synergies from bringing the two companies together.

CEO quotes

This is CEO Antonio Neri’s big bet to leapfrog Dell Technologies and IBM and step into the forefront of the high-performance computing market.

In a canned quote he said: “Cray is a global technology leader in supercomputing and shares our deep commitment to innovation. By combining our world-class teams and technology, we will have the opportunity to drive the next generation of high performance computing and play an important part in advancing the way people live and work.”

Another prepared quote, from Cray President and CEO Peter Ungaro, said: “This is an amazing opportunity to bring together Cray’s leading-edge technology and HPE’s wide reach and deep product portfolio, providing customers of all sizes with integrated solutions and unique supercomputing technology to address the full spectrum of their data-intensive needs.”