A legacy Seattle technology company, supercomputer maker Cray Inc. (CRAY: Nasdaq), is being acquired by another giant of the technology industry, San Jose, California-based Hewlett Packard Enterprise (HPE: NYSE) for $35 per share in cash, a deal worth about $1.3 billion, the companies announced.
The acquisition is slated to close by the end of January 2020, which is the close of HPE’s fiscal first quarter, subject to regulatory reviews and other closing conditions.
“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,” Peter Ungaro, president and chief executive officer of Cray, says.
Antonio Neri, president and CEO of HPE, said during a conference call about the planned acquisition that “when the transaction is closed, the current leader of Cray, Peter Ungaro, will lead the combined business for Hewlett Packard Enterprise.” Cray spokesperson Diana Brodskiy adds that “Cray will remain in Seattle.”
Cray was recently awarded a U.S. Department of Energy (DOE) contract to develop and deliver to the Oak Ridge National Laboratory in Tennessee the fastest computer Cray has ever built in a deal valued at more than $600 million. Semiconductor company AMD also is partnering with Cray on the contract.
The new supercomputer, dubbed the Frontier, is slated for delivery in 2021 and will be based on Cray’s new Shasta supercomputer architecture and will utilize AMD central and graphics processing units. The system will be used by researchers at the DOE national lab to propel advances in science, energy assurance, economic competitiveness and to help bolster national security.
The Frontier supercomputer is expected to achieve 1.5 exaflop performance capability, according to the DOE. A performance capability of 1 exaflop is a trillion times faster than a typical consumer laptop.
“We really believe that there’s this new era of computing that we call the ‘exascale era,’ and it’s really driven by the growth in data that’s happening out there,” Ungaro says. “It’s not just science companies that are dealing with digital transformation and artificial intelligence. We really believe that these technologies that we're developing for these exascale [supercomputing] systems will be used and available to all enterprises, whether they're large or small firms.”
HPE expects the segment of the data storage and services market it serves to grow form $28 billion in 2018 to $35 billion in 2021. Exascale computing is an expanding segment of that market, according to HPE, with some $4 billion in projected “exascale opportunities expected to be awarded over the next five years.”
Seattle-based Cray employs more than 1,300 people worldwide and recorded a net loss in 2018 of $72 million on revenues of $456 million. For the first quarter of this year, the company recorded a net loss of $29 million on revenues of $72 million.
HPE recorded net earnings of $800 million on revenue of $14.7 billion in its fiscal 2019 first quarter ended Jan. 31. The company employs some 55,000 people.