Seattle-based Cray is laying off about 90 employees — or 10 percent of its worldwide work force — in an effort to cut costs...
Seattle-based Cray is laying off about 90 employees — or 10 percent of its worldwide work force — in an effort to cut costs and make a profit.
The supercomputer maker also said yesterday in a regulatory filing that it was forcing its U.S. employees who make more than $50,000 a year to take a temporary pay cut from July 1 to the end of the year. The pay cut is voluntary for international employees.
Finally, Cray said it plans to cut its travel spending and reduce some other benefits.
The layoffs, expected to save $5.5 million a year, would take place mainly in the operations, sales and marketing divisions.
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The severance costs for the quarterly period ending Thursday will be about $2 million, the company said, but the salary and benefit reductions in the second half of the year will save about $2.5 million. At the end of last year, Cray had 889 employees, its last reported figure.
The moves are part of a restructuring that includes reducing its research and development work, the company said. Cray is also facing customer delays for several large supercomputer orders.
“These factors have resulted in a weak cash balance position and will adversely affect our cash flow until we receive product acceptances and payments,” the company said in its filing. Cray executives did not respond to repeated requests for comment yesterday.
Cray’s share price fell by 10 cents, or 6.6 percent, yesterday to close at $1.41. The layoff news was released after the stock market closed. The stock fell an additional 5 cents in after-hours trading.
Cray reported $37.6 million in sales and a $21 million net loss for the first three months of the year — a quarter executives described as “weak” and plagued by abnormally high research and development costs.
Its sales dropped in 2004 to $148.9 million, compared with $237 million in 2003. Its net loss last year was $206.3 million, compared with a $63.2 million profit the year before.
The news hasn’t been all bad for Cray recently. On June 1, the Nasdaq Stock Market withdrew its intentions to delist Cray. The month before, Nasdaq threatened the delisting because Cray didn’t include an auditor’s opinion of financial controls in its annual report.
Kim Peterson: 206-464-2360 or email@example.com