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Why Cray, Inc. Fell 27% in August

By Anders Bylund - Sep 8, 2016 at 1:58PM

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A huge chunk of the supercomputer builder's 2016 sales literally went up in smoke, adding another terrifying drop to this roller-coaster stock chart.

Image source: Cray.

What happened

Shares of supercomputing hardware specialist Cray (CRAY) fell 27.4% in August 2016, according to data from S&P Global Market Intelligence. A disappointing second-quarter earnings report was followed by a dramatic cut to Cray's full-year revenue target. Share prices fell more than 30% the next day.

So what

Cray fell short of analyst expectations on both the top and bottom lines, but the real damage came from a 21% lower full-year sales target. Five high-end systems being readied for delivery later in the year were damaged by an electrical smoke accident. The incident at one of Cray's manufacturing facilities in Chippewa Falls, Wisconsin, may seem small until you realize that the company relies on a tiny number of system sales, each worth many millions of dollars.

CRAY Chart

CRAY data by YCharts.

Now what

This company seems eternally stuck in a desperate turnaround mode. Every time there's light coming up at the end of the tunnel, another disaster strikes.

All may be forgiven if Cray can finish pulling itself up by the bootstraps one of these days. The company is working from a fairly stable financial platform, with no long-term debt and rising cash reserves.

Still, it's a risky bet that will almost certainly increase your monthly antacids budget. Invest accordingly.

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