Cray Acquires Start-up OctigaBay

Supercomputer maker Cray Inc. has announced that it will acquire closely held OctigaBay Systems Corp., a start-up supercomputer manufacturer, in a $115 million deal that is aimed at accelerating Cray's drive into commercial markets.

In announcing the acquisition, the firms noted that OctigaBay has been developing a high-performance computing system (HPC) that will extend Cray's commercialization of its "Red Storm" system. Traditionally a supplier of HPC systems to governmental and scientific agencies and installations, Cray had previously announced its intention to address more scientific and technical markets.

Cray said the OctigaBay acquisition will help it broaden its addressable market by a factor of four. Both firms use 64-bit AMD Opteron processors in their configurations.

"OctigaBay's product is designed with the same philosophy [as Cray's]," said Cray chairman and CEO Jim Rottsolk in a statement. "The combined company will increasingly benefit from the growing realization that purpose-built HPC systems like Cray's are more efficient and cost-effective than general business computers for the high-performance computing market."

Previewed last fall, the OctigaBay 12K high-performance machine utilizes high-speed interconnect and application accelerator technologies to remove major bottlenecks. The OctigaBay 12K operates Linux and can scale as many as 12,000 64-bit Opteron processors. First shipments of the 12K are expected in the second half of 2004, with general availability scheduled for 2005. Depending on configuration size, pricing is expected to range from below $100,000 to $2 million.Cray said it expects the acquisition to be accretive in 2005. OctigaBay's name stems from the fact that eight investors put up the initial venture capital for the Vancouver, BC-based firm.

Marty Seyer, general manager of AMD's Microprocessor Business Unit, said the solutions by OctigaBay and Cray "provide differentiated, highly innovative and high-bandwidth architectures that fully exploit the advanced capabilities of AMD64 technology. We have been working closely with both Cray and OctigaBay."

Cray said the $115 million deal calls for the exchange of 12.7 million shares and almost $15 million in cash. In addition, the acquiring firm will assume a number of OctigaBay employee stock options.