Cray today announced a definitive agreement to acquire privately held OctigaBay Systems Corporation of Vancouver, British Columbia. OctigaBay is developing an innovative high performance computing (HPC) system designed to make supercomputing performance accessible to the growing community of scientific and technical computing users. This pending acquisition, coupled with Cray's previously announced decision to commercialize the “Red Storm” system, will extend Cray's product portfolio and multiply its addressable market by over four times.

Cray will acquire OctigaBay in a transaction valued at approximately $115 million, based on Cray’s closing price yesterday of $7.84. Cray will exchange about 12.7 million shares and just under $15 million dollars for all outstanding OctigaBay shares and will assume approximately 400 000 employee options.

The transaction has been approved by the boards of both companies and is expected to close within 60 days of this announcement, subject to customary approvals.

Previewed in November 2003, the OctigaBay 12K high performance computer’s innovative architecture embeds both a high speed interconnect and application accelerators to remove major bottlenecks, improving performance on real-world applications. Self-monitoring, self-healing and management features give administrators a highly reliable and easy-to-use system.

The OctigaBay 12K consists of six 2-way AMD Opteron 2.40GHz-based systems in one “shelf” and is be able to achieve amazing 58GFLOPS, according to manufacturer’s claims. Furthermore, up to 12 OctigaBay 12K shelves can be assembled in a single rack, providing 691GFLOPS of processing power. OctigaBay 12K systems scale to over 12 000 processors in “multirack” without requiring any external switches to provide up to 60TFLOPS, the company said in November.

Early shipments of the OctigaBay product are expected in the second half of 2004, with general availability in early 2005. Pricing, to be announced later this year, is expected to range from under $100 000 to about $2 million. The acquisition is expected to be accretive in 2005, excluding the impact of non-cash acquisition-related charges. For 2004, the continuing cost of OctigaBay’s product development efforts and product launch will be about $2 million per quarter.

OctigaBay is primarily known for its 12K system powered by AMD Opteron CPUs.

This is not the first acquisition of a company that deals with AMD Opteron this month. In early February 2004 Sun entered into a definitive agreement to acquire Kealia, a privately-held company based in Palo Alto, California, co-founded and led by Andy Bechtolsheim, a Sun co-founder. Kealia was established to develop advanced server technology and was known for its tremendous interest in AMD Opteron microprocessor.